March 13, 2022
Cost of Lowell High Construction Project
Although it was not on the agenda for last Tuesday’s council meeting, City Manager Eileen Donoghue received council permission for a brief presentation by Suffolk Construction on new information about the cost of the Lowell High project. Donoghue said that the numbers had just been received. She stressed that they were not final, but she wanted the council to get the most up-to-date information as soon as possible. Donoghue added that exact figures for the cost of the rest of the project will be given to the council at its March 15, 2022, meeting.
The representative of Suffolk Construction began the briefing with an overview of the budgeting process. He said that in 2019, multiple estimates by several independent entities all concluded that the construction cost of the project would be $270 million. He said at the end of 2019 the job was re-estimated and still came out at $270 million. He then said that as late as December 2020, a renewed estimate still set the price at $270 million. However, when subcontractor bids were received in April 2021, they were 4% over the estimated amount which was the first indication of rising prices.
When this same representative of Suffolk spoke to the council five weeks ago, he said that the higher prices were being covered by the contingency amounts built into the budget. Although he made it clear that he was only talking about Phase 1 of the project (the gym, which is mostly finished), his comments created the impression that the overall project was “on time and on budget” which is not the case.
To be fair, the presenter at that time did expressly state that bids for Phases 2, 3 and 4 were still outstanding and more would be known once they were received. Those are the bids that were just opened this week.
In retrospect, the presenter at the earlier meeting should have alerted the council that industry indications were that the bids would be higher than expected. Since he didn’t do that back then, when he came back before the council last week and said the just-received bids were substantially higher than estimated – in some cases, almost double the projected cost – some councilors hammered away at his credibility.
Suffolk closed by saying the final three phases of the project which are included in the just-received bids, appeared to be 11% over budget. He explained that this increase was due almost entirely to the Covid-19 pandemic which triggered factory shutdowns and supply chain bottlenecks and that current levels of inflation have pushed the cost even higher.
The conversation then shifted to how to pay for the increased cost of the project. City Manager Donoghue said she requested relief from the Massachusetts School Building Authority on the grounds that a global pandemic was unforeseeable and that there was nothing the city could have done to deflect the increased costs. She said MSBA is sympathetic to the city’s position but had received no funding for Covid relief so it would be up to the governor and the state legislature to allocate additional funds to the project.
Councilor Paul Ratha Yem asked about cutting costs through “value engineering” which would mean cutting back on parts of the project to save money. Several councilors – John Leahy and John Drinkwater among them – pushed back on that idea saying that the full project should be completed as initially designed even in light of the challenges of paying the increased cost.
In this week’s council “packet” there is a request from Suffolk that the existing loan order for the project be increased from the original $343 million to $382 million, an increase of $38.5 million. It provides a breakdown of this amount as follows:
Steel - $6.9 mil increase due to 139% increase in steel mill products
Curtainwall - $4 mil increase due to 38% increase in aluminum mill shapes (curtainwall is the outside, non-load bearing covering of a building)
Drywall - $12.1 mil increase due to 24% increase in gypsum and 64% increase in lumber
Remaining trade costs - $6.5 mil increase due to higher bids resulting from “inflated market conditions.”
GRs/GCs/Other - $6 mil increase for “general conditions” and “general requirements” which are management and non-construction costs that are calculated as a percentage of the overall budget.
Contingencies - $3 mil increase, calculated as a percentage of the overall budget.
Total Increase: $38,568,011
In response to this request, City Manager Donoghue has prepared an amended loan order in that amount that will go to the council this week. This must be referred to a public hearing so the actual vote to increase the loan will come at a future meeting. Whenever the vote is taken it will require two-thirds of the council to support it. With 11 councilors, it would need 8 votes to pass.
Also before the council will be a vote petitioning the governor and the state legislature to provide “further school building project funding as the result of Covid-19 cost impacts.”
New Owner for Thorndike Exchange
The Thorndike Exchange complex at 165 Thorndike Street in Lowell sold last week for $33 million. The new owner is AG Palmdale Real Owners LLC, a Delaware limited liability corporation with a main office in Irvine, California.
The seller was 165 Thorndike Street Corp. whose president and treasurer is Salvatore Lupoli. 165 Thorndike was formerly known as Ruk Realty Corporation which purchased the property in 1961. Lupoli came into the picture in 2013 when he bought all the stock of the Ruk Realty Corporation which made him the new owner of the old corporation (including the corporation’s real estate so there’s no deed from Ruk to Lupoli that would show how much he paid for the property).
In January 2014, Ruk changed its corporate name to 145 Thorndike Street Corporation and in August 2016 it changed its name again to 165 Thorndike Street Corporation.
This building at 165 Thorndike Street was constructed in 1882 by Charles Ira Hood for his patent medicine company. At the time, it was the largest pharmaceutical manufacturing facility in the world. In 1961, Ruk Realty purchased the property and operated Comfort Bedding and the Thorndike Factory Outlet out of the space. Shortly after Lupoli bought the corporation and its building, the iconic “Hood” brick smokestack was struck by lightning and was soon demolished due to the resulting damage. Lupoli has converted the building into luxury apartments which from all indications are in great demand.
Mr. Lupoli’s name came up at Tuesday’s city council meeting in another context when the council gave preliminary approval to a Tax Increment Financing agreement (TIF) for another of Mr. Lupoli’s corporations, 330 Jackson Street LLC, to assist in the construction of a 500-space parking garage on the small lot that sits between the Justice Center and Mill No. 5. Besides the TIF, the city has obtained a $1 million MassWorks grant for this parking garage. Construction is supposed to start soon and due to the prefabrication techniques to be used, construction is expected to take just two months.
In addition, companies controlled by Mr. Lupoli intend to construct a 12 to 14 story building on the parcel that now holds the large, paved parking lot that is across Jackson Street from the Justice Center and a 50,000 square foot multi-level commercial, retail and restaurant space on the vacant lot that is across Jackson Street from Mill No. 5 and adjacent to the Appleton Mill apartments.
The Lowell Review 2022
The 2022 edition of The Lowell Review is available for purchase on the Lulu.com print-on-demand publishing website. With contributions from across the United States plus Ireland, Morocco, Hungary, and the U.K., The Lowell Review 2022 contains writing and poetry about the pandemic, politics and other contemporary topics but also has other pieces that explore universal elements of the human experience. Some stories are deeply local like our long riff on the city's storm boards. Others delve into the stories of remarkable people. This being the 100th anniversary of the birth of Jack Kerouac, we included a special section in recognition of the author, who seems to have an unlimited capacity to make news. Taken as a whole, the journal is a smorgasbord of great writing and poetry.
To see the full journal in electronic form and to see the 2021 edition, check out The Lowell Review page on richardhowe.com.