Guest Post: The Hotel Indigo Tunnel Returns
The Hotel Indigo Tunnel Returns
How not to plan expensive capital projects in the city
~ by Guest Contributor Mayor Chris Bzdok
This underground crossing of Grandview Parkway from the warehouse district to the Open Space was originally budgeted at $800,000. Last spring (Plan for TC), the developers of the Hotel Indigo approached city manager Ben Bifoss and DDA director Bryan Crough, and requested that the city sign a contract obligating us to build the tunnel.
The hotel developers wanted us to commit to this high-cost project prior to designing and engineering it, or knowing its true cost. The reason given was that they needed to begin construction of the hotel by May 1st, and needed to know if the tunnel was going to be there or not. The developers denied that the purpose of the contract was to guarantee to their investors that the tunnel would be built.
Bifoss and Crough put the contract on a fast track for approval. DDA approved it after a long debate by a vote of 6 to 4, and the city commission approved it by a vote of 6 to 1. The contract included a new, “not to exceed” price of $1.2 million. At my urging, the city commission modified the contract to give the DDA and city commission a final look at the design of the tunnel before we truly had to build it. The city hired Northwest Design Group out of Petoskey and they began the design engineering of the tunnel.
About a week after the public bodies approved the contract, Traverse City Light and Power informed the city that utility relocation had not been factored into the estimates. Some TCLP underground utilities had to be moved over to accommodate the tunnel, and this job could add $400,000 to the cost. Mr. Crough told the Record Eagle that utility relocation had been discussed as part of the project, but none of the city commission or DDA board members interviewed by the paper recalled that happening.
Now the engineering is in, and the new cost estimate is $2.3 million. That price does not include the design and engineering work to date, nor does it include construction engineering or MDOT permit review costs. The total savings balance in the DDA’s primary savings account (TIF 97) is a little over $1 million, so there is not enough money to pay for the project as it stands. Staff is nonetheless recommending approval of a new contract whose purpose at this point is unknown. Staff also recommends that the city seek a federal TIGER transportation grant of over $4 million – with a $1 million DDA match – to pay for the tunnel and other warehouse district improvements (DDA).
Another piece of news from the engineering report is that the recommended traffic control for construction is to re-route all four lanes of Grandview Parkway onto the open space. Like the escalating costs, this information is not yet on the public’s radar screen.
Next Steps, Lessons to Learn
The next steps in the process I expect will be a discussion and vote on a new agreement, and a commitment to back the TIGER grant application with the $1 million match. I expect discussion of these issues to begin at Friday morning’s DDA meeting, and to continue in front of the city commission at some point in the future.
The whole process is a stark lesson about what not to do when it comes to planning big, expensive capital projects. I expect the Hotel Indigo tunnel will now die a slow death from causes including negative public opinion, mismanagement by the city, mistrust of the developers, and the lack of a viable plan to pay for a project that has tripled in cost. There will likely be an effort to keep the project on life support until a decision on the TIGER grant. But hopefully the DDA and city commission will say enough is enough, and halt further expenditures of public resources on what is starting to look like a fiasco.
If I’m right, the only value that can now be extracted from this endeavor is educational – in the form of lessons we can learn to prevent this kind of thing from happening again. In that spirit, and tongue-in-cheek, I offer a Hotel Indigo Tunnel Guide to Bad Project Decisionmaking:
1. Don’t define your goal and then decide how to accomplish it-–pick the project first and then look for goals to justify it. Just about everyone agrees that Grandview Parkway serves as a barrier between our city and our waterfront, and that we need better connections to help people move safely and conveniently between the two. Just about everyone agrees that the warehouse district is an interesting place with a lot of potential that should be supported. Just about everyone agrees that we should be business friendly and support economic development in our city.
But when we talk about spending large amounts of limited public money, it is essential that we first figure out what our objective is, and then figure out the most cost-effective way to meet that objective.
- If the goal is better access across the parkway, calming speeds on that road and providing better surface crossings is vastly cheaper and would help the entire corridor instead of just 14 feet of it.
- If the goal is to maximize the use of a single crossing, this is the wrong place. It’s bounded immediately on the south by the river, and it’s literally a stone’s throw from the signalized intersection at Union Street.
- If the goal is to support the warehouse district, we need to ask what is the best way to spend a million dollars to do that. Streetscaping Garland and Hall Streets, and/or the Pine Street pedestrian bridge connecting the district to Front Street, might draw more people than building a tunnel from the district to the Open Space.
- If the goal is to have a great tunnel to the waterfront, we ought to look at expanding the Cass Street tunnel – which leads from the center of downtown to the phase one bayfront improvements at Clinch Park.
The point is, these projects cost a lot of money – in this case the entire savings of the DDA and more – and they need to be well thought out. That means deciding what your highest priority objective is, and then deciding the most cost-effective way of achieving it.
2. Set it up as a sweetheart deal. When the project first came before the DDA, the DDA director and city engineer recommended hiring the hotel’s project engineer, Garth Greenan, on a no-bid contract to do the design, engineering, and final cost estimates for the tunnel. The proposed contract amount was $100,000. The DDA board refused to hire the hotel’s agent to do the city’s due diligence on a multi-million dollar project the hotel was pushing the city to build. It’s frankly astounding anyone thought this was a good idea. But even though the attempt was rejected, the fact that it was made communicated messages to the public body and to the developers about the integrity with which the decision-making process would be managed.
3. Rush-the best public decisions are always made in a hurry to meet someone else’s timeline. The hotel developers pushed the city to make this decision so they could start their construction by May 1st. The city obliged, and in doing so failed to consider $400,000 of utility relocation costs and almost agreed to build the tunnel before even knowing what it would look like. Now it’s mid-September, the project costs even more than we thought it would, and the hotel shows no sign of starting construction before the snow flies.
The silver lining in all this is that if the Hotel Indigo tunnel is rejected, the money earmarked for it could be re-purposed for other projects that would benefit the public. These could include providing additional funds for the phase one bayfront improvements, helping pay for the additional expenses that will result from the city commission’s decision to keep the train at Clinch Park, making calming improvements to the Grandview Parkway corridor, putting in public downtown restrooms, and improving the Warehouse District. Discussing these kinds of objectives, and the most cost-effective way to re-purpose the tunnel money, is a conversation we could all look forward to.
- Tunnel Vision: Is The Garland St. Tunnel A Priority?
- Does A Tunnel Help Us Put The ‘Park’ Back into the ‘Parkway’?
EDITOR’S NOTE: MyWHaT encourages guest contributors submitting posts about issues relating to public spaces, transportation and community issues. This is the first guest post by Mayor Chris Bzdok.
This is an opportunity to also point out MyWHaT’s standards and ethics for all posts:
My Wheels are Turning is published with standard journalistic practice and ethics. The basics of which include: 1) Contributors seek to be accurate and inclusive in the coverage. 2) They treat all topics, viewpoints and individuals covered in a post with respect and dignity. 3) This is an editorial endeavor in that this online publication seeks to support and shift public perception of the value of public space, as well as pedestrian and bike culture. 4) All content is first & foremost the perspective & opinion of the author of that post and does not necessarily reflect the opinions of the editor, other contributors, or underwriters.