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 After it was discovered that there was an unpriced portion of the fourth floor of “The dot,” the Ferndale City Council approved up to $1 million to continue the project.

After it was discovered that there was an unpriced portion of the fourth floor of “The dot,” the Ferndale City Council approved up to $1 million to continue the project.

File photo by Patricia O’Blenes


Ferndale council approves $1 million for ‘dot’ after portion wasn’t budgeted

By: Mike Koury | Woodward Talk | Published February 18, 2020

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FERNDALE — The Ferndale City Council unanimously approved spending up to $1 million to fund a previously unpriced portion of the fourth floor of The Development on Troy, also known as “The dot,” Feb. 10.

The agreement with Colasanti Construction came after a lengthy discussion between council, city staff and residents, all of whom expressed their disappointment with how this predicament came about.

City Manager Joe Gacioch told the Woodward Talk that the eastern portion of the fourth floor was not priced in the original bid documents because they always knew it was going to be a cost-share between Versa Wanda LLC, the developer of the office component of The dot, and the parking project itself by the city.

The $1 million is to be used on the fourth floor of the development, which will cover the future foundation and floor for 25,000 square feet of office space and will act as the structural anchor needed to support The dot’s facade.

“The reason you would separate that is because you would want to understand what that price is as a standalone item, and once you understand that, you could incorporate that into your negotiation process with the developer, which we were having a concurrent negotiation with the developer to actually deliver this portion of the project,” Gacioch said.

As to how neither the city, Versa Wanda, nor Colasanti had budgeted the item, and why this is only coming up now and not months ago, Gacioch said it’s not known at this point and it’s currently being investigated.

In October, Gacioch explained that the city had finalized the financial package with Versa Wanda to develop the office, residential and retail space of The dot. They also heard from the Michigan Economic Development Corp. that it would help the developer fill their financial gap. As the city manager put it, “Without the state’s financial participation, the project doesn’t really pencil out, which means the costs are so much that it’s not going to be attractive for an outside investor to actually build the office.”

After that agreement was approved, work began on a site plan to submit to Ferndale’s Planning Commission. Around this time, in December, Versa Wanda was made aware that the office budget excluded fourth-floor construction. The city said it was alerted to this on Jan. 15 by Colasanti; the city’s project management firm for The dot, WGI; and Fusco, Shaffer & Pappas, the city’s design team.

What was assumed to that point, Gacioch said, was that the numbers that were given to Versa included the complete project build out and office space.

“That was never included in anyone’s budget projection. So I would say what happened is some assumptions were made and the assumptions were wrong,” he continued.

 Gacioch said finishing the fourth floor now is important because, structurally, it supports the parking deck’s facade.

“I can’t finish my deck without that fourth floor, and Versa can’t pursue their office space without that fourth floor, but as you might assume, since that portion of the project wasn’t in Versa’s budget, they are now just kind of in a negotiation with Colasanti on what the remaining project looks like,” he said. “They’re just kind of doing some pencil work right now. Meanwhile, I have to keep this project going.”

On the council’s table at the meeting were two items; one was to fund the rest of the fourth floor construction for up to $1 million. If that were approved, Ferndale’s contract with Versa Wanda stipulates that the developer would have to reimburse the city 50% of the costs. It’s expected the cost will be $1 million, Gacioch said, so when the floor is completed, he would send an invoice to Versa Wanda requesting $500,000.

The other item was to authorize an additional amount of funds not to exceed $1 million for change orders related to the office development of The dot. The change orders refer to costs that were changes in the office’s design, the majority of which are reimbursed by the developer, Versa Wanda, to the city. They can include a fire suppression system, elevator shaft construction and office stairwells.

The change orders — which the city stated were expected and were always part of the development — were added to the agenda item, and the official request was for funds not to exceed $2 million to pay for both the fourth floor and change orders.

Because the council didn’t know what the final pricing and scope were for the change orders, it elected to wait until those prices come in to vote on the item. Gacioch estimated the final prices will be back in March or April.

The council decided to focus solely on the “budget hole” that was the million dollars missing to fund the fourth floor. The funds to be used to cover the missing money will come from Ferndale’s auto-parking fund, which holds $1.2 million.

All council members expressed their dismay with how this happened, with Mayor Melanie Piana upset that Ferndale and Versa Wanda are absorbing the costs of the error of $500,000 each.

“I feel like we need to explore the shared responsibilities and cost of our design engineering and consulting firm, and right now I don’t hear a lot of that,” she said. “I feel this is what we hired these folks to do, and I feel let down, and now we are facing these choices and disruption that we were guaranteed up front we wouldn’t have. And so now as a council body and as the mayor, we are responsible for finding a solution forward.”

Councilman Greg Pawlica told the audience at the meeting they were right to be upset and mad, as that’s how the council and staff feel, too.

The bottom line, he continued, was Ferndale hired a firm, WGI, to represent the city’s interest in this project to make sure things didn’t fall through the cracks, but things fell through the cracks. WGI could not be reached for comment.

He described this situation as a “major flub-up.”

“As much as I would prefer to wait until a deeper-dive investigation takes place to determine who dropped the ball and when, in this situation, time is not on our side,” he said. “If we choose not to move forward, then we have wasted hundreds of thousands of dollars in materials we cannot use and end up with an incomplete structure. If we choose to wait, then we’re going to end up spending more money paying to have equipment brought back on-site to complete the project. I really don’t see any choice but to support covering these additional costs today to allow the project to continue and pursue the legal recourse moving forward.”

Pawlica later told the Talk that, since this entire issue came up so quickly, the council basically was forced into making this decision now.

“If we had not passed it on Wednesday, Colasanti was going to start … breaking down the crane to move on to a different project, if they needed to,” he said. “We were kind of forced into a quick decision because of that.”

Not finishing The dot, Piana said, doesn’t get the city where it needs to be, and she’s interested in moving forward so the business community is not impacted more than it already has been by this project.

“Our timing of this project was designed not to hit two winter holiday cycles, and I want to make sure we stick to our commitment to the business community,” she said.

The city and Gacioch have said the expectation for The dot was to have it complete by May, which the city manager reiterated in January. Now Gacioch believes there will be a delay on the deck, though he doesn’t know by how much.

“I will say that I made a firm commitment to City Council that I will be coming back with a realistic, adjusted timeline because of this,” he said. That adjusted timeline is expected to be presented at the next council meeting, currently scheduled for Monday, Feb. 24.

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