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The Herschler Question – To Be or Not to Be

The Capitol Renovation Oversight Group met once again discussed alternative designs for the Herschler building renovation and their budget implications. Although briefly mentioned, the option to leave the Herschler renovation for another day went disregarded.

The Herschler renovation may still go the way of the Dodo should project costs continue to rise.

Two weeks ago, the Capitol Oversight Group suspended all design work to get the Herschler part of the Capitol project designed, as Senator Phil Nicholas (R-Albany) said, “properly” and under budget. Recall that there are four parts to the Capitol Project: the Capitol renovation itself, the central utility plant (CUP), the connecting corridor between the Capitol and the Herschler, and the Herschler renovation itself.

What seems to be driving the Herschler renovation is the loss of office space in the Capitol and the desire to stop leasing office space in Cheyenne. This may be unnecessary if government starts shrinking during the upcoming budget debate due to plummeting tax revenue, and this means the Herschler renovation may once again be revisited, this time with a better outcome for taxpayers.

This week, the Oversight Group discussed two design options. One would fill the atrium area with office space and the other, the project manager’s B7a option, would add on to the south side of the Herschler.

When it came time to decide on the option of the moment, Governor Mead asked, which option is on budget?

Well, neither.

On-budget project cost for the Herschler, CUP and connector is about $101 million. However the B7a scheme costs $105.7 million and the atrium infill option, $104.5 million. The B7a option breaks down to about $70 million for Herschler, $22 million for the CUP and $13 million for the connector. So even the favored B7a option puts the project $5 million over budget.

What to do? To get the budget down the project manager recommended deferring finishing parts of the Herschler until sometime later when more money could be appropriated to the project. Here we go again, using delay as the bogus strategy to create an on-budget illusion.

But one way to make a real cut to the budget is to leave the Herschler renovation out of the equation entirely.

The project manager said it is possible to leave the Herschler out.

In doing what seemed to be a simple subtraction, Representative Tim Stubson (R-Natrona) asked, if the Herschler was eliminated, would the project cost drop to $230 million instead of $300 million?

No, nothing so simple.

The $300 million project cost includes fees. A better number, according to the project manager is between $240 and $250 million. So eliminating the Herschler renovation would save about $50 million.

At this point Governor Mead started to sound gubernatorial, but that didn’t last long. He said they didn’t want to build, rebuild or refurbish a building they didn’t want.

Eyebrows rose as it sounded like the governor might finally stop the project—but no. The governor suggested going with the B7a option, not the atrium infill option. To stay within budget, they could delay finishing the interior to some undefined time in the future when they had extra money to appropriate – but who knows when that might be. The last big minerals revenue downturn that started in the mid 1980s, lasted 17 years.

Adopting a design and delaying expenses for another day still means the project is over budget. As we enter the state budget cycle and as belts tighten, we might expect to see further reductions at the Herschler.

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Monday, 23 October 2017
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