28 December 2023
ST. PAUL A renovation and expansion of the Minnesota State Office Building, where 134 members of the state House have offices as well as the secretary of state, is expected to cost close to half a billion dollars a price tag that has raised more than a few eyebrows.
Republican critics have compared the cost to other recent projects at the Capitol complex in St. Paul, such as the $90 million new Senate Office Building finished in 2015 and the more than $300 million Capitol renovation completed in 2017.
Part of the criticism comes from the way the project was greenlit.
A provision in a 2021 bill effectively left the overall cost open to the Democratic-Farmer-Labor House majority and bypassed the traditional process for funding big projects. And the final design plans and cost weren’t shared with the public until hours before the DFL-majority House Rules and Legislative Administration Committee approved it in December 2022. The legislation also ruled out a teardown of the existing structure.
There’s also the growth in the price.
In 2019, the state Department of Administration estimated the project would cost $288 million, but when the DFL-led House committee approved the renovation last year, the price was closer to $500 million.
Critics question rising costs
It’s sure to become a campaign issue in the 2024 election, and already critics have painted the project as a taxpayer “Taj Mahal.”
At the 2022 rules committee hearing where lawmakers approved the project, state Rep. Bjorn Olson, R-Fairmont, questioned the open-ended price tag and the planning process.
“How are we going to assure that we’re not going to see grand pianos … how we’re not going to see marble fountains, how we’re not going to see gold plating all over the place?” he said. “Where are the guardrails to the taxpayers?”
Former state representative and House Majority Leader Ryan Winkler, DFL-Golden Valley, dismissed Olson’s concerns including the reference to luxury items.
“You won’t find a fountain, or a chocolate fondue fountain, or a grand piano and next to a reflecting pool, on top of a chocolate river flowing through the building,” said Winkler, the main lawmaker behind the project.
“This is not extravagance,” he continued. “This is safety, accessibility and function for the members of the House. And if you want the sound of flowing water to inspire you to work harder, I’d suggest we do nothing in this building and you’ll hear plenty.”
The committee room erupted into laughter at Winkler’s comments, which referenced pipe-burst incidents that have cost millions of dollars. They are one of the main reasons lawmakers and state officials called for the renovation.
But if half a billion dollars isn’t getting state lawmakers such luxuries, exactly what benefits will they see in the revamped office building, and why the cost? And is it fair to compare the project to previous Capitol complex projects and others around the Twin Cities?
What will renovation entail?
The project which is underway will renovate and expand the 290,000-square-foot building to the west of the state Capitol. While exact cost estimates have varied, it’s generally described by state officials as a roughly $450 million project. Work should be done by the end of 2026.
When construction is done, the building will have an addition with new committee hearing room spaces that will expand the building to more than 456,000 square feet. As of late 2022, contractor JE Dunn estimated the 166,000-square-foot addition was expected to cost a total of $178.4 million to build and add finishing touches.
Renovation of the existing 90-year-old building will include restoring plumbing, heating, ventilation and cooling, windows, roof, and electrical systems.
There will also be features to aid access for those with disabilities and security items such as bollards around the building.
All those upgrades will cost at least another $138 million to build and finish, according to the early estimate.
In both the renovation and the addition, the category with the single biggest cost is heating, ventilation and air conditioning, with a price tag expected to run more than $56 million, according to the JE Dunn estimate.
That’s followed by new and upgraded electrical systems, expected to cost more than $49 million. The new structure and enclosure for the expansion will cost about $48.6 million.
The design is based on input from eight workshops in 2022 that involved partisan and nonpartisan staff.
MOCA, a St. Paul consulting firm that held the workshops, identified “core values” for the design that included increased security, accessibility and openness, and a character that conveys the importance of the business conducted in the building as well as the state’s history. Designers also hoped to make the building’s layout functional and intuitive for visitors.
Why the need?
Minnesota’s Department of Administration, which is in charge of the State Office Building, has asked for an upgrade for the aging structure for more than a decade. It was built in 1932 and was last renovated in 1984.
