After negotiating to cut more than $700,000 from the initial bid, the Maple Leaf Management Group recommended that the Brown County Commissioners hire Brandt Construction Inc. to build the Maple Leaf Performing Arts Center.
The commissioners unanimously approved that recommendation at their May 16 meeting.
Brandt Construction was the lowest bidder when commissioners opened bids on May 2. Management Group co-president Barry Herring said the group had been meeting with Brandt over the last couple of weeks to negotiate their initial bid amount.
Negotiations resulted in a price reduction of $743,167, which brings the original $8,552,000 bid down to $7,808,833.
“We have to accept the original bid at $8,552,000, knowing that we’ll stick to the change order of $743,000,” Herring said.
The bid included the construction of the music venue itself, the site work, and the paving of a new road to get to it, Maple Leaf Boulevard.
The county has borrowed $12.5 million to build the 2,000-seat performing arts center, on Snyder Farm land behind Brown County Health & Living Community. As of February, about $2.5 million had been spent on land and prep work, such as architect fees, bank fees, environmental testing and consulting work.
According to one of the loan documents, $5,549,712 had been budgeted for the construction of the building, $1,959,068 was budgeted for site work and $75,000 for landscaping.
Paving of Maple Leaf Boulevard was set at $300,000, according to the mortgage note.
Project changes
Changes to the project include not paving the parking lot right away at a savings of $273,601.
Dropping the site a foot, which will still keep it out of the flood zone, was another cost-saving change, Herring said. That change saved $87,500.
Going from a metal roof to asphalt shingles over the lobby saved $40,497. Alterations to the stage flooring reduced the price by $54,920.
“(It) will not change the experience for the guest,” Herring said of the stage changes.
Using aluminum feeder wires instead of copper feeder wires saved $34,304. Removing two air scrubbers from the venue’s HVAC system saved an additional $50,000.
The biggest savings was taking some beams out of the lobby, for a reduction of $173,466.
Herring said the project still has nearly $500,000 in a contingency budget. At the commissioners meeting, Herring said some of that could be used to pave the parking lot.
At the May 9 meeting, Herring said that money would also be used to pay for insurance on the venue.
According to the mortgage note, $490,319.09 was budgeted for contingencies.
Other changes included reducing the roof thickness and letting electrical contractors use their own electrical panels.
Some members of the audience expressed concerns about allowing the lowest bidder to make changes to their bid amount before the commissioners officially accepted the bid.
“You should have rebid it,” resident Bob Cochrane said. “If you’re going to accept a lower bid from one company, give the other companies a chance to lower bids, also.”
Commissioner Diana Biddle, who serves as the commissioners appointment on the Maple Leaf Management Group, said that the commissioners had not accepted a lower bid from Brandt.
“We’re accepting the bid as it is, then we’re going to do a change order,” she said.
Herring said state bidding laws require the commissioners and the management group to consider and work with the lowest bidder first.
“You have to accept the lowest bidder, then you have to go through due diligence to decide if that low bidder can perform the project,” he said.
“If Brandt’s financial statement was weak, they had bad references, etc., we could have disqualified them, then we would have moved on to the next bidder. When we sat down with Brandt, they satisfied all of the criteria that we had of being a quality contractor; therefore, we had no reason or right to go to a second bidder per state law.”
Bill Freeman, who owned a construction company for 40 years, agreed with Cochrane.
“I am not sure what the legal wranglings the lawyers have done on the potential of rebidding versus accepting a low bid and then turning around and have a pre-negotiated change order. (It) seems a little funny to me, too,” he said.
Freeman said he did support the project, but he was worried that being over budget and reducing the “quality of the facility will reduce the ability for it to be as successful.”
“Don’t chase pennies to waste dollars,” he said.
“The question is, if all of these things were unnecessary to begin with, why weren’t they eliminated prior to going out to bid, and put in, if you wanted them, as add-alternates or something, or alternate deducts, if the architect thought the project was going to be overbid?” he asked.
Freeman said that a problem may arise with four other bidders who were within 4 percent of Brandt’s bid who may sue the county. The highest bid came from Dunlap Construction at $10,299,000.
Commissioner Jerry Pittman said he wasn’t concerned about possible litigation.
“Barnes & Thornburg is one of the top-rated lawyer firms in the state of Indiana. They represented us, they reviewed these documents and they found no problems whatsoever,” he said.
“We took the low bid. Every one of those bidders had the opportunity to present the bids we asked for. … They supplied to us what we have requested and there was a low bidder. If I was the low bidder and I didn’t get job, I would be upset about it. Once that low bidder has been accepted, then we can go farther and negotiate with them if we find things we want to change. There will be lots of changes. There’s always change orders in a project of almost any size.”
