New East Rosemary parking deck to exceed $50 million

Rendering courtesy of the Town of Chapel Hill.

GOVERNMENT; COMMUNITY NEWS

By Adam Powell
Correspondent

Although the Town of Chapel Hill is putting the finishing touches on its new East Rosemary Street parking deck, the project will be several million dollars over budget and will cost more than $50 million when completed.

The new deck, which will have 1,100 new parking spaces, will provide more parking in one of downtown’s most congested and currently least parking-accessible areas. However, the deck’s cost has ballooned. 

Before the onset of the COVID-19 pandemic, projections for the parking deck called for less than $30 million to complete the project. But after five years of inflation, cost overruns, and major issues with the site’s foundation, the deck will now cost about twice that.   The main issue was that large boulders were found under the parking site instead of the expected bedrock, which required additional work to create a secure foundation.

“I’m sure you’re all aware we started working on this project during a global pandemic, as the cost of materials and labor began to rise,” said Mary Jane Nirdlinger, Chapel Hill deputy town manager, in a presentation to the town council last month requesting an additional $3.02 million to complete the deck. “We’ve continued to operate in a really unprecedented environment, with global disruptions to the construction industry, changes in the labor market cost and general cost inflation.”

On June 14, 2021, the town council initially allotted the project $39 million in bond financing. At that time, the council was provided with a guarantee that the costs would not rise above  $39 million.

But that was before it was determined that issues with the site’s foundation would require substantial additional costs and force the nullification of that $39,000,000 guarantee, according to town staff.

“In November 2022, we made our best estimate of the increasing costs, and that was when we had to redesign the foundation because the bedrock was not where it was expected to be,” Nirdlinger said. That was an unfortunate but unforeseen condition. So we have really worked hard on this project to contain the costs.”

“I think we’ve all known there was going to be some sort of increase,” Nirdlinger explained. “We have a pretty good handle on what that looks like. We are pleased to be close to completion.”

Town leaders allotted an additional $9 million to the project in November 2022 to cover design costs and expenses related to the foundation issues, bringing the project to $47.9 million at that time. Costs have only continued to go up since then.

“Since then, the project has faced schedule delays and price escalations in the global construction market,” Nirdlinger explained. “We have been working with the design team and the contractor to evaluate and reduce costs, and the current estimate is for the deck to open this summer.”

On March 6, the Town Council approved Nirdlinger’s request for an additional $3.02 million in bond financing forthe parking deck project this June. Those funds will go along with the $9 million, bringing the total amount to $12 million in additional bond financing and bringing the total cost of the deck to about  $51 million.

On Wednesday night, the town is expected to approve an authorization for Town Manager Chris Blue to execute an easement with Duke Energy on the city-owned property at 125 Ea.Rosemary St. to provide electrical power for  the new parking deck.

Chapel Hill will have to borrow funds for an additional six years –—until 2030 — to  pay off the deck.

According to Amy Oland, business management director, the parking deck is not expected to generate positive cash flow for the town until 2033.

Oland said the town can absorb the additional parking deck costs within the existing debt service capacity. But, there could be a delay with new or unfunded projects that the council wants to begin.

“The additional costs will have minimal impact, though, considering borrowing for $3 million additional cost on the average annual debt service,” Oland added, expressing confidence that Chapel Hill would have no problem getting the additional funding to finalize the deck.

East Rosemary Street Parking Deck Timeline

  • 2018-2019—Initial estimates put the cost of the parking deck between $25 million and $30 million.
  • 2020 — The COVID-19 pandemic delays the start of the project, resulting in considerable cost increases.
  • June 14, 2021—Chapel Hill Town Council allocates $39 million for the parking deck with a guaranteed maximum price from Samet Corp. Preliminary work begins on the site’s foundation.
  • November 2021—After issues with the foundation led to an end of the price guarantee, the Town of Chapel Hill changed the design of the parking deck and increased the budget for the project.
  • November 2022 —The town council approves an additional $9 million for the deck, bringing total cost to about $47 million.
  • March 6, 2024—The town council approved a request from town staff for an additional $3.02 million to complete the deck, bringing the total cost to over $51 million.
  • April 17, 2024 — The town council is expected to adopt the resolution requiring Duke Energy to provide permanent electrical power to the deck.
  • Summer 2024 — Parking deck expected to open for business.
  • 2024-2030 —Town borrowing funds to finance the construction of the parking deck.
  • 2033-34 – Fiscal year in which town staff anticipates the parking deck to become cash-flow positive.

Adam Powell is a reporter on local news and sports and an education communications professional. A 2001 graduate of UNC-Chapel Hill, Powell has served as managing editor of multiple local publications, including the Mebane Enterprise, News of Orange County and TarHeelIllustrated.com. The public information officer for Rockingham County Schools in Eden, N.C., Powell is the author of four books and lives in Mebane with his wife and two children. This reporter can be reached at Info@TheLocal Reporter.press

Share This Article

Scroll down to make a comment.

5 Comments on "New East Rosemary parking deck to exceed $50 million"

  1. No cost/budget controls for this and other similar developments.

  2. Deborah Fulghieri | April 17, 2024 at 8:17 pm | Reply

    That’s equivalent to a third of the town’s entire budget (most of which is earmarked for salaries and benefits). How did this happen?

  3. Yes, just another example of how poorly this town is managed.

  4. Thanks for covering this. There appears to be much more to investigate here.

Leave a comment

Your email address will not be published.


*