Already, the structure has caused problems for occupants, including a 2016 pipe break that caused “substantial flooding” that cost more than a million dollars to fix, according to Wayne Waslaski, assistant commissioner of Property and Risk Services with the Department of Administration.
Just a few weeks ago, a water line capped in the 1980s burst and let water loose in the basement, said Curt Yoakum, a spokesman and assistant commissioner for the department.
On top of that, the renovation of the state Capitol completed in 2017 eliminated office and hearing room space. When complete, the new State Office Building will have additional spaces for committees to hold public meetings to discuss bills and other matters before the Legislature. In recent years, committee rooms have become crowded in the building, with members of the public often having to go to overflow areas.
Why the cost?
When the House’s rules committee approved the renovation last year, Republican members questioned the need for a half-billion-dollar expansion and overhaul when the Department of Administration had previously estimated the building would only need about $288 million to address basic issues such as plumbing and ventilation.
Republican lawmakers and the conservative Minnesota think tank Center of the American Experiment have been railing against the cost, often describing it as having a $730 million price tag a figure that includes a projected $230 million in interest payments on bonds over the next 20 years.
Then there are comparisons between the State Office Building renovation and other recent construction projects, such as the new Senate Office Building, the state Capitol restoration and even private projects and existing commercial real estate in Minneapolis.
Construction industry observers and labor groups say the Capitol restoration more closely resembles the State Office Building project some of the others are not fair comparisons as they are new construction.
And, private projects are not subject to the same kinds of longevity standards. The State Office Building will need to last at least half a century before it is redone.
Inflation, labor, supply chain issues
They also point to inflation, labor shortages and supply chain disruptions since the pandemic as cost factors.
Peter Hilger, faculty director of the Construction Management Program at the University of Minnesota, said those trends have only recently started to ease to pre-pandemic levels, and labor already was in short supply.
There are also the challenges that come with restoring a historic building.
“There are a lot of moving parts on this,” said Matt Bergmann, CEO of Laketown Electric Corp., a Waconia-based commercial and industrial electrical contractor. “Historic standards need to be followed to preserve the integrity of the original build, which in this case is extreme.”
Bergmann, a member of the Minnesota Construction Association, said some of the factors pushing up costs in a historic building renovation can include using lathe and plaster instead of drywall and concealed electrical and mechanical parts that can drive up working hours.
Comparisons
The Senate Office Building was constructed for $90 million and was controversial, drawing protests from GOP lawmakers who initially said they wouldn’t move into the new building though they eventually settled into their new digs.
At the hearing last December where DFLers approved the renovation, then-Republican House Minority Leader Kurt Daudt noted the new building had more than twice the price tag of the Senate building after inflation, despite the new building holding offices for 134 representatives versus the 67 senators.
But even with inflation driving up costs, Hilger says a new structure doesn’t pose the same challenges as renovation, and the price aligns with the job. And non-government new construction is comparing “apples and oranges,” he and others said.
Dan McConnell of the Minnesota Building and Construction Trades Council noted that the work on the State Office Building also will make use of granite rather than pre-cast concrete.
A better comparison is the state Capitol restoration, McConnell said, and that project remained somewhat close to its budget target.
“I think it is fair to compare it to the Capitol renovation,” he said. “Both are historic buildings; the important difference I see is the increase in square footage of the SOB. The Capitol renovation was constrained to the existing footprint.”
It wouldn’t be surprising, however, if the costs continued to climb. One thing that could do that is the discovery of what Hilger calls “ghosts in the closet,” or unknown issues in old buildings that might complicate the process.
“You’re not going to find them until they say ‘Boo!’, and then you have to put a price on calling the Ghostbusters to get rid of the problem,” he said. “That’s what happens in remodeling and restoration work.”
The project’s costs
Largest costs of the State Office Building renovation (based on 2022 estimates):
Construction estimate: $432.2 million Total cost of addition: $178.4 million Total cost of renovation of the existing building: $138 million $98 million for contingencies
Biggest expenses by category:
HVAC: $56 million Electrical work: $49 million Expansion structure, enclosure: $48.6 million Source: JE Dunn Construction estimate from late 2022
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