Inflation, green standards raise costs of capital's projects

Nevada lawmakers were told Thursday the state's capital improvements will cost millions more in the coming years because of continued high inflation in the construction industry and costs related to making buildings more energy-and water-efficient.

Gus Nunez, deputy manager of the state Public Works Board, outlined $300 million worth of capital improvements, about a third of projects planned by the state, to the Assembly Ways and Means Committee.

Nunez said the costs reflect projected inflation for construction materials and increased costs of meeting the U.S. Green Building Council's rating system, called Leadership in Energy and Environmental Design, or LEED. In 2005, the Legislature required all new state buildings to be built to LEED requirements.

Assembly Speaker Barbara Buckley, D-Las Vegas, wanted to know how much the buildings will save in utility bills.

"We are evaluating what we want to do going forward. We need to make some decisions here," Buckley said, referring to the costs versus benefits of green building.

Nunez promised to come up with a comparison. He said later that money was never provided to cover the costs of building according to LEED.

"Now we are here saying, we need more money if I have to satisfy LEED to finish this project," Nunez said.

Nunez thinks the state should design its own LEED-type system that focuses solely on water and energy conservation. LEED also provides credits for certain sustainable or healthy materials, recycling unused material or providing views from office space, he said.

Of the $900 million budgeted for capital improvements over the next two years, about $12 million will be spent on meeting LEED standards on 13 projects under construction or being designed. Another 77 projects included in the $900 million total were started before the LEED standards were imposed.

Meeting the standard raises construction costs by between 3.5 and 6.5 percent, Nunez said.

"Eventually all of these things are going to start catching up. If things keep going the way they are, that number (for LEED costs) will be considerably more than $12 million," he said.