Berkshire Innovation Center's potential cost overruns 'surprising' to state officials

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PITTSFIELD — State officials say they are surprised at the potential cost overruns associated with the construction of the Berkshire Innovation Center, but plan to work on ways to keep the project "within an appropriate budget."

Their comments came in response to Eagle questions after recent reports that BIC officials said it would cost $3 million more than the $9.7 million in state funding that has already been received to build the two-story, 20,000-square-foot structure to the specifications that were presented to the Massachusetts Life Sciences Center two years ago.

A technology and training center, the BIC is a public-private partnership between the city of Pittsfield and the Pittsfield Economic Development Authority. The project is considered key to the development of the 52-acre William Stanley Business Park of the Berkshires, the former home to General Electric Co. in Pittsfield, which is overseen by PEDA.

The Massachusetts Life Sciences Center, an investment agency founded during the Gov. Deval Patrick administration to build the life sciences industry, awarded the $9.7 million to the city to build the BIC in 2014. That sum was $3 million more than the $6.5 million earmark the city received from the Legislature to construct a building in the Stanley Business Park in 2008.

BIC Board Chairman Stephen Boyd's comments at a recent PEDA board meeting were the first public acknowledgement by officials that the funding gap was as high as $3 million. At that meeting, Boyd said the gap could be as high as $3 million to $5 million "depending on the scope of what the state wants to fund" and could go to $6 million if every item officials wanted in the building was included.

In an op-ed piece published in The Eagle on Saturday, BIC officials stated the funding gap has been $3 million since the project was publicly bid in September 2015 and "remains at that level." The op-ed was signed by Boyd, who's also the CEO of Boyd Technologies Inc.; Ellen Kennedy, president of Berkshire Community College; and Cory Thurston, executive director of Pittsfield Economic Development Authority.

The only previous public acknowledgement that a funding gap to construct the BIC existed was a $600,000 discrepancy between the building's actual and estimated construction costs after the project was put out to bid last September.

The additional $3 million needed to build the BIC to its original specifications apparently caught state officials off-guard.

"The potential cost overruns that are being projected for the Berkshire Innovation Center are surprising to both the Massachusetts Life Sciences Center and the Administration," MLSC President and CEO Travis McCready and Michael Kennealy, assistant secretary for business growth for the state Executive Office of Housing and Economic Development, said in a joint statement to several Eagle questions.

"The Baker/Polito Administration is committed to investing in life sciences infrastructure in Western Massachusetts and both the Executive Office of Housing and Economic Development and the MLSC are working closely with municipal and nonprofit partners to reach a common vision for a viable BIC project in Pittsfield," the statement said.

Officials are "doing their homework" to understand the cost structure and value proposition for the project in order to keep it within an appropriate budget, McCready and Kennealy added.

"We hope to reach some conclusions about the path forward during the summer of 2016."

Boyd did not respond to McCready and Kennealy's statement by presstime on Monday, but BIC project consultant Rod Jane said state officials have been aware of the $3 million difference in costs for the BIC.

"I guess I would say we've been in discussions with the state about the $3 million funding gap since last fall," he said.

In a meeting with the Eagle's editorial board last week, Boyd and Jane described how the project was sent out to bid last fall.

According to Jane, in an effort to get the project started, BIC officials "carved up" the building into a "stripped down" version, "kind of a base-building design without a lot of the significant features that were part of the project that we presented to the Massachusetts Life Sciences Center."

Officials began designing the building after receiving the $9.7 million grant from the MLSC two years ago, Jane said. Construction costs have since gone up in Massachusetts, especially in the western part of the state, he added.

"So because of that uncertainty, we felt it was prudent to carve the project up into pieces so that if we didn't have the amount of funding necessary to create the entire project, then we might be able to get construction going in pieces," Jane said.

As an example, Jane said the base stripped-down building model didn't include a "clean room," which he described as "a significant part of the program space" that had been presented to the MLSC in the funding request two years ago.

The base model also did not include metal skin on the structure, "a key part of the building, primarily for maintenance, durability, for esthetics," Jane said. "It's the way you build a science building."

Funding for the parking lot was not included either, he said.

Jane referred to the items separated from the base model as "chunks" or "add-alternatives."

Add-alternative is a method used in public bidding, "often when you're not sure you're going to have enough funding to complete the entire project, but where the chunks of that project could conceivably be executed in phases," Jane said.

"So you could potentially build the building, seek additional funding while you're building that then go out and get the additional funding for the pieces that could be added on subsequently," he said.

When she visited PEDA's administration building on Kellogg Street during her visit to Pittsfield last week, Lt. Gov. Karyn Polito was given an update on the project. Jane also told Polito that the BIC had been bid "in chunks."

Polito said the visit had given her the opportunity to understand how the BIC would fit into the city's overall economic development plan.

"I will have to dig deeper in terms of the estimates that they have relative to the cost to build the structure and determine what the next steps are," Polito said.

Contact Tony Dobrowolski at 413-496-6224.


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