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Contractors Meet to Discuss Louisville Projects

Members of the building industry are meeting today in Louisville to learn more about large projects happening in the area. The University of Louisville’s Labor Management Center is bringing the group together.

Spokesperson Carrie Donald says the number of projects in Louisville requires an annual meeting.

“We started it last year because there were so many construction projects going on in the community and people really interested in how this is going to mesh together, how the workforces would be available and the contractors are very interested in using local labor, to the extent that’s possible,” says Donald.

Contractors, labor unions and administrators will consider large projects at the University of Louisville, UPS WorldPort, Norton Healthcare and the Louisville Water Company.

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Transportation Cabinet To Re-Evaluate Projects

The Kentucky Transportation Cabinet is rethinking its plans for road repairs and construction.

Cost estimates for road work have increased 40 to 50 percent, which has made the state’s current plan for highway renovations unaffordable. Cabinet spokesperson Mark Brown says no projects have been cancelled, but the Cabinet is re-evaluating its plans and may make changes to save money.

“We might build a ten foot shoulder instead of a twelve shoulder,” says Brown. “Or we might build a two-lane highway with wide shoulders instead of a divided four lane road if we find out a two lane road will suit our needs.”

Construction costs have risen mostly because of higher fuel prices and increased demand for materials overseas.

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Arena Bonds Depend On Fluctuating Market

Bonds for the new downtown arena in Louisville could be issued as early as this week. But exactly when that will occur is unclear.

The arena authority will meet Wednesday afternoon. Investment bank Goldman Sachs could announce the sale of bonds at the meeting, but authority chairman Jim Host says the bond market is too shaky to guarantee that will happen.

“At this point we are still working on that and hopefully we’ll be in a better position of being able to talk about that Wednesday,” says Host.

The authority plans a $360 million bond issue for the project. Host says as of Friday the market appeared favorable for the sale.

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Humana Building Demolished

Downtown Louisville was shaken yesterday morning when an office building was demolished to make room for the new arena.

The ten story building at Second and Main Streets was once owned by Humana. Mayor Jerry Abramson triggered the implosion. He says it marks the next phase in construction of the downtown arena.

“It really is the end of the beginning. This building comes down, the financing gets in place maybe next week, as soon as next week,” says Abramson. “The markets are settling down a bit.”

Depending on the markets, a bond issue for the arena could be announced Wednesday, at the arena authority’s meeting.

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Museum Plaza Still Delayed

In January, a failed attempt to safely drill into bedrock at the Museum Plaza site stopped construction. At the same time, developers announced they would wait for interest rates to improve before borrowing the money needed to resume work. It was hoped builders would be back on the job this month.

Museum Plaza (From Newscom)But the economy continued to falter, the city budget was cut, and as a result, the bond issue for the project was postponed.

“We delayed the interest expenditure on the bond by 2 months, knowing they aren’t going to be issued by then anyway. There wasn’t any need to have that money budgeted for interest,” says Kelly Downard, co-chair of the Louisville Metro Council’s budget committee.

The city saves money when bonds are delayed by not paying interest. Downard says the council won’t issue bonds for the project until at least September, and maybe longer.

“Principally, the people who buy bonds, they are not buying them. There’s not a market for them. So it’s very difficult for them to issue a $300 million bond issue or a $400 million bond issue in the market. It has to do with the marketplace,” says Downard.

The Museum Plaza SiteMuseum Plaza’s developers declined to comment for this story; they recently announced that they’re in the process of moving utility lines to the site. One of them, Craig Greenberg, told us in March that the delay could end up saving the project money.

“There are costs of materials like steel and concrete where we might be able to realize savings, so we’re pursuing all of that as well to try and make the project a stronger project given the current market conditions,” said Greenberg.

“The index of materials used in non-residential buildings has gone up 10% from June of 07 to June of 08,” says Ken Simonson.

Simonson is the chief economist for the Associated General Contractors of America. He says there’s been a nearly 2% increase in concrete prices over the past three months, and steel has gone up more than 26% during the same period.

“Steel is being affected by the low value of the dollar and the big construction programs happening throughout the Middle East, India and China,” he says.

Simonson says if construction of Museum Plaza were to resume today, its $490 million price tag would go up about $49 million. And it’s not just steel and concrete that are driving up construction costs.

“Diesel fuel is kind of the hidden element. Contractors have to use a lot of it to operate their equipment and they’re starting to see a fuel surcharges on deliveries of equipment and materials and the hauling away of dirt and debris and equipment at the end of the job,” says Simonson.

Since March, diesel fuel has gone up more than 18%. Simonson predicts material prices will continue to rise, and developers would stay closer to budget if they started building now.

“I think if you go ahead sooner rather than later, chances are you’ll see lower prices,” he says.
“So as they wait to build this tower it’s going to keep getting more expensive?” we ask.
“I’m afraid so, unless they redesign it, take out some elements, substitute materials,” says Simonson.

Louisville Metro Councilman Kelly Downard says he doesn’t know if the developers would consider a re-design to cut costs. He says the council has yet to see a completion agreement for Museum Plaza to assure that it will be the same 62-story skyscraper they broke ground for in October.

(Museum Plaza image from Newscom.)

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Local News

New Paint Chipping On Kennedy Bridge

Drivers on Louisville’s Kennedy Bridge may have noticed paint chipping off of the structure this month.

The paint is flaking on the trusses, in areas called splash zones. That’s where passing cars spray water onto the bridge after it rains.

The splash zones were painted with rollers after the main protective paint was applied to the bridge. Intech, the contractors responsible for the job, didn’t clean the areas before applying the paint, and now, less than a year and $60 million dollars later, it’s chipping off.

Intech is putting together a plan to clean and repaint the peeling areas. Transportation cabinet spokesperson Andrea Clifford says they won’t charge for the job, which should end the nine year painting project.

“We certainly thought that the project was done but we’re glad that they’re willing to come back out and do this corrective work,” she says. “We want the job to be finished and we want it to be done well.”

Clifford adds that traffic will likely not be dramatically affected by the repainting, but some lanes will be closed.