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The Albert Lea City Council on Monday voted to move forward with an amendment to the contract for improvements at City Arena despite an unexpected $1.2 million increase in the cost for the refrigeration system from what was projected in December.

In addition to the new refrigeration system for both the Nystrom and Colstrup rinks, the amendment covers a new floor for the Colstrup Rink and a reverse-osmosis system for water used to resurface the ice of both rinks.

The projects were part of a referendum approved by 75.5% of voters in April that would allow the city to borrow up to $9.8 million to improve the City Arena, Marion Ross theater, Aquatic Center and Splash Pad.

Cathy Malakowsky, director of community engagement and enrichment for the city, said while the increased cost has been mostly offset, the project is still about $320,000 over budget. That figure also takes into account the cost for temporary chillers for each of the rinks for three months, which are expected to cost a combined $180,000.

Malakowsky said the city saved $500,000 because it did not need to conduct frost removal, and it received $47,000 more than expected in federal incentives. The Albert Lea Hockey Association is donating $250,000, and many other projects came in under budget. Lastly, there was about $225,000 remaining that could be used out of $500,000 in contingency funds after election and financing costs.

They could make up the remaining $320,000 through reductions in remodeling costs, cutting some projects or using the premium on the bonds the city received, though many councilors have expressed a desire to use the funds to reduce the cost of the levy to taxpayers, she said.

In talking about how to proceed on the arena project with the different user groups, including the Albert Lea Hockey Association, the Albert Lea Figure Skating Club and others, she said she received excellent feedback and believes the overage can be cut down to $180,000 with some of their suggestions for what is needed and not needed.

She said some of the equipment that needs to be ordered could be 40 to 60 weeks out, and the timeline for the project would be an entire year.

Third Ward Councilor Jason Howland during the workshop asked how the bid for the refrigeration system could have been so far off from the estimate in December. In December the bid was estimated at $4.2 million, while in July it was $5.4 million.

Marco Hunt, Cody Capra and Rob Krukoski with Apex Facility Solutions said they were also shocked that the pricing for the refrigeration system came in as it did, a 23% increase. The increase was attributed to equipment costs, not labor.

Second Ward Councilor Larry Baker during the work session asked if it could have been possible to rebid the project between December and July to let the city know where it stood before the bid came through in July. He said he works in the lumber business, and through his work they give estimates to people all the time.

“I’m a little disappointed,” Baker said, saying he believed the increase should have been on the Apex’s radar.

Hunt said they were also disappointed, noting that two price increases in six months was unprecedented and not consistent with the rest of the project. They could have predicted a 5% increase in seven months, and if that had been the case, that increase could have been absorbed into the project. He also noted similar bids in other communities the company is working with.

First Ward Councilor Rachel Christensen said she had a problem with how the bids came back in July and the council didn’t hear about them until September.

Mayor Rich Murray said he was also disappointed with the numbers presented and asked the Apex representatives how many different places they asked for bids for the project and if they were all Midwest-based.

“You guys think the questions that we’re asking you tonight are tough, but you know what, those are the questions we’re going to get on Main Street over the next two weeks, and people are not going to be happy with what we’ve done here,” Murray said. “It’s going to be tough. … This is a great project for the community, but it’s a huge tax increase and that’s what we have to watch out … We have to watch that very closely.”

He said he was hoping that all of the half a million contingency built in for the project would not have had to be used and that the money from the premium could have been used to save taxpayers money.

“That money belongs to the taxpayers, and I would like to lower their burden some with that money,” he said.

The Apex representatives said the companies they sought bids from were based in the Midwest, though the same thing is happening across the country.

Murray asked the Apex representatives if there were any other things that could be done to save.

Hunt said the company did not take an increase in its percentage that it would be paid even with the higher bid that came in. The company is typically paid a percentage of the total cost.

Krukoski said they would also try to push the contractors and vendors to get the equipment installed quickly to reduce the cost of the temporary chillers.

First Ward Councilor Rachel Christensen said she wanted clarification about whether it would be legal for the council to use the premium from the bond sale to make up for the difference in the cost as the referendum was approved by voters at a set amount.

Finance Director Kristi Brutlag and City Attorney Joel Holstad said they would bring more information back to the next meeting on the issue.

Bids for the improvements at the Marion Ross Performing Arts Center came in under budget, with Albert Lea Community Theatre agreeing to pay for the cost of a digital sign. The Aquatic Center is on its second design and is now believed to be under budget, though that has not gone out for bids yet.

The restrooms near the splash pad have not yet been designed.

With the vote Monday, the council locked in the prices for the refrigeration system, Colstrup arena floor and the water surfacing system for ice resurfacing.

In the coming months, the city and Apex will continue to finalize the remodeling plans and continue to work to reduce costs.

The council will vote on the remaining projects at the arena, pool and theater Oct. 14.

Work would be completed in 2025.