City officials were informed this week that the Marriott Hotel and Conference Center expected to open in August will cost about $3.5 million more than planned.
The project is being handled by UEB Builders, and UEB Builders President Kyley Harvey explained to the city council this week that construction costs had increased, causing the extra $3.5 million. Harvey said construction costs have increased nationally, and over the last two years, Texas has outpaced in the country.
“Our rapidly growing population, strong economy and demand for construction, and just the limited resources available have all forced prices up,” Harvey said. “For a project like this, the high-quality subcontractors you need to do this very specific work are even more limited.”
The cost of housing construction workers on the project has gone up, he said, by about $125 per day per person, for the 150 to 200 people they have on the job site. Harvey did say starting construction early, in May 2017, had benefits for the city, as they are nearing completion much more quickly, and costs would have been significantly higher had they started the project today.
Harvey said this final cost will essentially removes the change order provision and eliminates all qualifications associated with the project, meaning the cost will not change anymore. The only reason the cost would increase would be if the city wanted something additional, like adding an extra story to the building.
City Manager Michael Marrero said the additional cost would have to be brought to the city council at their next meeting for them to authorize the additional funding.
So how is this being paid for? Assistant City Manager Cindy Muncy said they would be paying for the conference center out of the hotel/motel tax fund. Right now, they have $8.7 million in cash and investments in the fund, so Muncy said they have enough money available to cover the extra charges.
At-Large City Council Member Peggy Dean added that the hotel when it opens will increase their hotel/motel tax income considerably.
“It’s not like we’re paying for this with the same tax monies,” Dean said. “There’s an almost guaranteed increase because of the new hotel and the taxes it generates.”
Dean said the increase shouldn’t be a surprise, either, because everything the city is doing is costing more due to the higher cost of living.
This is the second time the conference center has run over budget, after the council received a cost estimate two years ago for an additional $1.8 million of unexpected costs. Assistant City Manager Phillip Urrutia said the conference center was originally budgeted to cost $17.6 million in 2014. The additional $3.5 million brings that number up to around $21 million.