UNLV, UNR scale down building plans

By Christina Littlefield

Tuesday, March 15, 2005 | 11:01 a.m.

UNLV and UNR officials have big dreams for new structures on their campuses, from high-tech science buildings that will help bring in more grant money to 21st century libraries that combine traditional books with multimedia and digital technology.

These showcase buildings would help the universities handle growth and establish the architectural theme for future construction on the Las Vegas and Reno campuses, officials said.

UNLV's science building would be a major step toward improving the institution's status as a research university and UNR's library would make it a leader in information technology.

But hyper-inflation -- construction cost increases driven predominantly by rising costs for steel and concrete -- is eating away at those dreams.

Rising construction costs are forcing university officials to make major reductions in building plans as they beg lawmakers for additional money and do what they call "creative financing" to meet the increased need, UNLV and UNR officials said. They are giving up on parts of their original visions rather than risk losing the projects altogether.

"Steel (prices) alone jumped up 20 to 30 percent, so that breaks the bank," said Thomas M. Hagge, associate vice president for facilities management and planning at UNLV.

"So what do you do? You do the same thing you do when you go out to look at a house," Hagge continued. "You say, 'Oh, I love this house, but it's more than I can afford.' So you go for fewer bedrooms, less expensive finishes."

Daniel O'Brien, manager of the state Public Works Board, calls it "wanting a Cadillac on a Chevy budget" or uses the industry term "value engineering."

"The Chevy is fine but it just doesn't have all the bells and whistles," O'Brien said. "A lot of these projects are showcase buildings that they don't want to have to cut. But the reality of life is that if they want to build these projects, they are going to have to do that."

It's not just a university system issue, either. All state agencies will have to scale down their construction projects this year, O'Brien said, with increased construction bids likely to increase costs another 5 percent on every single project on Gov. Kenny Guinn's $322 million list.

In UNLV's case, that would be another $4 million it either has to cut from the budget or cover through other resources.

UNLV will likely have to "shell out" the entire fourth floor of its 207,000-square-foot Science, Engineering and Technology building to stay within its budget, Hagge said, meaning they will finish the roof and the main walls but do little to the interior.

The rest of the building will be usable and the fourth floor will be completed as money becomes available, possibly through a private donor or through research money, Hagge and other UNLV officials said.

Despite that major sacrifice, UNLV is still asking the state for an additional $9 million during this session. The additional funds are part of UNLV's $15.82 million request for fixtures, furnishings and equipment to complete the building.

If UNLV reduced the scope of the project to keep it within the original $75 million budget, it "would decimate the building," Hagge said. "We wouldn't have the building that would meet the need."

UNLV is contributing $25 million toward the building through institutional and private funds, including borrowing $12.8 million on the basis of future research dollars, Juanita Fain, vice president for administration, and Gerry Bomotti, vice president for finance, said. The rest of the university's share, already in the hands of the state Public Works Board, came from $7.2 million in lease income and $5 million in private donations.

The institutional and private funds are an essential part of leveraging state dollars, officials at both UNLV and UNR said.

"The larger portion we bring forward the more positively disposed the Legislature is," Fain said.

UNLV will not need to ask the state for any more additional funds after this session, Fain said, but construction woes at UNR are forcing officials to ask for more dollars now and in 2007.

UNR

UNR's Mathewson IGT Knowledge Center is now projected to cost $102 million -- $20 million more than its original budget despite recent cuts.

Using compact, automated book stacks, the library's size was cut down from an original 360,000 square feet to 310,000 square feet and then again to 295,000 square feet, said Buzz Nelson, assistant vice president for facility services at UNR. Officials are also making other aesthetic cuts, such as using a lower quality of carpeting.

To make the building happen, UNR is asking for the state to pay $11.2 million of the increased cost as part of this biennium's $16.8 million fixtures, furnishing and equipment request, Ron Zurek, vice president for finance and administration, said. UNR will have to hit the state up again in 2007 for that $11.2 million to cover the equipment needs.

UNLV and UNR compete for the same limited pot of capital construction money along with all other state institutions and agencies, so any current cost overruns mean less money will be available for future projects.

University officials are planning to cover the remaining $8.8 million in additional costs through institutional funds even though they are still scrambling to come up with UNR's original $44 million share.

UNR has only raised $11 million in cash and $7 million in pledges toward the $22 million it must raise privately for its contribution, John Carothers, vice president for development and alumni relations, said. The other $22 million is coming from student capital construction fees collected with registration.

UNR expects to receive pledges toward the full $22 million it needs privately, Carothers said, but the university may have to borrow against those pledges and expected student fee revenue until the cash actually comes in.

The financing will force the university to raise more money to cover the interest costs, Carothers said. But if the university waits until it has the cash in hand, what they save in interest will be lost in inflation.

The state's universities account for regular inflation in their project estimates, O'Brien said, but no one could have planned for the rise in construction materials the past year.

According to the February price index published by the Engineering News-Record, materials overall have gone up 16.7 percent since February 2004, with steel rising 26.9 percent.

O'Brien and university officials acknowledged that the state's system for paying for capital improvement projects sets them up for such disasters.

The state's continually strapped capital improvement budget has forced state institutions to break up construction projects over three bienniums, dragging out the process and running up costs. UNLV's science building and UNR's library were originally conceived in 1999, but the science building won't open until summer 2007 and the library won't be ready until fall 2008, officials said.

"Time is money," O'Brien said. "When you have this hyper-inflation that we've gotten into (with increased construction costs), the longer you delay the project the faster the funds will be eaten up."

When projects have almost all institutional or private funding behind them, such as new student unions at both universities or the proposed Greenspun College of Urban Affairs at UNLV, the process goes significantly faster, Hagge and Nelson said.

Because of the Greenspun donation, UNLV will not have to ask the state for any planning money and will not have to go back to the state for equipment money, shaving at least a year off the construction timetable, Hagge said.

Nevada State College

While UNLV and UNR officials are trying to make the numbers work to save their dream facilities, officials at Nevada State College in Henderson are hoping just to get their liberal arts building off the ground.

When officials first conceived of the facility back in 2001, the $23 million cost was going to cover 100,000 square feet, spokesman Spencer Stewart said. The classroom and office space was slated to meet all of the college's enrollment needs and give it room to grow until the next building could be erected.

Fast forward to 2005, and that original $23 million won't stretch nearly as far.

"What inflation (and rising construction costs) has done since then has eaten about 24,000 square-feet," said Stewart, who says college officials "are crossing our fingers" that the building stays at 76,000.

The college will likely still build a three-story facility, Stewart said, but like UNLV the top floor may have to be left an empty shell.

Still, the liberal arts buildings will provide 14 desperately needed classes and 60 to 65 offices.

"Space is better than no space," Stewart said. "Especially right now with the college bursting at the seams in its only building."