Final cost estimate slows progress on Wayne County jail site

John Gallagher | Detroit Free Press

MACKINAC ISLAND — Details, details.

Back when businessman Dan Gilbert offered Wayne County $420 million for the site of the stalled Wayne County Jail project, that price represented a ballpark estimate of what Gilbert’s team thought it would cost to build a new county criminal justice complex in Midtown Detroit.

Since then, the long delay in resolving what happens to the jail site has focused on turning that ballpark estimate into a solid purchase price. And as it turns out, getting to that final estimate has proven more time-consuming than anybody thought it would.

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The reason, as Matt Cullen, CEO of Gilbert’s Rock Ventures, told the Free Press this morning during at the Mackinac Policy Conference, is that the $420 million estimate was based only on a rough idea of what it would cost to build the new justice complex — not a detailed cost estimate based on a full knowledge of the county’s needs.

“Yeah, it was a ballpark,” Cullen said. “It was an informed estimate. We extrapolated based on other projects that had been done elsewhere.”

Such cost estimates on construction projects typically take months to develop. So it’s no surprise that the time lag between Gilbert’s initial offer and an agreement on a final price has stretched out far longer than anybody thought it might.

“We‘re working away,” Cullen said today. “You start with the programming and then you get into the design and then you get into the cost estimating. Some of the work obviously had been done on the jail relative to the program but none had been done on the courts or the juvenile facility and the integration of them. So we’ve spent some time doing that and working with them to understand all the programming.

“It’s coming together. My understanding from the county executive’s team is that they need to have clarity within the next couple of weeks on some of this stuff so we’re working hard to be responsive to them in that period of time.”

Of course, the deadline seems to have been a couple of weeks for a few months now, the process delayed as the county and Gilbert’s team hash out the details. And there was a new delay announced just recently as the Walsh construction team – the bidder to finish the jail on its current stalled site – asked for more time, too.

“We have been responsive to the county executive’s time frame,” Cullen said. “We continue to refine our proposal.”

Up to now, many thought that the delay was caused by Gilbert’s desire for a so-called offset to the purchase price based on how much more efficient his new justice center in Midtown would be over the county’s jail on the downtown Gratiot site. If Gilbert could save the county money by building a super-efficient complex, he reasoned, he ought to get some of the purchase price knocked down a bit.

But it appears now that this offset factor was just one question. The bigger delay focuses more on the need to work out a basic cost estimate based on the programming of the entire complex.

The process that’s underway is the normal one that takes place in any big development deal. Everyone needs to know down to the dollar what the thing is going to cost. If they don’t know that up front, somebody, or everybody, is likely to lose a lot of money on it.

Perhaps Gilbert’s team should not have made public that $420 million figure upfront, before a final cost estimate was in hand. It set up an expectation that a final decision from Wayne County might be had in short order.

Nothing to do about that now except work the problem and get it done.

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.