In an effort to better communicate with members about the cost of the State Bar building construction project, this article highlights several areas of the project from initial budgeting, through the design development phase, to where we currently stand.

As my article in the May issue of the Michigan Bar Journal states, we are currently estimating that the final cost for renovations will be under $4.5 million. In 1998, we budgeted $3.3 million.

The following table outlines all costs associated with the building renovation project.

Type of Service	Amount Originally Budgeted	Actual Projected	Percent Over
Construction/Demolition	$2,300,000.00	$2,665,998.94	15.91%
Design Development	$263,500.00	$722,066.25	174.03%
Furniture & Window Treatments	$471,573.00	$595,186.92	26.21%
AV Equipment and Services	$297,017.30	$297,017.30	0.00%
Premise Wiring	0	$83,075.16	100%
Asbestos Abatement	0	$104,668.00	100%
	Total Projected Construction costs:	$4,468,012.57
	Less Approved Budget:	$3,263,500.00
	Amount Over Budget:	$1,204,512.57
	Percentage Over Budget:	36.91%

The table shows the costs associated with asbestos abatement and premise wiring, which contributed to the actual costs going above budget estimates. In the process of tearing down walls, the construction crew also uncovered several structural columns not accounted for in the demolition and construction plans. Additionally, the mechanical engineer had to re-engineer closure of the stairwell, which was previously located just outside the former Board Room, as the carriers were insufficient. These items contributed to a significant rise in design and development costs.

Despite how long this project is taking and the total costs, I believe that members will be very happy with the new facility. When the renovation of the Michael Franck building is completed this summer I believe that members will be able to be proud of their new bar center. It will be state of the art and will accommodate the needs of lawyers and judges across the state now and for the next 20 years.

As you may already know from previous articles on the building construction project in the e-Journal and on the Bar's web site, renovation project funds were made possible through significant increases in non-dues income over recent years including investment income on reserves and by holding down operating expenses to protect our reserves. This makes it possible for us to renovate the State Bar building without affecting member dues or the time-frame for the next projected dues increase. It seems appropriate to give you a brief overview of how we are able to do this by explaining how the dues cycle actually works.

We operate with a dues cycle, just like other state bars. Dues are set at the beginning of each cycle so that more is collected than is needed at the time, which creates surplus budgets. The surplus is set aside in reserves. The reserves build, but over time increased costs, expanded programs and new initiatives eventually create deficit budgets. The Bar will operate with deficit budgets, drawing on reserves typically for two-three years in a row, until another dues increase is needed. This occurs when reserves dwindle to about $1.5 million. Dues are kept at the same level throughout this cycle.

At the time of the last dues increase, we projected that the next dues increase would be in 1998. However, even with the building renovations project, we are on track to delay the next dues increase by a couple more years.

I hope that this information gives you a clearer picture of the construction project. Even though the project has experienced delay, I can assure you that the new Bar building, with its greater use of technology and convenient location, will accommodate all of your professional meeting needs.

Danial J. Kim