B$L - City asked for $9M More to Cover Cost Overruns

The cost of Beale Street Landing was up - to $33M, the City Council was told in May. Memphis's share would be $22M.

Now, 6 months later, the cost has gone up again. The Commercial Appeal reports that the federal share is down, cost is up, and the City is being asked for another $9M to pay for Beale Street Landing.

Letters-to-editor raise questions; point out more problems; and urge City to investigate and get answers before committing any more money.

First, nail down all the costs
Letters-to-the-editor, Commercial Appeal, Sunday, December 20, 2009

Troublesome delays are primarily the absence of full accounting of all the costs of the Beale Street Landing project (Dec. 13 article, "Beale St. Landing delays add cost / Need for more money arises as riverfront project drags on").

In May 2009, the Memphis City Council was informed that the project's cost had risen to $33 million from $27.4 million, increasing the city's share to $22 million instead of $17.4 million. Within six months, the city's share has now climbed to $26.3 million, absorbing $8.9 million of the recent $9.6 million increase. State funds of $3.6 million have been spent. Federal funds ($7.9 million), not yet spent, are likely to be reduced approximately $1.4 million.

"Total cost" of $35 million is misleading, as that amount is only the cost of design and construction, excluding postconstruction sustainability costs, such as routine maintenance, operating expense, security and debt service payments on bonds estimated at $1.7 million per year. The actual total cost of the project has not yet been published.

Until all of the project costs are identified in detail and verified in an accounting of the total financial package, the City Council and Mayor A C Wharton cannot make a fully informed, fiscally responsible decision on the project: to approve it as-is, curtail it or modify it. It is necessary to know specific line-item costs of the landing's postconstruction sustainability -- its source of revenue and impact on our city budget. These urgent fiscal matters transcend considerations regarding other delays, a post-Katrina construction crunch or popularity of the design.

Lynda Ireland*

RDC excuses don't add up
Riverfront Development Corp. president Benny Lendermon owes taxpayers (and not just those in Memphis, as federal monies are also involved) an explanation regarding his request for an additional $8.9 million to complete the Beale Street Landing project. Lendermon blames a two-year delay in construction commencement for an almost 30 percent cost overrun. His statements do not add up.

Lendermon blames the dramatically increased construction costs after Hurricane Katrina for bids that were higher than initially expected. Indeed Katrina did cause an increase in construction costs, but Katrina struck New Orleans on Aug. 29, 2005, almost three years before construction began on Beale Street Landing in July 2008. How could the construction bids not have reflected post-Katrina construction costs?

Lendermon continues his excuses by stating that costs have gone up as the project has dragged on. Almost anyone involved in commercial construction knows that construction costs have fallen dramatically in the last two years. Inverse from historical trends, any construction delays over the past couple of years should have proven cost-beneficial, and significantly so at that.

If Lendermon worked in the private sector, his behind would be in the CEO's office to explain why his project is almost 30 percent over budget during a time of construction cost deflation, and his project management ability would be brought into serious question, and rightfully so. Lendermon's excuses offered so far simply make no sense, and the City Council should investigate thoroughly before committing any more money to a project destined to be a boondoggle designed to serve a now virtually nonexistent riverboat excursion industry.

G.S. Fraser

* In the interest of full disclosure, Lynda Ireland is a member of the board of Friends for Our Riverfront and lives on the riverfront.