Cost overruns for Whitefish’s new City Hall and parking structure have now grown to nearly $1 million in a “worst case scenario,” the Whitefish City Council learned Monday.

The $14.95 million construction project — still in the excavation phase in downtown Whitefish — has been hit with higher-than-expected material and labor costs, which already had kick-started a “value engineering” process of cost-cutting by a city committee and the design team.

With the proposed cost-cutting and some budget maneuvering, the city had found ways to trim roughly $772,000.

Council members went into Monday’s meeting thinking they had to find a way to cover a remaining $227,687 shortfall, but then were told by City Manager Chuck Stearns about another $700,000 funding gap.

Bids for the interior work that were solidified late last week added about $290,000 to the latest shortfall. Stearns also discovered at the 11th hour that a line item for furniture somehow had been deleted from the project budget, which added another $420,000 to the overall cost.

“We got some shocks in the last week,” Stearns admitted. “The worst case scenario is $990,000 [shortfall] and that will come down” as the cost-cutting continues.

Frustration spilled over during the council meeting as council members grappled with how to proceed.

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

Although the council did not vote on a four-part proposal to provide $772,322 through various budget tweaks and design changes aimed at addressing earlier cost overruns, Stearns said he believes there was a consensus from the council to proceed with value engineering and cost-cutting.

One of the initial recommendations was to wait on the installation of an elevator in the southwest portion of the facility until sometime in the future. That suggestion was not embraced by the council, however, and a vote was taken to install the elevator at a cost of $90,000.

To keep the construction moving forward, the council voted to approve a project amendment to proceed with $10.2 million of the project that covers concrete, steel, electrical and plumbing work.

The city recently demolished its nearly century-old brick City Hall to make way for a new building and adjoining parking garage with 212 spaces on the half-block between First and Second streets along Baker Avenue. It’s the parking garage and its required steel construction that is driving up the project cost, Stearns said. The City Hall portion remains more or less on budget.

The City Hall oversight committee is meeting at 9:30 a.m. today at the interim City Hall to tackle the cost overruns.

“The cutbacks are probably going to be on the interior or the exterior facade,” Stearns said. “There’s really not much else you can do.”

There’s really no way to eliminate the basement at this point, he said, and the city will need that space for storage.

Initial recommendations for cost-cutting included removing a number of building amenities from the project, at the recommendation of a subcommittee. Some of the proposed changes are not finishing the basement storage area and lockers/bathrooms, scrapping a skylight over the City Council chambers, eliminating canopies from the retail space planned along Baker Avenue and using concrete blocks on the alley facade instead of brick.

Some council members said they want to keep the canopies, which will cost an estimated $53,000.

The city can tap its tax-increment finance district fund further if the council so chooses, Stearns said. The current fiscal year could provide $317,000 in tax-increment revenue that could be diverted to the City Hall project, and it’s possible to postpone other projects such as improvements to Depot Park to free up money.

“Two years from now in the TIF [tax-increment fund] we’ll have in excess of $1 million,” Stearns said. “There is some funding [available], but I think the council is trying to hold to the budget established in June as much as possible.”

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.