Olivia, Minnesota, council rejects City Hall project that has roughly doubled in cost

By a 4-1 vote, Olivia City Council members rejected the low bid for a City Hall project that has roughly doubled in cost since it was originally proposed.

Olivia city council members voted 4-1 to reject a City Hall project that some fear could cost nearly $5 million.

OLIVIA — City Council members in Olivia voted 4-1 during a special meeting on Monday to reject bids for a City Hall project that has roughly doubled in costs from when it was originally proposed.

Calling it one of the most difficult decisions the city has faced in years, Mayor Jon Hawkinson said he had to say “no” to the project. He and council members emphasized that despite rejecting the project, they remain committed to “immediately” addressing the needs of the fire and police departments.


By their vote, council members rejected the low bid of $3,608,518 from Kue Contractors of Watkins for the project. It called for addressing space efficiency, security and function needs for the city offices, as well as electrical, heating and ventilation, plumbing and space needs for the fire department. The city offices and Olivia Fire Department are part of the City Hall building.

The project also called for providing space for the Police Department at the City Hall. The Police Department operates out of space leased from Renville County.

Council member Matt Baumgartner called the City Hall project a good one when it was originally proposed, and when it was estimated to be in the range of $2 million. But he said costs have since “ballooned” to nearly $5 million, well above what the city can afford.


The city of 2,400 population has arranged for $4.1 million in low-interest loan funds from the United States Department of Agriculture Rural Development. The city remains eligible for the funding and can apply it to a revised project.

The $4.1 million is not sufficient for the project, however. The project as bid does not include the full scope of work that would be required.

Mayor Hawkinson said the city learned it would need a wide range of additional work, from landscaping and furnishings to extensive electrical work, that would add hundreds of thousands of dollars in costs. The total cost would be closer to $5 million than $4 million, he explained.

He and council members said the city would need to immediately raise taxes to have funds available to service the debt.

The large and sudden tax impact was not the only concern cited by council members. The long-term financial commitment would limit the city’s ability to address other needs.

Council member Landon Padrnos said he was concerned it would “tip the scales” in favor of a fixed building for the Fire Department, but leave the department without the resources for equipment. The department could find itself with a new building holding a 40-year-old fire truck, he said.

Baumgartner also voiced his concerns about being able to address other needs.

“We need to focus on growth in this town,” he said. “We are not doomed to the demographics we see on the graph.” If the city spends all of its money on the City Hall project, it would “not be able to take advantage of opportunities when they come along.”


“Unfortunately, this project got way too big for what we can handle,” said council member George Ebbers who joined in rejecting it.

More by Tom Cherveny:
State and federal lawmakers toured the site Friday of the BNSF train derailment in Raymond.
This winter's snowpack has covered area lakes like a tight-fitting lid for roughly four months
Chronic flooding has led Renville County to consider the possible sale of Anderson Lake County Park along the Minnesota River
Many Raymond residents were not awakened by the sound, but it wasn't long before neighbors, volunteers and law enforcement officers were knocking on doors to start the evacuation process.

Council member Blanca Ferguson cast the only vote for the project. She told council members that costs will only continue to rise.

Her concern is that by rejecting this project now, down the road the city will be paying as much for only one of the objectives in this project.

Ferguson also voiced her concerns about continuing to pay $100,000 a year to lease space and services for the Police Department from the county. The city will be making a total of $3,381,770 in lease payments during the time it would be servicing the loan for the project, she pointed out.

Following the vote, council members agreed to meet March 6 prior to the regular City Council meeting with representatives of the fire and police departments to discuss how to address their needs. An assessment of their needs was used by Engan Architects in developing the now rejected City Hall project.

Mayor Hawkinson was among those emphasizing the need to address the police and fire department needs.

“I want to put that out there,” he said in explaining his position prior to the vote on rejecting the project. “We’re not saying no to the Police Department. We’re not saying no to the Fire Department. We are saying no to this project.”

Tom Cherveny is a regional and outdoors reporter for the West Central Tribune.
He has been a reporter with the West Central Tribune since 1993.

Cherveny can be reached via email at or by phone at 320-214-4335.
What To Read Next
Get Local