(CelebrityAccess MediaWire) — The anticipated costs of the Sprint Center in Kansas City, Missouri, has increased about $30 million above the original $250 million estimate.
Wayne Cauthen, city manager of the AEG-owned project, acknowledged that the price for the arena would be significantly more than initially planned, but said that the city did not expect to dip into property or sales taxes to cover additional costs, according to the Kansas City Star.
Citizens approved a $250 million funding package in August 2004, which increased the hotel bed tax by $1.50 per night and the car rental tax by $4 per day.
“Everything is coming in as projected,” Cauthen told the paper.
“We would go ahead and use the revenue streams we told the voters were going to use,” Cauthen said. “No other sources of city money are needed.”
The cost of the arena has been in flux for months amid design changes, bidding problems and rising costs throughout the construction industry. The latest cost estimates, between $280 million and $290 million, is not out of line with the double-digit inflation that has occurred in the construction industry since the project was announced in May 2004.
City officials are awaiting the results of negotiations between AEG and M.A. Mortenson Co., the project construction manager, to learn the final project budget. Under the terms of the development agreement, AEG is responsible for any construction cost overruns.
That pledge to cover overruns, according to the paper, is based on a “guaranteed maximum price” for the arena that is agreed upon by the city and AEG, which is now being debated by the two companies. AEG is being assisted in negotiations by Icon Venue Group of Colorado.
“We have not gotten to the point where we’ve signed on the guaranteed maximum price,” Cauthen told the Star. “Icon and AEG need to be comfortable with it and present it to the city…I hope they get back to us sometime this week.”
Michael Roth, spokesman for AEG, told the paper that, “We are still in the process of finishing details,” but declined to comment on any specifics.
Last November, Tim Leiweke, president and chief executive of AEG, complained that construction bids had been coming in higher than anticipated. Leiweke accused some subcontractors of being “greedy” and said it was up to Mortenson to solve the problem.
Cauthen told the paper that city officials had anticipated that the final costs would be higher than first predicted.
“There are a number of reasons: the number of contractors in the marketplace, national conditions with regards to energy and fuel, the affect of Hurricane Katrina. …I still feel there’s an opportunity to get the number closer to what we said it would be,” he said.
Cauthen said the city has agreed to a limited number of construction contracts in order to keep the project on schedule. –by CelebrityAccess Staff Writers
