A sprawling new courthouse and judicial center opening this month in downtown Denver to bring the state attorney general, the supreme court and the appellate courts under one roof cost more than advertised and won’t save nearly as much in efficiencies as originally thought.
The $283 million Ralph L. Carr Judicial Center was sold to lawmakers as necessary to reduce overhead and cut down on redundancies from having the Judicial Branch spread out around the city. State judicial staff promised $60 million in savings over 30 years.
But an evaluation by the Colorado Office of the State Auditor found that there was no basis for the anticipated savings and judicial staffers couldn’t produce any documentation to back up the figure.
The revised estimate has been significantly downgraded: Having the judicial branch in one building is now estimated to save $20 million in day-to-day expenses over 30 years.
“We found that the Judicial Department was able to give some very high numbers” in estimated cost savings when pitching the new building in 2008, said Acting Deputy State Auditor Michelle Colin. “But they were not able to provide us with anything to really substantiate how they came up with that $60 million and what was the basis of that.”
The department originally estimated that the new building would save $15 million in rent over 30 years; the revised numbers now show they’ll save only a tenth of that amount over the same period, $1.5 million. Likewise, projected savings for staff and operational costs were originally estimated to be $30 million. Now it’s $3.5 million.
Total first-year savings on rent, utilities, staff and operations were originally estimated to be $4.3 million. The new estimate is a mere $477,983.
“The expectation that cost savings would occur through consolidating and reducing the operational costs of Judicial Branch agencies and the Attorney General’s Office was a major justification for approving construction of the Judicial Center,” according to the report.
The original plan also didn’t include the cost of renovating and backfilling the Attorney General’s old office space, which will be used by other state agencies. That’s estimated to cost $3 million.
“We saw some things that we felt should have been considered and we felt like you would have expected to see more detail on how they derived some of those numbers,” Colin daid. “If they had included all of the additional costs and such, it would have been a more complete estimate.”
Colin noted that tenants in the new building will be paying less per-square-foot in rent than originally estimated, which could offset some of the cost-saving reductions over time.
The review of the building’s construction was part of an overall performance evaluation of the state’s capital asset management done by Deloitte on behalf of the state auditor. The Judicial Center was one of four projects that were evaluated.
The report found several deviations from standard real estate practices, including how construction requests are analyzed and how they’re monitored once they’re approved. For instance, the Department of Personnel & Administration didn’t prepare a project justification and analysis for a new $9.3 million parking garage near the capitol complex. Nor was the project reviewed by the Office of State Planning and Budgeting.
The plans for the parking garage also included no lifecycle costs — such as estimates for ongoing maintenance and repairs — beyond construction and financing.
The Judicial Center suffered some of the same problems. The report found that its project analysis included outdated assumptions about space needs for various departments. Many are now occupying more space than originally planned, leading to an increase in total annual rent expenditures of $1.2 million.
The problem, Colin said, comes from the fact that Colorado has no standardized or statutory guidelines for how construction projects are undertaken and the process varies from agency to agency.
“Colorado is very decentralized,” she said. “Because there’s not a standard process that every project has to follow, we found that there were inconsistencies in how they … reported what the total project cost was going to be and how they reported and estimated their cost savings.”
The state court administrator and the state architect did not return messages seeking comment.
But in the report, the judicial agencies agreed with the auditor’s recommendation to report annually on its expected cost savings to the Capital Development Committee and the Joint Budget Committee. It also agreed to report on unresolved building issues and to conduct a post mortem evaluation of the project.
Other agencies involved in reviewing capital construction projects have agreed to demand better and more complete information for future proposals.
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