Changing course?

Locals look to cut feds from CAEDA incubator
2010-06-23T01:30:00Z Changing course?By PETE NICKEAS - Star-Tribune staff writer Casper Star-Tribune Online

Three local government boards are trying to push the federal government out of the Casper Area Economic Development Alliance's business incubator project after local contractors complained that Casper-based construction companies were shut out of bidding.

The impasse between contractors and CAEDA stems from a federally approved process that critics say cut local contractors out of an opportunity to bid on a lucrative construction manager contract. The manager will oversee renovations and new construction at a building on the old Amoco refinery site that will house young businesses.

CAEDA President and CEO Robert Barnes said that the rules attached to a $2.5 million federal Economic Development Administration grant prevent his agency from starting the process over unless it wants to give the money back.

A proposal to be considered by the Casper City Council on Thursday and the Amoco Reuse Agreement Joint Powers Board tonight would replace the federal money with local money.

Scott Sissman, chairman of the Amoco board, outlined his proposal in a letter to Casper Mayor Bill Brauer that will be discussed at Thursday's City Council work session.

Under Sissman's plan, the Amoco board would give CAEDA $500,000 atop its $1.5 million contribution, the city of Casper would contribute $1.5 million on top of its $150,000 contribution, and the Economic Development Joint Powers Board would add $500,000 to its $1.5 million contribution.

"We have the reserves. I don't know if we want to do that, but it's silly of us not to review the option at least, or maybe find some partners," Sissman said.

Local contractors and politicians have been vocal in their opposition to the process CAEDA chose to determine who is "qualified" for the management position, which could be worth about 8 percent of the construction costs plus any construction work the company can obtain when bidding against subcontractors.

A CAEDA committee reviewed materials from 10 contractors before interviewing five -- two of them local -- and choosing three as finalists as part of the EDA-approved process. Neither of the Casper companies was chosen.

The three finalists will submit a "guaranteed maximum price" for the project later this month, and whichever submits the lowest price is slated to be awarded the job.

After CAEDA selects a manager, all of the construction goes out to bid, with contracts being awarded to the lowest qualified bidders. The construction manager will have to compete against subcontractors if it wants to self-perform any of the work.

Federal law doesn't allow CAEDA to give a preference to any contractors, in contrast with Wyoming state law that allows in-state contractors a 5 percent cushion when competing with out-of-state contractors for state or local projects.

"We'll see if there's a way to get the federal funds out of [the project] so it can be bid and all local contractors can not have to go through a sophisticated selection process," Sissman said.

Sissman's proposal aims to piece together funding to replace 20 percent of the money CAEDA is relying on for the project. The development agency had successfully lobbied different boards and governments for money, and news of the federal grant money was celebrated by CAEDA because it put the agency at its fundraising goal.

If the different governing bodies agree to Sissman's proposal, the bidding would start over using a "fixed price" bidding process after plans for the project are complete, and any savings would return to the three boards increasing their contributions to the project.

Brauer and Council Vice President Paul Bertoglio both said the council would likely support Sissman's plan, despite massive cuts to the city's budget approved by the council last week.

The city cut about $60 million from its budget by not filling vacant positions, skipping pay raises for city employees for the second straight year, increasing insurance costs for employees, cutting overtime hours, and scaling back construction projects.

If the City Council wanted to spend the $1.5 million, it could use 1-cent sales tax revenue, stop other projects, spend reserves, or use mineral tax revenues. City Manager Tom Forslund said it was a council policy call, and no options were outlined in Sissman's letter to the mayor.

Bertoglio and Brauer said the money could come from previously-set-aside cash for a failed civic auditorium project.

"We believe this project has the potential of greatly enhancing the ability of young start-up companies to not only be successful but stay in the community. There's a real big economic development incentive for the city to see this project through to fruition," Bertoglio said.

Bertoglio said that either approach carries risk: Keeping the federal money could cement hard feelings toward CAEDA and further damage personal relationships that have been harmed through this ordeal; starting over and awarding the contract to a single general contractor could cut locals out of the project altogether if an out-of-state company is the low bidder.

Ward 1 Councilwoman Kim Holloway predicted lawsuits if CAEDA were to walk away from its already chosen path.

"Because the local contractors didn't meet the qualifications set by CAEDA for their project, we're going to derail the whole situation and open the floodgates for lawsuits, and I think this is just not the way to go," she said.

Under Sissman's proposal, none of the new money could be used by CAEDA to deal with lawsuits or other fallout from the process that CAEDA would abandon by accepting this money in place of the federal money.

Bertoglio and Brauer both predicted the council would approve the plan, and Bertoglio said CAEDA's board would likely approve the plan as well.

Council members and other local officials have been under intense pressure since the beginning of June. About 150 businessmen, contractors and politicians attended a meeting with CAEDA last week to air their grievances. Ed Opella, a Natrona County commissioner and also a member of the Amoco board, threatened to pull that board's funding altogether if CAEDA didn't start its process over. Commissioner Matt Keating said he would work to get another board to pull its $1.5 million of funding for the project, as well.

Contractors had predicted a backlash against Natrona County's optional 1-cent sales tax at this November's election because local companies weren't deemed "most qualified" to bid on the project.

That tax is subject to voter approval and is used by local governments to pay for construction and day-to-day government operations. Local contractors would benefit from the tax's approval.

Reach city reporter Pete Nickeas at pete.nickeas@trib.com or (307) 266-0639. Read more about Casper politics and government at http://tribtown.trib.com/redtape

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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