RENU panel debates construction management models

Staff photo by Clay Schuldt Reinvest in New Ulm (RENU) Oversight Committee members, left to right, City Manager Chris Dalton, Building Inspector Elwood Zabel, City Attorney Roger Hippert, Committee Chair Toby Freier, City Councilor Lisa Fischer, City Councilor Larry Mack and Facilities Maintenance Supervisor Ryan Weier focused on the benefits of construction manager models.

NEW ULM — The Reinvest in New Ulm (RENU) Oversight Committee was split over the type of construction manager (CM) they wished to hire for the Recreation Center project.

The committee was locked into the idea of using a CM on the Recreation Center projects, to take the burden off city staff, who already have full duties. The Recreation Center has four separate RENU projects: aquatic center, wellness center, indoor playground and gymnastic center. With the amount of activity planned for this site, the committee agreed a CM was needed to oversee the projects.

During the December RENU Oversight meeting, the committee heard proposals for CM services, but City Attorney Roger Hippert raised concerns that the proposals presented were for the at-risk method of construction management, which the committee had not previously agreed to follow. Clarifying the type of CM model the committee wanted to use was the main topic of discussion for Thursday’s meeting.

City Manager Chris Dalton presented the committee with simple flow charts explaining the three different construction models: general contractor, CM agency and CM-at risk.

Originally the city put bids asking for the CM agency or CM-at risk model, but Hippert explained the original recommendation was to seek bids for a fourth type of model, which was a hybrid of the general contractor model with the CM serving as an owner representative.

Hippert said the idea of this hybrid model was to have a CM oversee the general contractors’ work, rather than use city staff to take on extra work.

Hippert said this method would result in extra cost, because the city was hiring a general contractor and a CM. But New Ulm could save money on the design and engineering portion of the project as well as ensuring the general contractor followed the contracted work.

Hippert also had concerns regarding the legality of the CM-at risk model.

“No one has been sued on it yet,” he said. There is an argument that the at-risk model circumvents the municipal contractor laws because the entire project is not being bid out at once. Since this had never been litigated, Hippert could not guarantee how a judge would rule if a subcontractor sued New Ulm. He said it was unlikely a business would file a lawsuit, because it was not worth their time, but it was a possibility.

Hippert had also contacted the city attorneys of other communities to use the CM-at risk method. Hippert believes most had positive experiences depending on the quality of the CM hired. None could say for certain if the they saved the city money compared to the general contractor method.

“Every project, especially one this size is going to have problems,” Hippert said. The general contractor will be the one person responsible for completing the project on time and posting a performance and financial bond.

Under the at-risk method, the subcontractors would post the bonds, rather than one entity. If an unforeseen problem arrives during construction, there was uncertainty over who was responsible.

Linda McCracken-Hunt with JLG Sports attended the meeting as the future architectural and engineering services provider and provided some insight on the different models.

McCracken-Hunt said the at-risk method sets up a maximum price for the project, which allows for flexible scheduling. The city could order materials in advance with the model and ultimately shorten up the time of construction.

“It would allow you to start contracting and build a foundation early,” she said. Under a general contractor, early footing works cannot be bid out early because the project must be bid in one package. McCracken-Hunt said JLG has worked with the CM-at risk model more often and was their preferred method.

The Oversight Committee was almost evenly divided over whether to take the owner representative model or the CM-at risk model.

Committee member and City Councilor Lisa Fischer said she could go either way, but wanted to make sure an extra person was on the ground to make sure city staff is not being spread too far.

Park and Recreation Director Tom Schmitz favored the at-risk method because it allowed for early design.

Committee member Chris Vorwerk and City Councilor Larry Mack preferred the owner representative model because it eliminated liability.

Ultimately the committee voted in favor of the CM-at risk method. Chair Toby Freier was the swing vote. He reminded the committee that they were simply making a recommendation. The city council would have the final say.

In other news, Freier suggested the RENU projects could be used to assist the community with childcare needs. All of Minnesota is facing a daycare shortage that is reaching crisis proportions. The two childcare centers in New Ulm, MLC and Xcel, are both full and are likely to remain full for the extended future.

Freier suggested the city consider a plan to integrate a childcare center into the Recreation Center and find an operating partner for the facility. He suggested redirecting funds from the dome facility project to fund the daycare.

Freier was not optimistic the city could complete the dome project as Martin Luther College (MLC) is the only party interested in partnering with the city.

“I think if we truly did a community need assessment and thought about what were the primary drivers of future economic development and growth, I think childcare would trump the dome,” Freier said.

Schmitz said from an operation standpoint, it made sense to put a daycare at the Recreation Center, and there were funding options available. He added the dome facility project is still on the table and he would have more information next month.

The committee took no action on the daycare issue, but would discuss the option at a future meeting.

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