The cost of the new City Hall in Rehoboth Beach has risen from an initial estimate of $18 million to an expected $21 million when all is said and done.

City Manager Sharon Lynn provided an update on the project to members of the Rehoboth Beach Homeowners Association April 15 and detailing why the project’s funding has worked out the way it has.

She said the cost of the 43,000-square-foot building was estimated at $18 million, but that changed as the project evolved when seven alternates, not in the estimate, were included in the project. Lynn said four of the seven alternates had to do with matching the facade of the Rehoboth Beach Convention Center with the new City Hall. Other alternates included new flooring at the convention center, landscaping to create a walkway from Second Street to the new City Hall and a more sophisticated fire suppression system. She said these alternates alone added about $1 million to the project.

Also driving up the cost have been change orders for plan modifications. Thus far, city contractors have requested more than 75 changes that together add up to nearly $1 million. About 65 changes have been approved, with Mayor Sam Cooper signing off. The city commissioners have questioned whether at a certain dollar threshold, requested changes should come back to the commissioners for a vote, but that practice has not been implemented.

At her April 15 talk, Lynn said there are four kinds of change orders: agency-related changes, design work, owner-requested changes and changes brought on by field conditions. As an example of an agency-related change, she said $300,000 in change orders came about as the result of changes to the erosion and sediment controls at the site as required by the Soil Conservation District. Lynn said there were a number of changes to the design of the project - such as modifying the wood on the staircase leading to the second floor - and some changes were brought about by weather and worker safety concerns.

The commissioners went over the most recent batch of change orders at their April 10 workshop meeting. Among the newest orders are $11,000 to modify the walls of the commissioners’ caucus room, a tower structure standing on the eastern corner of the building.

Cooper said a $7,540 change order to remove and replace a gas line to the kitchen of the convention center was troubling because relocation was suggested by an unnamed city employee. Cooper said the gas line had to be upsized to increase the gas available for the kitchen. He said the employee wanted to make the gas line large enough to install a water heater. What was troubling, Cooper said, was the gas line had already been run and had to be redone.

“So one of our employees had an add-on? Can any of our employees just add anything they want?” asked Commissioner Kathy McGuiness.

“Who could have given instructions to Whiting-Turner that would have been acted upon?” asked Commissioner Toni Sharp.

Lynn said the change had been discussed and voted on at progress meetings on the project, which are held between the city’s contractors and architects along with Lynn and Cooper, and often one other commissioner. The meetings cannot have four or more commissioners taking part or else the gathering becomes a quorum and the meeting must be publicly noticed.

“In this case, it was talked about a couple of times and went through the process,” Lynn said.

McGuiness said even if the change order was vetted, she was troubled that a city employee could suggest a change order that would be acted upon. Commissioner Paul Kuhns asked if the city should have a policy in place for situations when employees suggest changes.

Other change orders include $14,000 for adding roof drains to the convention center roof, which Cooper said were not previously in the plans, and $53,000 for conduits to the 911 center’s uninterrupted power supply system. Cooper said the city is in line to receive grant funding that would reimburse the city for a large chunk of the money for the work on the 911 center.

The commissioners continued to question how the City Hall project has moved forward.

“I’m questioning the process,” McGuiness said. “When I hear things from constituents and I do not know, it’s troubling. I’d like know when there are changes. I’d like to have a threshold for approvals.”

Commissioner Stan Mills said, “We gave the architect, in my opinion, no guidance on what to do with the design. So they come up with their own design. We ought to model a template that would be used. We need to give better guidance from the beginning.”

City employees to move in after Labor Day

While the upfront costs have increased, Lynn said the city expects to save money on the back end after closing its loan with the U.S. Department of Agriculture early, earning a much lower interest rate that is projected to save $120,000 in interest payments per year.

Despite all the problems that have arisen, Lynn said the project is nearing completion. She said the western parking lot will reopen, for use by city employees only, Monday, May 15.

Lynn said city employees will move into the new building after Labor Day; while the building could be ready for move-in by August, Lynn said she did not want to uproot city operations during the summer season. Lynn said the convention center will reopen in January because work remains on the lot behind the fire hall, which will become the main public parking area.

She said the city is planning to hold an open house for the public before city employees move in.