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A closer look at Plan B: Cost overrun issues remain to be decided

By Mark Belko, Post-Gazette Staff Writer

This is the 10th in a series of articles taking a closer look at Plan B, the financing mechanism proposed by Pittsburgh and Allegheny County officials to pay for new baseball and football stadiums and the expansion of the David L. Lawrence Convention Center.

Today's installment discusses what happens if there are cost overrruns should both a baseball and football stadium be built.

Q. Who would cover cost overruns on the stadiums?

A. The teams. Probably. Mayor Murphy and Commissioners Bob Cranmer and Mike Dawida insist that the Steelers and Pirates would pick up overruns associated with the projects. And both teams have pledged to do so, with one caveat: They want control over the design and construction phases of the projects.

Q. It doesn't sound to me like the issue has been settled. Is anything etched in stone?

A. No. Like other aspects of Plan B, the issue of cost overruns is the subject of ongoing negotiations between the teams and the city and the county.

Q. What's to negotiate?

A. Well, for one thing, Murphy, Cranmer and Dawida have yet to give the Pirates and Steelers the control they want. And it is not likely they will give them unfettered authority. Remember, two-thirds of the money going into the projects is coming from public sources.

The teams, on the other hand, believe it's only fair that if they are going to be on the hook for overruns, they should be the ones making sure the construction is within budget.

There are other issues, including competitive bidding, minority participation, and prevailing wage rates as well as other labor and contractual matters that still must be decided.

There's little doubt that the projects will be competitively bid. After all, competition has a way of bringing about better prices. But the unanswered question is who would draw up the specifications and award the bids -- the government or the teams.

As for labor-related issues, one key might be the same type of comprehensive no-strike agreement drafted for the construction of the midfield terminal at Pittsburgh International Airport.

Q. What constitutes a cost overrun?

A. Good question. To get an agreement on overruns, negotiators would first have to determine a realistic cost estimate for the design and construction of the stadiums.

Current estimates place costs for the baseball and football stadiums at $228 million and $233 million, respectively. Those figures include land acquisition and demolition costs.

It's the Pirates' position that design and construction does not include site acquisition. For the Steelers, that is a detail yet to be worked out. Construction costs are projected at $184 million for the Pirates' stadium and at $192 million for the Steelers'.

Negotiators would have to determine whether those estimates are precise enough that they could be used as a benchmark to determine when cost overruns begin.

The Pirates' Steve Greenberg, director of ballpark development, said the team has pledged to be responsible for overruns associated with the actual ballpark construction and on-site improvements, such as sidewalks and terraces.

Q. How common are cost overruns in stadium projects?

A. They are not uncommon. The cost of a new stadium for the Steelers' Central Division rivals, the Cincinnati Bengals, is expected to more than double to $400.3 million, although some officials believe that figure is exaggerated.

Not included in the original price estimate were $65 million for land acquisition, $38 million for parking, $22.5 million for design and infrastructure work, $15 million for added labor costs because of Ohio's prevailing wage law and $10 million for a practice facility.

The cost of Cleveland's Jacobs Field started out at $128 million and ended up at $176 million. Estimates indicate that Cleveland's new football stadium could be at least $21 million over its $247 million price tag. Detroit's new baseball stadium is several million dollars over its $260 million price. A $117-million baseball-related renovation to Anaheim Stadium came in $17 million over budget.

Q. Who normally pays for the overrruns? The taxpayers? The teams?

A. It's a mixed bag. In Anaheim, Disney, part owner of the Anaheim Angels, covered the overruns. In Detroit, the team is responsible for them. In Baltimore, the Maryland Stadium Authority covered $20 million in overruns on the Ravens' new stadium by selling the naming rights to the team for $10 million and convincing it to accelerate payments of certain contributions demanded by state lawmakers. And in Denver, overruns on a proposed football stadium would be split between the Broncos and the taxpayers.

Q. What makes teams think they can do such a good job containing costs? After all, everybody knows the great job the leagues have done restraining players' salaries.

A. Maybe it's not so much their confidence in their own efforts as it is their lack of faith in government's ability to stay within budget.

The teams know what they want and they believe that by paying attention to detail, selecting the right architect and putting the right construction team together, they could build the stadiums on budget. ''If you do the job right, you should bring the job in at the right price,'' the Pirates' Greenberg said. ''It's that simple.''

Of course, one way the teams could avoid overruns is to skimp on certain aspects of the construction as they approach the high end of their budget. For example, might the brick, steel and terra cotta the Pirates plan for the exterior of their new ballpark end up as plain old concrete to save money?

Representatives for both teams insist that that would not happen. Greenberg pointed out that many of the amenities to be offered at the Pirates' new park are designed to attract fans. To cut corners would be defeating the point, he said.

Q. It's nice to say that doing it right will get the job done. But I hear there already are problems with the Redskins' new $180 million stadium in Landover, Maryland. What's the deal?

A. The Redskins are adding $25 million in renovations and additions, including a climate-controlled, glass-enclosed atrium around club and luxury suite concourses. Club level concourses also will get carpeting and televisions. The Redskins also are improving stadium food and increasing parking.

The Redskins, according to the Washington Post, have acknowledged that in their hurry to get the stadium open for the 1997 season, they didn't get everything just right, and now are trying to do so. The $25 million in improvements will be privately financed.

Of course, governments don't always distinguish themselves in their handling of building projects. The new county jail, built in 1995, has been plagued by problems since it opened. And the county is making $2.6 million in repairs to the parking garage at the airport because of problems that have surfaced since it opened in 1992.