An estimated $1.7 million budget shortfall is projected for the Whitefish City Hall and parking structure construction project, and city council remains undecided on how to tackle the issue.

Along with an anticipated $1 million shortfall, council learned of another $700,000 gap in funding at Monday’s meeting.

Despite expressing concerns, council approved an amendment to the construction contract for the project, chose to keep a third elevator, and took no official action on other suggested cost-saving measures.

Following a packed agenda with seven public hearings, council began discussing issues related to the construction project at around 11 p.m. Several councilors asked if any items in the amendment could be delayed for consideration. The city’s architect and general contractor both told council that delaying approval of the amendment at $10.2 million, which includes concrete, steel, electrical and plumbing work, would effectively stall the entire project.

“I’m massively frustrated with our current state,” councilor Frank Sweeney said, “and the pressure we’re under to make decisions based off a fire hose of bad information.”

“I know this locks ourselves into this [amendment],” councilor Andy Feury added. “We’re not going to get lower bids on this. We need to approve this or fill the hole back in. We do have options in the future to look for savings.”

Whitefish recently demolished its 98-year-old City Hall to construct a new building that will include city offices and a parking garage with 212 spaces. Site work on the $14.95 million project is underway at the corner of Second Street and Baker Avenue.

In a memo to council last week, City Manager Chuck Stearns proposed budget and design changes to make up for a projected $1 million deficit, reducing the shortfall to $227,000. Stearns asked city council to consider the measures Monday, but it didn’t vote on the plan.

In addition, Stearns told council on Monday the shortfall was actually higher than original calculations. Following late bid numbers for interior finishes, another roughly $290,000 was added to the shortfall, and the discovery that a line item for furniture had been deleted from the budget added another $420,000 to the shortfall.

“We have bigger problems than we thought,” Stearns told council. “We need direction from council to either continue cutting or for council to fund that, but we’re going to have to take some more time and see what we can do to resolve that.”

Stearns told the Pilot that while council didn’t technically approve his original cost-savings plan, he believes council made it clear that it wants to move forward with the measures. If the council ultimately approves the plan, that would bring the actual budget shortfall down to about $990,000.

“They seem to agree that all those changes were acceptable,” he said. “They wanted to keep the elevator, but they also wanted to go further and look for more cuts. We have a steep hill to climb and it’s not going to be easy.”

Stearns pointed out that the City Hall subcommittee has done cost cutting reductions already. Some parts of the project, like cutting the basement, aren’t an option because the excavation of the site has already begun, he said.

“I don’t know where else you cut that you’re not changing the whole project,” he told council.

“If you took the whole facade off of Baker Avenue you are left with gray concrete and you would save some money, but that’s not what people are going to be happy with,” he added later in the meeting.

Stearns said cost increases are due to rising prices for materials and labor. He noted that the City Hall portion of the project remains in line with cost projects, but the parking structure is driving the increases. In addition, while the city knew the site had clay soils that would need a special foundation system, the required rammed aggregate piers were more expensive than budgeted.

In the plan before council on Monday, cost-cutting was proposed through eliminating a number of amenities, including not finishing the basement storage area and bathrooms, cutting a skylight from council chambers, eliminating some canopies on Baker Avenue, removing a roof cornice detail design, the use of painted block instead of brick on the alley side of the building and removing the southwest elevator in the parking garage. The cuts were expected to save $229,000.

The city also proposes to add $162,000 of revenue into the project by capitalizing on three years of lease payments from the planned retail space in the facility. The amount would be borrowed from the city’s tax-increment finance fund and repaid over three years.

Value engineering changes could provide $181,000 to the project and allocation of $200,000 in leftover funds from the ancillary fund could add another $200,000 in revenue. The city set aside $1 million in ancillary funds for additional costs as part of the $14.95 million for the project.

Council considered the plan, which could have provided a total of $772,000 in savings and revenue increases, but given that the clock was ticking toward midnight, it chose only to vote on the elevator that was part of the suggested changes. Council in a 4-1 vote chose to keep the elevator as part of the design at a cost of $90,000. Feury was in opposition.

Councilor Jen Frandsen cited recommendations from the city fire department that the elevator remain because of its intention to be designed large enough to accomidate a gurney, and the additional costs that result if the elevator inside City Hall was redesigned to a larger size.

“The southwest elevator should not be removed,” she said. “It’s a public safety concern and we would need to redesign the City Hall elevator.”

A few councilors also expressed interest in keeping the canopies on Baker Avenue at a projected cost of $53,000, although they did not vote on the matter. Stearns noted in his memo in regards to the $227,000 shortfall that the difference could be made up with additional value engineering savings, other design cost reductions, an increase of the budget and increase of contribution of TIF money or use of the 5 percent contingency.

Councilor Richard Hildner said it was important for the city to approve the construction amendment, which was necessary to order steel and begin concrete work, while knowing it will still have to continue to look for cost savings.

“We need to move forward — every delay is costing us money,” he said.

The city’s architect Ben Tintinger, with Mosaic Architecture, said the difficulty of the City Hall project is the “amount of effort” its taken to get off the ground with demolition, asbestos abatement and the fact that it had soils that required a specialized system.

“We are at about $1 million just to get out off the ground,” he said. “In a way, we knew that, but before we [the architect and contractor] got involved the budgets for City Hall did not include that work.”