PHOENIX (By Ginger D. Richardson, Arizona
Republic) August 18, 2006 — Arizona State University's plan to move the
Walter Cronkite School of Journalism to downtown Phoenix has hit a major
snag because increases in construction costs have pushed the project
well over budget.
The problem has created a ripple effect that could jeopardize the construction of the downtown campus' next biggest priority, the expansion of the College of Nursing and Healthcare Innovation.
City and university officials have committed themselves to moving the journalism school and its television affiliate, Channel 8 (KAET), to the new campus in fall 2008. That also is when they hope to be able to expand the College of Nursing. But now, they say, there likely won't be enough cash to cover the cost of building both facilities.
Phoenix has roughly $88 million at its disposal, part of a $223 million bond issue that was approved by voters in March.
It wasn't clear Thursday how much more money might be needed, but ASU officials are anticipating that fund-raising efforts and other private dollars will be needed to cover the shortfall.
The financing problem, the result of rising costs for construction materials and labor, is being exacerbated by what appears to be overwhelming interest in the new campus. University officials had anticipated an initial enrollment of 2,500 students. As of Wednesday, it was 5,000-plus and counting. They have enough classroom and office space to handle the initial influx, but the high demand has already caused administrators to revise their anticipated enrollment for the campus' future phases from 7,500 to 10,000 by fall 2008.
That could mean a serious space crunch if new buildings aren't in place.
"The idea that we might have 10,000, that gets me a little nervous," said Mernoy Harrison, the downtown campus' vice president and provost. "I won't say that it is our max, because we might be able to go a little higher. But it also might be lower depending on where the growth is."
Phoenix Mayor Phil Gordon said, "The enrollment is really good, but it has put some stress on the system."
The news comes just days before the downtown Phoenix campus holds its first classes, and it illustrates how challenging it is to build a new urban university, essentially from scratch, in only a few years.
Now, local officials are being forced to move forward with an alternative that would result in a new developer designing and constructing the academic space on city-owned land nearby.
The original project, known as Central Park East, has been touted by city leaders as a signature development for the downtown area. It is to take up the block bordered by Central Avenue and First, Polk and Van Buren streets. Plans call for two towers, one high-rise with about 150 condominiums and one mid-rise with about 300,000 square feet of commercial office space, plus the academic space for ASU. The complex is also supposed to include ground-floor retail space that Gordon and other city officials hope would contain a grocery store.
That proposal, which city officials say is not dead, is still the preferred location for the journalism programs.
But Phoenix officials were forced to start looking for alternatives late last month after the developer, Al Iudicello, failed to give them a guaranteed maximum price for the construction of the ASU space.
"He (Iudicello) also couldn't commit to a definitive time frame on the condos and the office components," Deputy City Manager David Cavazos said. "We made the decision that we had to look at other options."
Iudicello did not return a call seeking comment.
But city officials say that the combination of rising construction prices and the Valley's cooling housing market has made it impossible for Iudicello to build the ASU space for a manageable price. In other words, it not only will cost more to construct the entire complex but the developer also is likely to lose needed revenue if he can't sell the condominiums because of a glut of similar properties.
City officials have little leeway to negotiate.
Phoenix voters allocated $223 million in bond money for the new campus in March, but $100 million was set aside for land acquisition and renovation costs associated with the opening of the university's first phase. Plus, $35 million is dedicated to outdoor civic space and other improvements.
That leaves less than $90 million for new construction.
The city said Thursday that negotiations with Iudicello are ongoing and that they expect him to deliver a price estimate by the end of this month.
But their actions seem to indicate that they don't hold out much hope of resolution.
Next week, they plan to issue a request for proposals that would allow them to work with a new developer and build a stand-alone journalism facility a couple of blocks to the north.
The proposed site is on the southern half of a parking lot at the corner of Fillmore Street and Central Avenue.
It is adjacent to University Center, the downtown campus' main academic and administrative building.
Timing is critical. ASU officials have to have a building under construction by January if they are to have any hope of having it ready by fall 2008.
No cost estimate for the building, which ASU wants to include retail space, has been released.
Because the city and ASU don't yet know how much they will need for the journalism facility, they also have no idea how much bond money will be left over for the new College of Nursing building.
"We are anticipating a shortfall," Cavazos said.
The Nursing College is one of the campus' primary anchors and is expected to forge strong ties with the Translational Genomics Research Institute and the University of Arizona's downtown medical school. The latter is slated to open downtown in July 2007.
Without the new building, the university will be unable to expand the college and increase the number of graduates, a critical goal given the state's nursing shortage.
Harrison said ASU officials are still trying to determine how much space they would need to expand the program. The size of the building will determine its cost and whether there is enough bond money to cover its construction.
The university has other needs, too.
Most will likely have to be covered with fund-raising dollars. They include:
The problem has created a ripple effect that could jeopardize the construction of the downtown campus' next biggest priority, the expansion of the College of Nursing and Healthcare Innovation.
City and university officials have committed themselves to moving the journalism school and its television affiliate, Channel 8 (KAET), to the new campus in fall 2008. That also is when they hope to be able to expand the College of Nursing. But now, they say, there likely won't be enough cash to cover the cost of building both facilities.
