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State Won't Cover Annex Cost Overruns: Asbestos Has Demolition $3.5 Million Over Budget

Posted on: Wednesday, 8 March 2006, 03:03 CST

By Dave Umhoefer, Milwaukee Journal Sentinel

Mar. 8--State transportation officials have rejected Milwaukee County's request for more help in paying for Courthouse Annex demolition, which is $3.5 million over budget.

A dispute is escalating, meanwhile, over the cost overruns, with a contractor deflecting blame to the county for the failure last year to discover an entire floor of asbestos-containing material.

The county was worried about damage to the vehicles owned judges and county officials who parked in the annex, and it therefore discouraged invasive testing for asbestos, two officials with Professional Service Industries Inc. said in a Feb. 15 letter to the county that was made public this week.

The company further alleged that county officials paid far more than the normal rate when they agreed to a change order lead demolition contractor Walsh Construction Co. for the additional asbestos work.

County Public Works Director George Torres on Tuesday stood his earlier assertion that PSI should have discovered the materials during its inspection last fall. Both sides agree the material was shielded layers of sheet metal, fiberglass and plaster.

Another top county public works official, Jack Takerian, said Tuesday that no contractor was ever denied access to the building, including after hours when the floor in question was vacant. PSI contends it was told it could not do any "destructive" testing, even on weekends.

County officials have said they had little choice and little leverage, because of the tight deadlines, but to approve the change order sought Walsh, which is the state contractor on the Marquette Interchange freeway work. As part of an agreement to help fund the annex demolition, the state insisted that Walsh act as the general contractor on the county job without a bidding process, county officials say.

Meanwhile, the state's rejection of providing extra funding leaves a question mark on the payment source for the in-progress razing of the five-story structure that formerly provided parking for state and county employees and contained county office space. The skywalk over N. 10th St. that connects the courthouse and annex is set to be lifted out Thursday night, Torres said.

The County Board is scheduled to vote Thursday on a plan top officials in the administration of County Executive Scott Walker to divert $4.6 million from planned 2006 improvement projects in parks and county facilities to fill the funding gap on the annex project. The amount includes money to build a small, fenced surface lot on the old annex site, which also exceeded preliminary estimates mainly due to security enhancements sought state judges who will park there.

A total of $6.6 million was budgeted last year and this year for the combined demolition-parking replacement project. The latest projected cost is $11.2 million. Demolition alone was budgeted at $5.7 million but is now expected to cost $9.2 million, an increase of $3.5 million.

The state had hoped to see the building come down during Marquette Interchange reconstruction and already has agreed to funnel $5.2 million to the county from the future proceeds from the state's share of the sale of county land in the old Park East Freeway corridor.

Torres last month sought $1.7 million more from the same pot, but state Transportation Secretary Frank J. Busalacchi replied that the state's previous commitment was "more than generous."

The county ran into $1.5 million in unexpected costs because of the belated discovery of asbestos-containing material in the F parking level shortly after the annex was vacated on Jan. 31. Another overrun of $200,000 relates to asbestos found elsewhere in the structure last year.

The overrun and a proposal to take money from other capital projects to cover it have prompted criticism from County Board members who reluctantly went along with Walker on the demolition, barely meeting a state-set deadline last year. Walker had argued that the annex was outdated and could be demolished at a discount during the Marquette project.

But supervisors stopped short at Finance Committee last week of stopping the project while they ponder a possible audit of the cost overruns and an investigation into the no-bid demolition process.

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Copyright (c) 2006, Milwaukee Journal Sentinel

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Source: The Milwaukee Journal Sentinel

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