Resident Paul Navarro asked County Attorney Jake German that if a company finds out the bid was adjusted down, was it possible that could create a lawsuit on the part of another bidder who didn’t get the same opportunity?
“I don’t know the answer to your question,” German said.
Brown County Highway Superintendent Mike Magner said that the Indiana Department of Transportation adjust bids with “billions of dollars a year.”
“You take the low bid and you can add or subtract from that within a 20-percent range. It’s customary across the board,” he said.
German said that the bids and associated documents were in compliance with the current loan agreement and the budgeted hard and soft costs. German said the State Bank of Lizton, which is loaning the money for the project, has agreed with the decision.
Pittman and Biddle both reiterated that this loan would not fall back on property taxpayers, since it has been secured by innkeepers tax and the real estate.
What about sewer?
Resident Sherrie Mitchell asked the commissioners to consider holding off on awarding the construction bid because of uncertainty about sewer service. The town of Nashville has offered to serve the venue through its sewer plant nearby, and gave the Maple Leaf organizers a letter which they used to get a bank loan. However, the Maple Leaf property lies outside of the town’s sewer boundary.
“After the (regional sewer district) meeting last night, I am kind of concerned about that. How can you award a bid if you don’t really know where your sewer stuff is?” Mitchell asked the commissioners.
Biddle said the regional sewer district is “having a meeting to work that out.”
“The way we’re looking at it, Sherrie, is that we have two people vying to give us sewer service, one of which is going to be ultimately be successful in giving us sewer service,” Herring said.
“I went to the meeting last night,” Mitchell answered. “It was very contested. This could drag out 30 days, it could drag out 60 days.”
Biddle said if the matter cannot be resolved through the regional sewer district, then it would be resolved through the Indiana Department of Environmental Management.
“Until you get that resolved, don’t you think it would be in the best interest of the public to hold that award until know if you’re going to have sewers?” Mitchell asked.
Biddle said the commissioners can’t hold off awarding the bid “indefinitely.” “The bank wants us to move forward,” she said.
Both Biddle and Pittman said the issue would be resolved.
“I’ve spoken with the Brown County Regional Sewer District and it will be resolved. It will be resolved without attorneys and litigation and spending a lot of money,” Pittman said.
Mitchell said the dispute is “a legitimate problem that needs to be resolved, I think, before we award a contract to somebody. Why would we do that? That seems silly to me,” she said.
After the meeting, Biddle said it’s not a matter of the Maple Leaf being able to connect to a sewer, but rather who the venue would pay bills to.
“We we have a workable solution,” she said. She could not elaborate on the solution at that time.
Private enterprise vs. government
Resident Ron Lawson expressed concerns about using tax dollars to compete against the private sector, since Scott Wayman is still planning on reopening the Little Nashville Opry and other music venues exist already in the county.
“I am in business. I don’t like the government competing with these guys out here who are Mike’s Dance Barn, this RedBarn (Jamboree) out here,” he said. “It’s outrageous to me.”
“We have waited for five years for him to do something, and he hasn’t,” Biddle responded about Wayman.
Lawson said he feared building the Maple Leaf would be bad for the Opry. “You’re going to have two businesses doing the exact same thing, two miles apart? Don’t sit there and think that it’s not going to,” he said.
Pittman said since Opry burned in 2009, the economic situation in Brown County has deteriorated.
“We waited since 2009 for someone to fill that gap, and it has not happened,” he said.
Lawson said the private sector will fill the gap if there is one, “because that’s what private sector does in this country. Government should not be involved in filling these gaps. That’s not what government does,” he said.
Pittman said he “generally” agreed with Ron.
“As a general rule, I don’t want government to do anything private enterprise is willing to do or can do. I believe we’ve given private enterprise quite a length of time to do something in this arena. Even if the ‘ole Nashville Opry would reopen, it would not be in direct competition with this venue,” he said.
Pittman said the Opry is a country music venue only and that the Maple Leaf intends to have different musical genres perform there.
“I think, occasionally, there’s a situation where government can step in and do some things that can benefit the entire community and everyone in this county and do it in manner that is not degrading in any way to private enterprise’s opportunities.”
A date has not yet been set to break ground for the Maple Leaf Performing Arts Center.
On May 17, management group co-president Kevin Ault said that a date would be discussed at the management group’s May 22 meeting.
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Net operating revenues from the Maple Leaf will first be used to pay mortgage payments on the building. If there is not enough to do that, the county’s 5-percent innkeepers tax will be tapped to make up the difference, according to the administration agreement the Brown County Commissioners approved on May 16.
The innkeepers tax is charged on Brown County hotels, motels, inns and tourist rentals.
