Denver's Webb Office Building offers cities new model for construction and financing public buildings

Bob Threlkeld
Principal
JohnstonWells
Denver, Colorado

The recent construction of Denver's $200 million Wellington E. Webb Municipal Office Building offers a unique model of public-private partnership that municipalities throughout the country can study for its lessons in financing, construction management, design integrity, budget savings and community outreach.

The massive project consolidated 46 city agencies and 1,800 employees into a 700,000-square-foot office complex composed of a 12-story tower with 570 underground parking spaces connected to a remodeled four-story historic building by a new four-story atrium. The ambitious project required a remarkable degree of teamwork to overcome numerous design and construction challenges. Moreover, the building was conceived, planned and completed in less than three years, nearly a month ahead of schedule, and within the project budget.

Employees and citizens are praising the building's stunning, contemporary design for its openness, accessibility, functionality and beauty, and community leaders are applauding the project's private sector management, public art and community outreach programs.

City officials anticipate an estimated long-term savings of $100 million in annual lease payments they were paying to 13 separate building owners to house various city agencies, as well as gains in efficiency from improved communication.

How did all this happen? How did Denver escape the cost overruns, construction delays and infighting that have become all-too-common in the planning and construction of public projects?

The project's success begins with the innovative financing arrangement and design-build process that saw creation of a single-asset, not-for-profit corporation as the actual owner of the building.

The corporation, Civic Center Office Building, Inc., collects annual lease payments from the City and County of Denver and pays off the tax-exempt certificates of participation (COPs), which funded 100 percent of the project's costs, including $15 million for land, the design-build contract of $132 million for the nearly one million square feet of improvements, $11 million in new furniture, the $1.3 million public art program, a $3 million Owner Controlled Insurance Program (OCIP), and $35 million in financing and capitalized interest expenses. In 25 years the city will own the building outright.

The developer, Mile High Development, LLC, of Denver, was selected in October 1999 to coordinate the effort. A city-led design competition narrowed the architectural teams, who then teamed with contractors to lead the design-build effort. The team of Hensel Phelps Construction Co./J.A. Walker, contractors, and the joint venture of David Owen Tryba Architects/RNL Design was selected in February 2000.

The selection of Mile High Development as developer was due in large part to the firm's experience in both the public and private arenas, as well as its expertise in building high-rise office buildings. The architect's master plan for the project, including preserving the 80,000-square-foot Annex building, earned the community's support. The contractors' considerable experience in managing large design-build projects and respecting the city's project budget in their proposal was crucial to their selection.

Critics of design-build argue that the process gives too much power and control over the design to the contractor and not enough influence to the client, in this case the City of Denver. However, by bringing the contractor into the project early, the design-build process allows considerably more flexibility in the design and construction than the traditional design-bid-build method. Participants are convinced that the quality of the building was improved through the process, and the shortened timeframe saved the city money.

"The city really did its homework," said Bill Mosher, principal with Mile High Development. "Before the project began the city hired a space planner and spent eight months determining the specific needs of each department. They also compiled a detailed list of technical criteria that governed the quality and performance of the building."

To avoid surprises and monitor progress of the project, the city established a communication and reporting matrix composed of a City User Group, City Project Management Team and City Tenant Representative. The User Group, comprising employees from many city departments, met monthly, and on demand, to get updates and to voice concerns. The Management Team, comprising representatives from the city's eight lead agencies, met twice a month with the developer and project team to discuss budget, design problems and other issues. Finally, the City Tenant Representative from the Public Works Department met weekly with the project team to monitor the design and construction progress.

"This process helped the city maintain control, but even more importantly, it allowed us to minimize disputes and keep the project on track," Mosher said. "We always had the power to make final decisions, but for the most part everything was done on a consensus basis. We were like an orchestra conductor, making sure everyone was hitting the right notes at the right time and were in tune with each other."

The teamwork and open communication that predominated throughout the building process were greatly enhanced by having the architects, contractor, developer and other project constituencies all housed in one place onsite. The shared offices were located on the top floor of the existing and soon-to-be remodeled Annex building. The personal interaction created by this arrangement led to a quick resolution of problems. It also facilitated adherence to a demanding schedule, one that saw construction begin in August 2000, within six months of the design-build team's selection, and completion by July 2002, one month ahead of schedule.

The city may not have served in its traditional ownership/developer role, but it did not use this new arrangement to circumvent its own and other government regulations. The city accomplished a variety of public purposes, including compliance with Davis-Bacon wage rates, the city's one-percent public art program and an ambitious community outreach program.

Indeed, one of the project goals was to recruit small subcontractors who had never had the opportunity to work on such a large commercial project. The project met or exceeded all its Small Business Enterprise goals, with 20 percent Minority Business Enterprise participation and 11 percent Women Business Enterprise firms.

The private sector project team spearheaded an innovative community outreach program that included an ambitious effort to connect with the city's school kids. The multi-phased program included:

  • Field trips to the work site to help K-12 school children learn how school-based skills are used in the workplace;

  • Partnership with a local high school to promote employment opportunities in the construction industry to inner-city youth;

  • An "Art of the Walkways" project that created an onsite interactive gallery;

  • An ongoing program led by Hensel Phelps to mentor a group of low-income area high school students with the goal of steering them into post-secondary education;

  • An onsite employment center was created to promote employment opportunities available through the contractor and the numerous subcontractors.
This community outreach program was awarded the Dr. Martin Luther King, Jr. Humanitarian Award for 2002.

The positioning of the city as tenant rather than owner/builder also proved to have a number of advantages, not the least of which was having a credible third party acting as mediator and final arbiter over contentious design and space issues that normally arise in the construction of a public building.

"With 46 different city agencies involved, you can imagine the number of requests and the competition for the best and biggest space," said Mosher. "As the third party, we assumed the burden for these decisions, shielding the city from the inherent internal politics and demands of such projects."

Mosher is quick to add, however, that the city deserves the lion's share of credit for the project's success by developing the space program and technical criteria and embracing the design-build process, while at the same time maintaining city control and oversight.

"But, I can honestly say we now have a better relationship with everyone involved than when we began the project," Mosher said. "And, this is a better building today than what it was originally planned to be. Among other things, we were able to add limestone to the exterior and put granite throughout the atrium and still come in under budget."

Without question, the developer-led design-build process gave the city more bang for the buck. As Mayor Webb said at the opening ceremony, "The building is not only a source of pride for the employees and people of Denver, but also a larger reminder of what public and private cooperation can achieve for the benefit of generations to come."

For more information contact Bill Mosher, Mile High Development, at 303-837-3470 or wmosher@mhproperties.com, or visit www.milehighdevelopment.com for project information.