The City of Unalaska has cancelled an $8.1 million renovation of the public library amid uncertainties from the coronavirus pandemic. But officials say the city will still owe as much as $3 million to the contractor.
At a special meeting Thursday night, the Unalaska City Council authorized the City Manager to terminate the contract with F&W Construction.
"Staff has determined that terminating the Public Library Improvements Project construction contract with F&W Construction is in the best interests of the citizens of Unalaska in light of the unexpected health and financial consequences brought on by the coronavirus COVID-19 pandemic," said Tom Cohenour, director of the city's Department of Public Works, in a memorandum to council.
The City Council had in January approved on a 5-1 vote moving forward with the renovation, despite construction bids coming in $3.2 million over the original cost estimate.
The council funded the project for a total of $8,681,981 inclusive of design and construction. Just over $573,000 has already been spent on preliminary design work, underground site investigation, final design, and bidding.
According to Cohenour, since the project was awarded three months ago, the landscape has drastically changed. He said the COVID-19 pandemic presents an uncharted situation, and the measures to mitigate the effects of the crisis will change over time in unknowable ways.
"One thing we do know is that the risk to Unalaska has not peaked," said Cohenour. "These circumstances create extreme uncertainty affecting the conditions under which this project will be completed and potentially having great impacts on project cost and time to completion."
Councilors approved cancelling the contract with F&W Construction unanimously in order to allocate funds to address the pandemic.
Per the contract, the city will have to fulfill certain financial obligations, the exact amount of which will be determined in consultation with the contractor.
Cohenour said the city is likely to pay anywhere from the low six figures up to $3 million to the Anchorage-based F&W Construction, to cover costs of materials on hand, and bonds and insurance.
"I would say it could be anywhere between $500,000 and $3 million at the very top end…That's just all the materials that have been purchased and already shipped out here," said Cohenour at the special meeting.
City Manager Erin Reinders said she wished there were more concrete numbers available, but that the current pandemic situation is "the great unknown."
"I think this is the most responsible action based on the fact that we don't know what the future is holding," she said. "The longer we wait during this time period to terminate this project, the risk increases, and I can't foresee additional costs not being added to the project at this point in time."
Vice Mayor Dennis Robinson said with the uncertainty of how long things will be in limbo, he supported cancelling the project, and encouraged the city to look to federal funding sources to offset the cost of the many bills coming down the road.
"I don't think [the cost] is going to be that great now," said Robinson. "But every day that goes by, there is a question that it'll increase. So at this point, I would support cancelling the project and then utilizing the money where we need it, if we need it, and when we need it, on other things to address this COVID-19, in the event that it devastates our community."
The Public Library Improvements Project, which was planned to break ground in May, has been on the city's Capital & Major Maintenance Plan (CMMP) for five years, and would have renovated approximately 8,000 square feet of the city's public library and expanded it by approximately 3,000 square feet.
At its special meeting, the City Council also approved an amendment to appropriate $250,000 to cover the initial estimated costs of the city's COVID-19 response, as well as $500,000 for Iliuliuk Family and Health Services (IFHS).
The funding will go towards developing a quarantine site, starting an emergency food delivery program, and purchasing necessary supplies and services "for use in prevention and response efforts as this situation unfolds," said Jim Sharpe, interim finance director.