The administration agreement is among the Brown County Maple Leaf Management Group, the Brown County Convention and Visitors Commission, the Maple Leaf Building Corporation and the county. It outlines the management of the Maple Leaf Performing Arts Center, collection of revenue, operations and maintenance, and how funds will be transferred to make payments. It also outlines how excess revenue will be distributed.
The county has borrowed $12.5 million to build the 2,000-seat performing arts center on Snyder Farm land behind Brown County Health & Living Community.
The agreement was supplied by the State Bank of Lizton. It states that the county auditor will create an installment payment fund to use to make the mortgage payments. That is where the net operating revenue will be deposited. If there is not enough money in that account to make a mortgage payment, then the auditor must notify the CVC to transfer innkeepers tax revenue to make up the difference, three days prior to the due date.
Under the agreement, the management group is charged with managing the Maple Leaf project on behalf of the county and is responsible for contracting professional services, like attorneys or accountants, and other services.
It also states that the music venue will be used “solely as a music venue and public arts building or for corporate events or community events, and for no other purpose, except with the prior written consent of the building corporation.”
No material changes, remodel or alterations can be made with prior written consent of the building corporation and the county, according to the agreement.
It also states the management group is responsible to procure and maintain insurance on the project on behalf of the county.
Gross revenue, or all revenue generated by the Maple Leaf, will be deposited into a cash operating fund held by the management group. That account will be known as the Operation and Maintenance Fund. That money can be used to pay for repairs and maintenance of the Maple Leaf building. It could also be used for payments in lieu of taxes. But it can only be spent if there are no defaults on the mortgage, according to the agreement.
Operation and Maintenance Fund money cannot be spent to increase the value of the project, only on maintenance and repair expenses that keep the Maple Leaf in its original condition.
Any balance left in that fund “in excess of reasonable, budgeted expenses of operation, repair and maintenance (including payments in lieu of taxes) for the next succeeding six calendar months” would be net operating revenue.
That excess money could then be transferred to the county auditor to deposit into the installment payment fund. Anything left over after mortgage payments are made in December and June each year would be “excess revenue.”
If the county defaults on the mortgage, the bank could “require transfer of all amounts owed to satisfy the building corporation or the county’s obligations” from the operation and maintenance fund to the bank, the agreement states.
Excess revenue would then go into an Excess Revenues Fund. Under the agreement, if there is no default on the mortgage, that money would go first into an Capital Improvement Account until the balance equals $1 million. That money would be used for capital improvements.
If that balance falls below $1 million, the management group would be required to deposit excess revenue into that account until it is brought back up.
Once that balance is built up, excess money would go to the CVC to reimburse any innkeepers tax that was spent to make up the difference on mortgage payments. That money could also be used to pay for “unforeseen contingencies” in the operation, or repair or maintenance of the Maple Leaf with prior written consent from the bank, according to the agreement.
The agreement states that 75 percent of remaining excess funds per calendar year will go to the Brown County Community Foundation — if the improvement account sits at $1 million. If the Foundation ever ceases to exist, the money will go to a “similar non-profit corporation with a similar mission in the county,” the agreement states.
The use of that money would then be governed by a separate fund agreement.
If all of the above compliance measures are met, then any remaining excess money after mortgage payments are made would go to the commissioners “for any purpose permitted by law.”
The agreement also requires the management group to submit an annual report containing “unaudited financial statements” related to the operation of the Maple Leaf from the previous year to the building corporation, the county and the CVC.
The agreement has to be signed by the management group co-presidents Barry Herring and Kevin Ault, county commissioner Diana Biddle, CVC President Kevin Ault and building corporation President Robyn Rosenberg.
The commissioners also approved a agreement for project construction among the county, the management group and the building corporation. It outlines insurance requirements, bidding procedures and construction supervision for the management group.
Both agreements were approved unanimously before the bid for the project was awarded.
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The Maple Leaf Management Group met with Brandt Construction for a couple of weeks to negotiate Brandt’s initial bid of $8,552,000 down to fit the project budget. The Brown County Commissioners awarded the bid to Brandt on May 16. Here’s a breakdown of the changes made to reduce the bid price tag:
Site grading/revisions: $87,500
Removing asphalt paving for parking: $273,601
Reducing thickness of roof: $4,045
Asphalt shingles instead of metal roof: $40,498
Reducing number of timber beams in lobby: $173,466
Alternate stage flooring: $54,920
Alternate manufacturer for electrical panels: $6,333
Aluminum feeder wires instead of copper: $34,304
Reduce HVAC tonnage in lobby: $18,500
Delete two air scrubbers from HVAC: $50,000
TOTAL: $743,167
SOURCE: Brandt Construction Inc.
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