Council approves $3.3 million boost to Salem police station budget, blames inflation

Samantha Hawkins
Statesman Journal

Salem city councilors have approved an additional $3.3 million to fund the city's new police headquarters, the second additional funding request since voters approved $61.8 million in bonds for the project in 2017. 

Construction on the three-story building is already well underway and it's projected to open in September 2020. Higher than expected inflation has caused costs to rise, but city officials said they are ready to lock in a price with contractor JE Dunn sometime in the next two weeks.

Last year, an extra $2 million was requested in part to incorporate features citizens asked for into the police headquarters design, like a community room, public plaza and public restrooms, though rising construction costs also contributed to the request.

Construction at the site of the future Salem Police headquarters on Wednesday, Feb. 20, 2019.

This time, Assistant City Engineer Allen Dannen said, it's just inflation. He said there's been a 7% annual increase in construction costs in the area, more than double what they predicted when the project began. 

"The project team has been working continually since the bond passed to try to fight these market factors," Dannen said. Construction costs are up in part due to tariffs on steel and aluminum, plus labor shortages.

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This problem isn't unique to Salem. Projects in the Portland school district, Beaverton and Clackamas County are also up against funding setbacks due to rising construction costs.

Designs were already scaled back to cut costs for the police headquarters, reducing the size of the building from 115,000 to 104,000 square feet — the current police station is 26,641.

There's also been an ongoing analysis on the electrical and data outlets, security systems, flooring and lockers, among other amenities, to look for opportunities to cut costs.

Still, the project was looking at a $3.3 million deficit before the council approved additional funds last week.

About $2.6 million of the newly approved funding will go to the police facilities, while about $633,000 will go to street improvements. 

The rest of the funding will be scraped from Capital Improvement Grant Program budget and a bucket for unspecified future projects. 

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Because of the setback, the improvements program, which awards grants to tourism and cultural facilities like the Gilbert House, won't be able to grant out quite as much money this year. But Urban Development Director Kristin Retherford said there is still a good amount left: $5.7 million. 

The request will almost deplete the rest of the budget for unspecified future projects, leaving only $600,000. Retherford says it won't affect any other projects.

The previous $2 million request was also taken from the unspecified future projects budget. 

Now, city officials are confident they are done asking for more money. The almost $5.4 million additions to the budget include money set aside for unanticipated expenses.

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