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Lottery HQ below budget

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A dearth of construction jobs and an efficient design-build strategy are helping construction of the California State Lottery headquarters come in way under budget.

With the six-story building’s frame just completed last week and more than a year of construction to go, it’s too early to say what the final construction cost will be. But it’s expected to be substantially less than the $63.5 million earmarked for the project on North 10th Street near Richards Boulevard, agency officials said Thursday.

Subcontractors have agreed to work below previously estimated costs.

"It’s a really good time to be building because construction firms don’t have as much work. So you can get a better price," said Bill Ainsworth, deputy director of corporate communications.

The agency is collaborating with its contractor, Otto Construction, and architects in an innovative lean design and construction. The strategy involves weekly meetings and 3-D computer modeling to identify design clashes and solve issues before they become a problem in the field. That allows design and construction to take place almost simultaneously, saving a lot of time.

The new headquarters is being built on the agency’s 13-acre campus, next to the building that has served as the lottery’s base of operations for 25 years. That building was constructed in 90 days to meet the requirements of the ballot measure that activated the lottery in 1985.

"It wasn’t built with the intention of it being a nice headquarters building," Ainsworth said. "It’s just kind of a crummy building."

The agency approved the construction after a study determined that updating and maintaining the current 183,000-square-foot headquarters would be much more expensive. A renovation would cost $40 million and operating costs were estimated to be $2.4 million a year, totalling $136 million if the building held up for an additional 40 years, he said.

Funding for the project comes from lottery purchases. No tax dollars or state general fund monies are used, so the project has no impact on the state deficit, Ainsworth said.

The agency recognizes that money used for construction is money that can’t be turned over to schools. However, lottery commissioners approved the project because it’s expected to save money in the long run, he said.

Lottery sales are expected to increase by five percent for fiscal year 2009/2010 to $3.1 billion, according to the agency.

The current headquarters has a leaky roof, mold problems and a sinking foundation. Coffee cans sometimes are used to catch leaks in the reception area for executive offices, and 3,700 square feet had to be closed because of mold. The building also doesn’t meet seismic standards or requirements of the Americans with Disabilities Act.

The new headquarters will include environmentally friendly features and seek LEED certification from the U.S. Green Building Council. Features include a front-entrance, 10,500-square-foot landscaped plaza using indigenous, drought-tolerant plants, palm trees and no grass; low-flow toilets; carpeting, panels and adhesives free of volatile compounds; solar panels on a pavilion roof; three "green" roofs covered with drought-tolerant, low-maintenance vegetation; and a glass curtain exterior that enables 90 percent of the interior to access natural daylight.

The 155,000-square-foot project, which includes the main building and the 9,300-square-foot pavilion, is expected to be more efficient, have a smaller footprint and be easier for its 400 employees to navigate than the current mazelike headquarters, said Alex Traverse, assistant deputy director of corporate communications.

The project is expected to be finished in October 2011. The agency has postponed plans for other construction on the campus.

The new headquarters will feature a more open ground floor, a separate pavilion with a larger auditorium for lottery commission meetings, an updated lottery ticket draw room and a small, public museum for lottery artifacts that have been in storage. The idea is to create a more welcoming environment for the public.

"I think it’s going to improve our image," Ainsworth said.

Photos by Kati Garner and Suzanne Hurt, a staff reporter covering business and development for The Sacramento Press.


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