State panel approves additional funds for new inn at Fall Creek Falls park
Approval comes despite gripes over $11 million in unplanned cost increases
NASHVILLE — Construction of a new inn at Tennessee’s premiere state park, Fall Creek Falls, is finally anticipated to get back on track in September after revised project costs won grudging approval last week from State Building Commission members, upset over its whopping $11 million cost increase.
The issue caused the $29.4 million, 95,000-squarefoot replacement inn and related facilities’ costs to soar to $40.4 million, a whopping 37.3% increase.
Problems were only publicly revealed on the House floor in late April as the House was approving Gov. Bill Lee’s first budget. Lee, who took office in January, inherited the controversyshrouded project from the prior Haslam administration.
The state is anticipating on-site work will resume in September 2019. “Completion should be summer 2021, but we can’t yet say a specific month,” said David Roberson, a General Services
Department spokesman.
According to testimony in last week’s Building Commission meeting, General Services’ officials actually became aware in August that their latest $29.4 million cost estimates were no good.
During last week’s meeting, Building Commission members
went on a tear, calling missed cost estimates on the Fall Creek Falls project and other big state capital projects an unwelcome trend for Tennessee taxpayers.
They demanded to know why officials at General Services and the Tennessee Department of Environment and Conservation didn’t foresee higher costs in constructing the new 75- to 90-bed inn at the remote 26,000-acre state park that straddles Van Buren and Bledsoe counties on the Upper Cumberland Plateau.
Commission members, who call the shots on state building projects, also wanted to know what specific steps are being taken to prevent future recurrences.
“This is going up about a third, which is certainly significant,” said Lt. Gov. Randy McNally, R-Oak Ridge, the Building Commission’s chairman. “The fact that it was a rural project, and that it would be hard to get people out there to bid on it, and the bids would come in higher — that was not taken into consideration when the project was planned?”
Comptroller Justin Wilson complained “we have seen over the last couple of years a large number of projects that have had cost increases. … What efforts are being done to estimate more accurately? In the future, what are you doing about this?”
Environment and Conservation Commissioner David Salyers, appointed to head the agency in January, said “construction costs definitely escalated more than was previously anticipated” and attributed at least part of the problem to “competing with three major metropolitan areas.
“And it was expensive to get folks out to Spencer, Tennessee,” Salyers said.
In response to McNally’s question on whether any pre-planning on the project had been done, Christi Branscom, the state’s new General Services commissioner, said there had been.
“We had an expert architect come in to give us the estimate,” said Branscom, who formerly owned a Knoxville-based construction company. “No offense to architects in the audience, but they’re not always the best estimators. And this particular project did come in higher than our estimates.”
Branscom said it was only the first of several issues she discovered, including state government’s estimates on what constitutes construction inflation in Tennessee. Inflation here has “increased dramatically” due to booming demand statewide, she noted.
State officials had estimated a 4% annual increase in inflation. It’s more like 8%, she said.
A third issue was the decision to use a seamed roof, which is considered more durable but expensive.
As to what steps the Lee administration will take to address estimate problems, Branscom said the “first thing we’re doing is increasing our annual inflation rate for constructions.”
Secondly, General Services will start using professional “construction estimators who work in the markets every single day,” Branscom said, adding, she hopes it provides a “better idea of what these numbers ought to be when we go out to bid.”
The state also is working to expand the preplanning process on building projects with a longer period to “try to get our numbers a little tighter,” she said.
McNally noted “these projects were budgeted under the previous administration.”
Secretary of State Tre Hargett wanted to know when officials “figured this out.”
Branscom said her understanding was officials “quickly realized” problems when the general construction manager got on board.
General Services Deputy Commissioner John Hull, who heads the department’s Real Estate Asset Management Division, later told commission members “it was actually last summer.” Contractor Bell Construction came “with a much higher figure at that point than the architect had told us that they estimated,” he said.
“So we knew early on about August of last year,” Hull added.
“I appreciate you giving me a stroll down memory lane,” Hargett dryly noted. “Thank you commissioner.”
The Fall Creek Falls project has been mired in controversy since its inception. In 2015, thenGov. Bill Haslam and his administration proposed outsourcing to private companies the hospitality operations of all state parks with amenities such as inns, restaurants, cabins, golf courses, campgrounds and boat docks.
Companies turned their collective noses up, citing the parks’ dilapidated conditions. Haslam sought additional funds and still got no takers.
The then-Environment and Conservation Department later came forward with its own plan to outsource the 144-room Fall Creek Falls inn, considered the “crown jewel” of the state’s park system, and handed over $22 million to construct the facilities. There were actually two buildings, the main inn built in the 1960s and a separate one built in the 1970s.
The department’s plan drew protests not just from state employees who feared losing their jobs but a later war with architects and engineers who would have been affected and had the political clout to stop it dead in the Legislature, which they did.
The department then proceeded with plans to build an inn in a more traditional fashion and have the state operate it. Despite objections from workers and the community, the inn and restaurant were closed in April 2018 and torn down last winter. The park’s golf course, cabins and boating services remain in operation.
In January, Environment and Conservation officials held a ceremonial “ground breaking” on a 75- to 95-room replacement inn. That came while evidently knowing there would be no actual work until the required $11 million increase was approved by state lawmakers.