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Green light for long-awaited downtown Duluth transit center

An architect’s rendering shows what a new, multimillion-dollar transit center in downtown Duluth could look like from the intersection of Michigan Street and Third Avenue West when it is finished in December 2015. (Duluth Transit Authority image)

After years of planning and multiple delays, work soon should begin on a new transit center in downtown Duluth.

At a special meeting Wednesday, the Duluth Transit Authority’s board of directors unanimously signed off on an agreement that sets the guaranteed maximum price of the project at just shy of $27.3 million.

Higher than anticipated construction costs, to the tune of about

$32 million, forced the DTA to rethink the project, which includes a bus terminal, parking ramp and an area for commuters to stow bicycles.

Jim Heilig, the DTA’s director of administration, said his management team spent the past year working with Mortenson Construction (the project’s lead builder) and LHB (its designer) to get the budget back to a manageable level.  

The revamped project plans could allow for some original materials to be swapped out for less expensive alternatives

Heilig outlined more than $600,000 prospective changes.

“These are areas where we could save money, if we’re pinched,” he said.

But he said there are some places where it wouldn’t pay to cut corners.

Jim Lasher, a consultant hired by the DTA to assist with the project, pointed to the center’s durable roof and terrazzo floors, as well as its heated outdoor walkways, as nonnegotiable features that simply make good sense.

Dennis Jensen, the DTA’s general manager, explained the rationale for walkways with heated pavement as a way to minimize the risk of people falling on ice.

“One of our main ideas was to make this center as safe as possible, and we’re dealing with a lot of senior citizens, as well as people with disabilities,” he said.

In light of budget constraints, the transit center is being built with a smaller cushion of contingency funding than the 10 percent initially envisioned.

The plan calls for a contingency fund of $1.1 million — or about 4½ percent contracted cost of the project cost.

That’s less than half of the 10 percent contingency fund initially envisioned.

Heilig said his greatest concern involves encountering a major underground barrier to construction. In describing the center’s site at the corner of Michigan Street and Third Avenue West, he said: “It’s all dredged material that was brought in well before the 1920s.”

But with the guaranteed maximum price outlined in the agreement approved Wednesday, Lasher said that once the building begins to rise, any worries will be put to rest.

“After we’re out of the ground, we’re safe,” he said.

A recent independent cost analysis came back with an estimate only 2 percent lower than what Mortenson set forth in its maximum price.

“That gives us confidence that the price we’re getting from Mortenson is a valid number,” Heilig said.

Still, the DTA’s board of directors had questions.

“Do you believe this is absolutely the best we can do?” asked DTA board member Tony Orman before the vote Wednesday.

Jensen responded affirmatively, saying that he believed the guaranteed maximum price in the agreement approved Wednesday was “as good as we can get.”

“I don’t like the numbers, but if you say this is the best we can do, I have to believe you,” Orman responded.

Heilig identified two of the biggest cost drivers as inflation, which added about $1 million to the price of the project since last year, and a $500,000 design change that placed the terminal’s bus operations on a single, flat plane without an incline as initially proposed.

As a fee for its services, Mortenson Construction will collect 4 percent of the total project cost up to a maximum of $1 million.

Meanwhile, LHB, the engineering and design firm overseeing the project, will receive $1.4 million for its services.

Heilig said the final finished cost of the transit center, including a new skywalk connecting the transit center to Amsoil Arena on the other side of the freeway and new bus-coordinated traffic signals for streets surrounding the facility likely will push $30 million.

Money for the project will come from multiple sources, including about $16 million from the federal government, $6 million in state bonding and $1.4 million of private investment. The DTA will foot the bill for most of the remainder, shouldering financial responsibility for about a 20 percent share of the total cost.