By Michael Raponi
A $200 million high school? How is this possible?
Only a few years ago, such a price tag for one high school in Northern Nevada would have been unthinkable. Just consider the school construction cost estimates proposed by the Washoe County School District in the 2016 campaign to pass WC-1, the tax initiative to increase the county sales and use tax by 0.54 percent to fund new construction and capital improvements. At that time and according to the Las Vegas-based Guinn Center for Policy Priorities, the school district estimated $330 million would be needed to build three new high schools, or an average of $110 million each. Today, the estimated cost for the new school at the Wildcreek site is projected at $216 million, nearly $700 per square foot. And this might not be the end of it. Cost estimates have leapfrogged by the tens of millions of dollars over the last couple of years.
Then there’s the controversy during the recent legislative approval of two new buildings under the Nevada System of Higher Education’s (NSHE) Capital Improvement Program. The new Education Building will be constructed on the campus of the Nevada State College and the new Health and Science Building on the Henderson Campus of the College of Southern Nevada. As recently reported in The Nevada Independent, the new cost estimates for these buildings have skyrocketed, obliterating the estimates in NSHE’s current Capital Improvement Program. The cost of the education building has reportedly jumped from $26 million to $62 million and the cost of the Health and Science building soared from $41 million to $77 million. These are mind-boggling changes in such a short time span.
If the original cost estimates were 10 years old, then fine, such dramatic increases could be explained away. If the increases were even 25 percent more than what was proposed two short years ago, one could take a deep breath and move on. But the increases for the new high school in Reno and two education buildings in Southern Nevada average more than 100 percent each, rendering the original estimates meaningless. Yet, it was those very estimates that were used to secure planning and design funding from the Legislature and, in the case of WC-1, sales tax increases from the voters in Washoe County.
Have construction labor costs doubled or tripled over the last few years? Have material costs risen that much? Have projects been significantly modified since the original estimates? Is cost containment as high a priority as it should be? Are contractors profiteering?
The answer to the first two questions is no. The answer to the third question is yes and no. The answer to the fourth question is… It Sure Doesn’t Look That Way. And the answer to the fifth question is: Let’s hope not.
Starting with wages—public works projects are subject to prevailing wage rates established by the Office of the Labor Commissioner. In considering prevailing wage averages in Clark and Washoe counties for three common construction occupations—carpenters, cement masons, and ironworkers—from 2017 to 2019, wages increased by 3.8 percent for carpenters, 3.2 percent for cement masons, and 3.9 percent for ironworkers. Plus, state regulations require that the prevailing wage rates in effect at the time a contract is awarded must stay in effect for the duration of the project. Couldn’t one therefore assume that prevailing wages and hence labor costs, however high, would be somewhat predictable for public works projects?
Material costs across the board are indeed rising substantially, but is this really the root cause of the out-of-control increases? Just last October, the Associated General Contractors of America Association (AGC) estimated that material costs would increase by 7.4 percent over the previous year. Diesel, structural metals, asphalt, you name it, the prices are going in one direction for all materials. But the same report by the AGC stated the following: “In contrast, an index that measures what contractors say they would charge to construct five types of nonresidential buildings rose just 3.5 percent over the year (emphasis mine), indicating that contractors were absorbing more of the costs than they were passing on to owners.” Even if contractors were passing the increases on to customers, would they cause overall price tags to double over three years?
Project modifications have apparently occurred for the education building at Nevada State College, as reported in The Nevada Independent. But would the addition of a pathology lab, pre-school for 60 children, parking lot and added expenses for such things as soil testing raise the cost by over $40 million or 150 percent of the original estimate? That’s really hard to believe. In the hearing to approve the revised funding, lawmakers were reportedly told by college president Bart Patterson there was nothing extravagant about the building. But at $800 a square foot (or whatever it is now), that certainly isn’t true about the new price tag. This is an education building, not a nuclear engineering lab.
In the case of the Health and Science Building at CSN, there were no significant additions, according to Vice President Patty Charlton. But her rationalization that hikes could be attributed to competition for labor doesn’t jibe with the wage requirements imposed by the labor commissioner, nor is the new price anywhere near in line with inflation rates.
One could only assume the $216 million high school includes all-of-the-above. But according to Pete Etchart, chief operations officer for the Washoe County School District, that cost isn’t too bad when considering inflation. Some may beg to differ.
But really, what gives? According to a 2017 report published by the Terner Center for Housing Innovation at UC Berkeley, San Francisco ranked second in a study ranking 43 global markets as the most expensive places to build with an average square foot construction cost of $330. Things are really hot again in Nevada, but San Francisco were not. $700 a square foot for a high school in Reno? Or $800 a square foot for an education building in Las Vegas? How does one reconcile the latter with a new elementary school currently under construction in the same county that is costing a much more reasonable $258 a square foot? This is more baffling than the aftermath of the Mueller Report.
The public information officer at the Public Works Board would not provide comment.
If the general public, top administrators responsible for building oversight and some of our most seasoned legislators tasked with authorizing capital funding are confused about what’s going on, a complete disclosure is warranted if for nothing else but good public relations. This doesn’t mean details down to the gnat’s eyebrow. But the university system, Washoe County School District, state Public Works Board, or whoever else in the know, needs to provide a clear and defensible explanation. Not a justification for the new buildings—there should be no argument against new facilities to accommodate student population growth and to expand postsecondary programs to prepare future educators and develop careers in health sciences. Just rock-solid disclosures as to why cost estimates have soared to inexplicable and unacceptable levels.
And what else is needed? Confirmation that cost containment is a high priority.
If not already planned, this would be an opportune time for construction audits, which would probably pay for themselves many times over. It’s not far-fetched to imagine tens of millions of dollars in cost savings—just think about what those funds could accomplish when repurposed for other needs. Plus, the audits would help restore public trust.
Without additional transparency, suspicions among supporters and detractors alike will continue unabated. And justifiably so.
Michael Raponi is a former director at the Nevada Department of Education with thirty-three years’ experience in career and technical education and workforce development. He currently writes guest articles covering a variety of topics, and may be contacted by email at [email protected].