Phoenix has roughly $88 million at its disposal, part of a $223 million bond issue that was approved by voters in March.
It wasn't clear Thursday how much more money might be needed, but ASU officials are anticipating that fund-raising efforts and other private dollars will be needed to cover the shortfall.
The financing problem, the result of rising costs for construction materials and labor, is being exacerbated by what appears to be overwhelming interest in the new campus. University officials had anticipated an initial enrollment of 2,500 students. As of Wednesday, it was 5,000-plus and counting. They have enough classroom and office space to handle the initial influx, but the high demand has already caused administrators to revise their anticipated enrollment for the campus' future phases from 7,500 to 10,000 by fall 2008.
That could mean a serious space crunch if new buildings aren't in place.
"The idea that we might have 10,000, that gets me a little nervous," said Mernoy Harrison, the downtown campus' vice president and provost. "I won't say that it is our max, because we might be able to go a little higher. But it also might be lower depending on where the growth is."
Phoenix Mayor Phil Gordon said, "The enrollment is really good, but it has put some stress on the system."
The news comes just days before the downtown Phoenix campus holds its first classes, and it illustrates how challenging it is to build a new urban university, essentially from scratch, in only a few years.
Money woes
City and university officials last year brokered a deal with a Virginia-based developer who pledged to build the journalism facility as part of a mixed-use project that would include retail, residential and office space.Now, local officials are being forced to move forward with an alternative that would result in a new developer designing and constructing the academic space on city-owned land nearby.
The original project, known as Central Park East, has been touted by city leaders as a signature development for the downtown area. It is to take up the block bordered by Central Avenue and First, Polk and Van Buren streets. Plans call for two towers, one high-rise with about 150 condominiums and one mid-rise with about 300,000 square feet of commercial office space, plus the academic space for ASU. The complex is also supposed to include ground-floor retail space that Gordon and other city officials hope would contain a grocery store.
That proposal, which city officials say is not dead, is still the preferred location for the journalism programs.
But Phoenix officials were forced to start looking for alternatives late last month after the developer, Al Iudicello, failed to give them a guaranteed maximum price for the construction of the ASU space.
"He (Iudicello) also couldn't commit to a definitive time frame on the condos and the office components," Deputy City Manager David Cavazos said. "We made the decision that we had to look at other options."
Iudicello did not return a call seeking comment.
But city officials say that the combination of rising construction prices and the Valley's cooling housing market has made it impossible for Iudicello to build the ASU space for a manageable price. In other words, it not only will cost more to construct the entire complex but the developer also is likely to lose needed revenue if he can't sell the condominiums because of a glut of similar properties.
City officials have little leeway to negotiate.
Phoenix voters allocated $223 million in bond money for the new campus in March, but $100 million was set aside for land acquisition and renovation costs associated with the opening of the university's first phase. Plus, $35 million is dedicated to outdoor civic space and other improvements.
That leaves less than $90 million for new construction.
The city said Thursday that negotiations with Iudicello are ongoing and that they expect him to deliver a price estimate by the end of this month.
But their actions seem to indicate that they don't hold out much hope of resolution.
Next week, they plan to issue a request for proposals that would allow them to work with a new developer and build a stand-alone journalism facility a couple of blocks to the north.
The proposed site is on the southern half of a parking lot at the corner of Fillmore Street and Central Avenue.
It is adjacent to University Center, the downtown campus' main academic and administrative building.
Timing is critical. ASU officials have to have a building under construction by January if they are to have any hope of having it ready by fall 2008.
No cost estimate for the building, which ASU wants to include retail space, has been released.
Because the city and ASU don't yet know how much they will need for the journalism facility, they also have no idea how much bond money will be left over for the new College of Nursing building.
Anticipating shortfall
But they are predicting that it won't be enough."We are anticipating a shortfall," Cavazos said.
The Nursing College is one of the campus' primary anchors and is expected to forge strong ties with the Translational Genomics Research Institute and the University of Arizona's downtown medical school. The latter is slated to open downtown in July 2007.
Without the new building, the university will be unable to expand the college and increase the number of graduates, a critical goal given the state's nursing shortage.
Harrison said ASU officials are still trying to determine how much space they would need to expand the program. The size of the building will determine its cost and whether there is enough bond money to cover its construction.
The university has other needs, too.
Most will likely have to be covered with fund-raising dollars. They include:
- A permanent student union. ASU officials planned to turn the historic downtown post office into such a facility. But that means that they have to construct a building next to the site to house a full-service cafeteria and other amenities. In the meantime, ASU has worked out a five-year deal that allows it to use space at Arizona Center, a downtown shopping and office complex at Third and Van Buren streets, as a temporary student union.
- Another academic building, most likely for the University College, which houses the campus' undeclared or "exploratory" majors.
- A library and archival building. A cost and time frame for this property also has not been determined.
Much of the planning for the campus will have to be
completed within the next eight weeks if the city and university are to
have any chance of having a journalism facility and nursing building
under construction by the beginning of next year.
City and ASU officials are confident they will be able to get it done.
"There have to be adjustments, and I bet there will be a lot more
adjustments after this," Gordon said.
"But I'd rather have that problem than the alternative, where we've
built buildings and there is no one in them."
