Although original estimates put a price tag of $100 million to $120 million on CPS Energy’s new headquarters on the San Antonio River, the final maximum number the public utility and Sundt Construction settled on Monday was $150 million.
“You always start [request for proposals] with a low number,” said John Benedict, CPS Energy vice president of real estate and master planning.
The construction company was awarded the contract in June, and the board unanimously approved the maximum cost Monday of $145 million from Sundt and a $5 million contingency fund from CPS Energy. Construction is expected to start in the coming weeks once paperwork from the utility, Sundt, and subcontractors is complete.
“It’s a major milestone,” Benedict said. “Now we have the dollars locked in.”
CPS Energy will start moving its employees into the renovated former AT&T headquarters during the first half of 2020, Benedict said. Initial estimates placed move-in during 2019.
The utility’s contingency fund will provide some flexibility to accommodate new technology, regulatory changes, services, or other updates to the building design, Benedict said. The design was approved by the Historic and Design Review Commission in late 2016.
The search for a new headquarters began more than six years ago when the utility’s leadership was considering building a new structure or renovating an existing building near downtown. Its current two-tower campus at 145 Navarro St. provides less than 300,000 square feet of office space and will be sold to offset the costs of the new 430,000-square-foot space. CPS Energy has yet to select a real estate broker to handle the sale. The buildings, which overlook the River Walk, were valued at $35.3 million in 2016 by the Bexar County Appraisal District.
“All said and done,” CPS Energy Board Chair Ed Kelly said, the project that includes two office towers, retail space, a 1,200-car parking garage, and connection to the River Walk will cost approximately $350 per square foot.
A lot of the savings in this project have already occurred, Kelly said. “We got the structure for nothing and the land for market value.”
CPS Energy paid $25.2 million for the land and building, which were appraised at $8.8 million and $11.4 million respectively by the Bexar County Appraisal District in 2016 and 2017. Appraisal value does not typically match market value.
The new, energy-efficient headquarters are expected to save the utility on operating, maintenance, and commuting costs as it relocates its more than 3,100 employees from various facilities in the city.
The cost of the building has been budgeted into the utility’s annual budgets and will not result in increased rates for customers, Benedict said.