New state buildings on hold as cost climbs

By Adam Wilson | The Olympian • Published May 23, 2008

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OLYMPIA – A new complex of state buildings on the Capitol Campus will cost at least $110 million more than expected — and possibly a lot more than that.

Wheeler Project

• Original budget estimate: $260 million

• Current budget estimate: $370 million

• Location: East side of Capitol Campus, along Jefferson Street

• Includes: Department of Information Services headquarters, general office building for the Washington State Patrol and smaller agencies, and a data center for major computer systems

• Scheduled start for construction: June 2008

• Scheduled completion date: February 2010

• Web site: dis.wa.gov/wheelerSM.htm

Heritage Center

• Original budget estimate: $186 million

• Current budget estimate: $221 million

• Location: North side of Capitol Campus, along 11th Avenue

• Includes: A Heritage Center including State Archives, State Library and museum space, and an executive office building for state agencies, including Office of the Insurance Commissioner

• Scheduled start for construction: April 2010

• Scheduled completion date: Fall 2012

• Web site: www.ga.wa.gov/HCEOB/index.html

New headquarters for the Department of Information Services and the Washington State Patrol, as well as a center for the state's computer systems, are planned for the east side of the campus. The estimated price tag was $260 million when the Legislature approved the project a year ago. The Department of Information Services now figures the cost at $370 million. Treasurer Michael Murphy warned Thursday that the price could rise far beyond that, depending on interest rates and higher lease payments.

His concerns, as well as an appeal of the state's plan to deal with traffic created by the new offices, have stopped work on the project. The delay could further increase costs. Still, the project could remain within its funding plan because of the way the Legislature financed the project, said Gary Robinson, director of the Department of Information Services.

Cost estimates have increased for a number of reasons, Robinson said. They include rising prices for construction materials, building a roundabout at 14th Avenue and Jefferson Street to accommodate added traffic, and changing the design of the buildings to lessen the effects on the nearby residential neighborhood, he said.

The agency was not given a certain amount of money for the project. Instead, it was told to keep the per-square-foot lease rate within 110 percent of the market rate for similar buildings.

Robinson said the agency should be able to cover the higher costs with higher payments and stay within that range.

Murphy cited that financing method, called lease-purchase, in his concerns. He said it could lead to long-term costs beyond the agency's estimates.

"There are many reasons to take a hard look at what we are doing and how we are doing it," Murphy said. "This project will be the most expensive project on the Capitol Campus ... yet it is being financed in a way that makes it exempt from public works laws."

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