EDITORIAL: Stir-fry Government, Part Six

Read Part One

The first rule of architecture fees is that you don’t talk about architecture fees. At least that’s how it seems to many in the wake of The United States of America v. The American Institute of Architects.

— Article by Elizabeth Evitts Dickinson in ‘Architect Magazine,’ January 2014

Yes, the U.S. Justice Department filed a lawsuit against the American Institute of Architects, on July 5, 1990 — the day following Independence Day — charging that the association violated the 1890 Sherman Antitrust Act. The federal suit charged that the AIA entered into an unlawful agreement to prohibit members from engaging in competitive bidding, discounting fees and providing free services.

Under a proposed settlement, the AIA would not admit wrongdoing but would be prohibited from having a code of ethics whose aim is to discourage competition.

It wasn’t the first time the AIA had been sued by the Justice Department. In 1971, the Department took the AIA to court following an investigation of numerous professional trade associations.  These associations had crafted fee structures that all members were expected to follow. As explained by AIA general counsel Jay Stephens, “If competitors in an industry get together and decide not to compete on price, that violates the Sherman Act. It doesn’t matter if you have good intentions or not, anything that you do that tampers with competition on fees or payments is going to be a violation of that law.”

From the above-quoted Architect Magazine article by Elizabeth Evitt Dickinson:

In fact, the most lasting effect of the antitrust litigation may well be the silence that ensued. Architects have been afraid to talk shop, in part because they don’t fully understand the scope of the law as it relates to fees.

“We know that we shouldn’t be talking about fees, so nobody talks about it” says Peggy Deamer, principal of her eponymous New York firm and an assistant dean at Yale University’s School of Architecture. “The Justice Department going after the AIA — that has cast a very long shadow.”

So I suppose we shouldn’t be surprised if we don’t hear much discussion about fees, while our local governments have been spending thousands of taxpayer dollars on consulting architects in the process developing plans to increase local taxes.

In the middle of this awkward situation is local architect Brad Ash, of Reynolds Ash & Associates, who has been making presentations to the Archuleta Board of County Commissioners (BOCC) and to the Pagosa Springs Town Council — at the request of those two local boards — about two multi-million-dollar government expansion projects.

We’ve discussed these two current proposals earlier in this editorial series, but here’s a quick summary. The BOCC hired the team of Reynolds Ash & Associates and Reilly Johnson Architecture to do programming work and develop price estimates for several options that would provide the 6th Judicial District and the Archuleta County Sheriff with significantly larger facilities. The expansion is to be funded by some type of tax increase, if approved by county voters. The most recent estimates of the expansion project cite $18.3 million, as the price for just the Sheriff’s offices and detention center.

We have yet to hear a coherent price estimate for the Judicial District’s expansion.

Then, last week, we heard Mr. Ash deliver an estimate to the Town Council, for a much-expanded Town Shop facility costing in the neighborhood of $9 million.

When these cost of these projects are discussed in public meetings, we don’t hear much discussion about “architect fees.” Like, how much money do the architects earn, when they design an $18.3 million government building?

This is a very important question, I think, because of the process governments use to determine their facility needs.

When you or I, as private citizens, decide to build a new house or a new commercial structure, we typically look at our current financial situation — savings accounts, income stream, access to credit, relationship with rich relatives — and make a decision about how much we can afford to spend on the project. We then design the building to fit our financial means.  Maybe we hire an architect to design the building for us, within that fixed price range. (This is not to say that everyone makes sane and reasonable estimates of their own financial situation — but that’s another matter.)

Basically, you first figure out what you can afford, and then you design the building.

This is not at all the process used by the BOCC or the Town Council, when they began looking at expanded Sheriff and Court facilities, or at a new Town Shop. Quite the opposite.

Instead, the government board hires consulting architects to tell them what they needed to build, how big it should be, and what it would cost — and then the BOCC (or the Town Council) try to figure out how they can extract that amount of money from the taxpayers.

Basically, you let the architects design the building first, and you let them tell you what the taxpayers must afford.

This is where we should probably be talking about architect fees — even if AIA members are reluctant to do so.

If you review the estimates presented to the BOCC by their consulting architects, you see documents that look something like this:

Estimated cost of a “Justice Center” on Hot Springs Boulevard, produced by architects Bob Johnson and Brad Ash in January 2016.

Try as you might, when you look at the above price estimate — you will not be able to find a line item for “Architect Fees.”  Instead, at the very bottom, you will see a line item called “Soft Costs.”  Somewhere — in the “Soft Costs” priced above at $5.9 million — are hidden the fees that the taxpayers will pay to the project architects.

What some of our readers may not realize is that, on big government projects, the architect fee is based on a percentage of the total project cost.  We can’t tell, from the quote shown above, if that fee is 10 percent… or 12 percent…  And the BOCC has never made that percentage publicly available.

What this means, for the taxpayer, is that the architects — if they are charging, say, a 10 percent fee — will earn $2.8 million on a $28 million ‘justice center.’   But they will earn only $1 million on a $10 million ‘justice center.’

Because of the way architects structure their fees, the more expensive the project, the more the architects will earn designing it.

But our governments hire the architects to tell them how expensive the project should be.

For the past couple of years, Archuleta County Commissioner Michael Whiting has been arguing that the BOCC should first define a budget for its proposed facility expansion project, and then ask the architects to fit their design within that pre-defined budget.

Didn’t happen.

Read Part Seven…

Bill Hudson

Bill Hudson founded the Pagosa Daily Post in 2004 in hopes of making a decent living writing about local politics. The hope remains.