Cost 'overruns' for Fall Creek Falls inn replacement soar by $11 million

2019-04-24 | Chattanooga Times/Free Press

April 24-- Apr. 24--This story was updated Wednesday, April 24, 2019, at 6:58 p.m. with more information.

NASHVILLE -- There's a multimillion-dollar surprise in the Tennessee House's just-passed 2019-2020 state budget and it's not good news for lovers of Fall Creek Falls State Park, as well as residents of the remote Upper Cumberland Plateau community where the park sits.

A Lee administration budget provision includes $11 million to cover "cost overruns" for construction of the new inn, restaurant and conference center at the park near Spencer, Tennessee.

It's causing the total costs for building the $29.4 million, 95,000-square-foot replacement facilities to soar by more than one third to $40.4 million.

And it's also pushing the anticipated completion date beyond the summer of 2020 to 2021.

The problem became evident on the House floor Wednesday during the presentation of Republican Gov. Bill Lee's first budget, the state's $38.5 billion fiscal year 2019-2020 annual spending plan.

In response to a question from Rep. Scott Cepicky, R-Culleoka, Finance Committee Chairwoman Susan Lynn, R-Mt. Juliet, said the Lee administration told legislative leaders the cost overrun is due in part to difficulties in finding labor in the sparsely populated, remote area during a time of high employment.

The House later passed Lee's budget. Senators are expected to take it up in Finance Committee Thursday.

Responding later to Times Free Press inquiries about the jump in costs and the delay, General Services Department spokesman David Roberson cited via email two main factors at work: The first is that "construction cost escalation has been more than anticipated since 2017."

Secondly, Roberson said, there's been "difficulty in finding subcontractors to bid on the project at the location, which has added to the cost of construction."

He added that "it's hard to find construction contractors to work on large projects in rural areas."

In June 2018, when the project went before the State Building Commission for approval, Roberson said in a second email, representatives with the architect firm Earl Swensson Associates told SBC members the $29.4 million project figure was accurate.

Demolition of the old inn and construction of the new inn were separate projects, with separate contractors.

Roberson said the demolition contract was within budget and the existing structure was torn down in August as planned. Construction of the new inn was originally expected to begin later in August.

"In late August, the contractor for the new inn, Bell Construction, informed us that they were having difficulty securing subcontractors and that the project would likely exceed estimates by several million dollars," Roberson said. "We then began working with the contractor to try to identify ways to reduce costs as the overall design moved forward."

But Roberson said in the email that as design moved toward completion in the fall, "the estimated total cost continued to rise. The main reasons for this increase were the rapid increase in construction costs (labor and materials) and the difficulty of finding subcontractors to work in a rural area."

Roberson also said Tennessee Department of Environment and Conservation and state Finance officials "participated with us in the discussions with the contractor and they were aware throughout the design process that estimates for the project were increasing."

By November 2018, Roberson said, "it was apparent that the project would cost an additional $11 million."

Working with both the incoming Lee and outgoing Haslam administrations, Finance Department officials "decided to request the additional $11 million in the coming year's budget request," Roberson added.

Despite that, TDEC officials held a ceremonial groundbreaking ceremony on the new inn in mid-January.

Roberson said the "project schedule will be adjusted for the time it takes to get the additional funding in place."

"We can't begin work on a state construction project until all funds are identified, so the current budget will have to be approved before construction can begin," he said.

The situation represents just the latest in a string of woes for a project that has been mired in controversy since its inception.

In 2015, Republican Gov. Bill Haslam proposed outsourcing hospitality operations at Fall Creek Falls and other state parks with similar amenities only to be rebuffed, first by would-be vendors who cited the inns' neglected condition.

The governor later stirred up a political hornet's nest with another outsourcing plan that united state employees, architects and, ultimately, legislative leaders and the State Building Commission, which lawmakers control, in successful opposition.

Still, Haslam pressed with the current plan to replace the Fall Creek Falls inn and a similar facility at Paris Landing State Park, despite concerns and protests from the communities over the closures' impact on local jobs and income. It calls for the state to run the facilities.

But the issue angered enough voters in state House District 75 that it became a factor in the loss of an incumbent state representative who had supported the administration's plan to tear down the existing inn at Paris Landing State Park.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow on Twitter @AndySher1.