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UHD bids come in low

By Staff | Aug 31, 2009

Jeff Lang

Financing and bids have been approved for United Hospital District’s multi-million dollar campus expansion and renovation project.

Once the contracts have been finalized, construction can begin.

“We anticipate to receive finalization by Sept. 15. That’s what we are shooting for and is our goal,” says Mark Mensing, project construction manager.

Dan Pfaffinger of United Builders in Blue Earth says there were 65 bidders in 33 different sections.

The UHD board Tuesday night awarded bids totaling $10.6 million to 25 contractors.

Hospital administrator Jeff Lang says bids came in 11 percent lower than ex-pected.

“If you look at the actual construction costs, we beat our estimates. It is a good time to be in the market right now,” says Lang.

Professional fees of $1.45 million, ‘soft’ costs of $2.174 million and a 10 percent construction contingency fee of $1.06 million put total cost of the clinic/hospital project at $15.3 million. That amount is lower than the April price tag of nearly $19 million.

Board member Norm Hall asked Mensing and Pfaffinger why there weren’t many local companies among the low bidders.

Pfaffinger says many local companies were unable to post a bid bond amount required by the state.

“It’s not like we didn’t try. We tried and tried to solicit locals,” says Mensing.

The total for the UHD project and Winnebago adolescent treatment center is $19.5 million. UHD board members have approved a construction budget of $21 million.

Lang says the lower bids will reduce the bond amount by $750,000 and the amount of cash the district uses by the same amount.

UHD will bond for $11 million, which includes refinancing of some old debt that’s at a higher interest rate.

Tom Mayfield of National HealthCare Capital says a Luverne bank will act as the “lead bank” for the gross revenue bonds. The interest rate will be 4.58 percent for the first five years and will be changed every five years. The rate cannot go up more than 1 1/4 percent at each adjustment.