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Construction Costs Taking Toll on County

County Manager warns that some building projects may be re-considered.

The rapidly increasing cost of construction is placing “a significant strain” on Arlington’s capital program and the government may be forced to curtail future building projects, County Manager Ron Carlee said during the Jan. 24 County Board meeting.

This year the county government should focus on completing a few major initiatives, and not try to over-extend its resources on other undertakings, Carlee added.

“We have significant challenges trying to do as many capital projects as we want,” Carlee said. “...We may have to rethink the scope of some projects.”

Construction costs region-wide have increased by 15 percent over the past two years, and risen by 24 percent since the beginning of 2003. In comparison, construction costs grew by less than 1 percent per year from 1997 to 2002.

Projects identified for inclusion in the 2006 bond referendum were originally forecasted to cost $79 million. In 2007, those same projects would cost approximately $105 million to complete, Carlee said. Therefore an additional $26 million needs to be raised through this November’s referendum, or found through other sources.

Intense competition with the private sector for the best contractors, combined with a tight labor market, has led to a decrease in the number of bids received for government projects, Carlee said. The lack of competition has helped boost the amount the county has to pay construction companies.

With escalating costs and limited funds, some new building initiatives may not go forward as planned, County Board members said.

“We are going to have to make difficult decisions and say no to worthwhile projects,” County Board member Jay Fisette said.

OVER THE PAST FEW YEARS the county has invested in infrastructure at one of the highest clips since Metro first came to Arlington.

In 2005 the county completed 129 infrastructure projects, compared to 74 the year before and 39 in 2003. In addition, Barcroft Park, the Fenwick Center and the George Mason Center were all renovated in 2005.

This year the county has an ambitious schedule of projects it hopes to complete, including the new Walter Reed Community Center, the ice rink atop the Ballston Mall and the new Shirlington Library and Signature Theater complex.

The county manager identified the redevelopment of Arlington Mill Community Center, the North Tract property and the new Cherrydale Fire Station as the other top priorities for this year.

The county will have to be cautious about taking on new initiatives in the near future to ensure that there is sufficient funding to complete the board’s goals, Vice Chairman Paul Ferguson said.

“We want to deliver on commitments we have made, but some projects might not have the size or feature originally hoped for,” Ferguson said.

To mitigate the impact of growing construction costs, the county must pursue “value engineering,” Carlee said. This will not include cutting corners on construction materials or skimping on the environmental sustainability of projects, the county manager added.

The board will continue to pursue public-private partnerships, such as it is doing with the Arlington Mill Community Center, to help defray costs. In these collaborations, a private developer pays for a portion of the construction in return for greater density.

Board members will continue to closely evaluate all public-private partnerships to ensure the additional space does not impinge on surrounding neighborhoods, Ferguson said.