Steel Tariffs Partial Cause of LBI School Rehab Cost Increase

Sep 26, 2018

To the casual observer, the trade war between China and the United States seems far removed, but the battle for steel has trickled down to impact local construction projects, including a potential rehabilitation of the LBI Grade School.

“It’s mostly been in steel,” Frank Little, the professional engineer retained by the LBI Consolidated Board of Education to update an April 2015 report on repairing the 1960s-era building, said of increased costs associated with the initial estimate. “We’ve seen it in other, bigger projects we’re doing on the Island.”

The increase is in the overall cost of the project, which has grown more than $200,000 between April 2015, when Little coordinated the structural review of the district’s two elementary school district, and now, he said. Some of the work laid out in that report was performed by Harrison-Hamnett PC of Pennington, including a shoring-up project prior to the beginning of the 2015-16 school year. The LBI School was built with a structural steel roof framing that consists of open web steel joists, steel beams supporting the metal roof deck and steel columns.

Last month, Little was asked to present an updated cost estimate to the April 2015 work. He used the same team of professionals for consistency. After presenting that report to the board, he went back to the architect, and adjustments to the original estimate of $5 million to $5.5 million for the work were made. Among the changes, he said, was an increase in the costs of restrooms. The initial cost quoted was $11,000. The updated cost is around the $20,000 mark, he said. The architect also included a 10 percent contingency cost that wasn’t in the initial estimate, Little said.

Still, the numerical changes all keep the project within the forecasted $5 million to $5.5 million provided to the board by Little in August. The district is eligible for 40 percent state aid of the total cost, so approximately $2 million, from the state Department of Education for the rehabilitation project. State aid for new construction is configured differently, according to Little, and the cost per square-footage isn’t comparable to real-world costs.

Without knowing what will happen in the future, Little said he is confident the project cost would remain consistent for the next year. The school board has not indicated when or whether it would make a decision regarding the updated report.

The rehabbing of the LBI School is, in part, a response to the failed $18.4 million expansion and rehabilitation referendum for the Ethel A. Jacobsen School in neighboring Surf City. On Sept. 26, 2017, voters in Long Beach Township, Ship Bottom and Surf City rejected the proposal out of hand. The board has been considering its options ever since.

In the meantime, the trade war with China has kicked up and the Congressional Research Service, the public policy research arm of Congress and a legislative branch agency within the Library of Congress, has issued an update to its report on Section 232 of the Trade Expansion Act of 1962. The section allows the president to impose restrictions on certain imports based on an affirmative determination by the Department of Commerce.

The Sept. 11 update found steel and aluminum tariffs are impacting stakeholders, propelling feedback from Congress – some in support and others voicing concerns.

“In general, the tariffs are expected to benefit the domestic steel and aluminum industries, leading to potentially higher steel and aluminum prices and expansion in production in those sectors, while potentially negatively affecting consumers and downstream domestic industries (e.g., manufacturing and construction) through higher costs,” according to the 40-plus-page report.

The report goes on to say Congress has performed oversight of the Section 232 investigations and examined the potential economic and broader policy effects of the tariffs.

“Congress may consider legislation to override the tariffs that have already been imposed or to revoke or further limit the authority it previously delegated to the President going forward in future investigations,” the report said, noting global overcapacity in steel and aluminum production, mainly driven by China, has been an ongoing concern of Congress.

The last three administrations engaged in multilateral discussions to address global steel capacity reduction through the Organization for Economic Co-operation and Development.

“Based on concerns about global overcapacity and certain trade practices, in April 2017 the Trump Administration initiated Section 232 investigations on U.S. steel and aluminum imports. Effective March 23, 2018, President Trump applied 25% and 10% tariffs, respectively, on certain steel and aluminum imports,” according to the report, which noted Trump temporarily exempted several countries from the tariffs pending negotiations on potential alternative measures.

Some of those countries include Brazil and South Korea, steel only; steel and aluminum for Argentina; and Australia was exempted from both tariffs with no quantitative restrictions. Other American trading partners are challenging the tariffs under the World Trade Organization rules and have threatened or enacted retaliation, risking potential escalation of retaliatory tariffs.

The next LBI school board meeting is slated for 7 p.m., Tuesday, Oct. 16, in the media center of the LBI Grade School, 20th Street and Central Avenue in Ship Bottom.

— Gina G. Scala

ggscala@thesandpaper.net

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