New governor’s residence moves ahead unaffected by budget cuts, State negotiating with Dickinson firm for construction manager contract

BISMARCK - This week's orders from Gov. Jack Dalrymple to cut state agency budgets by more than 4 percent and drain most of a reserve fund to cover a $1 billion revenue shortfall aren't slowing down a $5 million project to replace the official go...

BISMARCK – This week’s orders from Gov. Jack Dalrymple to cut state agency budgets by more than 4 percent and drain most of a reserve fund to cover a $1 billion revenue shortfall aren’t slowing down a $5 million project to replace the official governor’s residence.

The building project approved by the Legislature last spring is immune from the $245 million in general fund budget cuts announced by Dalrymple on Monday because the money for the residence is coming from the Capitol Building Trust Fund. The state constitution reserves the trust fund for construction and maintenance of public buildings on the Capitol grounds.

“It’s the only thing it can be used for,” said Jeff Engelson, investments director at the state Department of Trust Lands.

Lawmakers voted to spend $4 million from the trust fund if $1 million in private donations could be raised for the project.

A fundraising committee announced just before Christmas that it had secured the $500,000 in donations required before construction can start.


The state is now negotiating a construction manager-at-risk contract with JE Dunn Construction Co., a national firm with headquarters in Kansas City, Mo., and an office in Dickinson, said John Boyle, director of facility management.

JE Dunn received the top ranking among three applicants for what is essentially the general contractor’s job, Boyle said. The firm has worked on governor’s residences in six states and a number of state capitols, including restoration of the Minnesota State Capitol, he noted.

“They have a vast amount of resources and talent spread across the country that we can tap into,” he said.

JE Dunn has proposed charging a fee equal to 10 percent of the $3.5 million construction portion of the project to cover its general conditions, overhead and a 3.8 percent profit, Boyle said. The state is trying to negotiate that down to 9 percent, and if the two parties can’t reach agreement, the state would have to start over with the second-ranked firm, Capital City Construction of Bismarck, he said.

The other $1.5 million of the project will cover costs such as architect’s fees, furnishings, security and additional landscaping.

Construction is still on track to begin this summer, with completion expected in late 2017, Boyle said. At 17,700 square feet, the residence and its public gathering space will dwarf the current 10,000-square-foot residence.

The new residence will sit in the southwest corner of the Capitol grounds, just north of the existing 56-year-old home, which will be demolished when the new residence is ready. Lawmakers said the current residence has problems ranging from security to asbestos to a lack of handicapped accessibility and would have cost up to $3 million to repair and upgrade.

The new residence was one of three projects appropriated money from the trust fund during the 2015-17 biennium, the others being a $1.4 million for signs on the Capitol grounds and $310,000 in electrical upgrades in the Capitol’s legislative chambers.


The fund collects about 90 percent of its revenue from oil and gas royalties on state-owned trust land and also receives income from land rented for farming and ranching. Its $6.6 million balance as of Dec. 31 is projected to slip to roughly $2 million by the end of the biennium – about $1 million less than what was projected last spring, mainly because of low oil prices, Engelson said.

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