Gaithersburg’s New City Hall Came In 54% Over Budget. The Council Tabled It, Then Approved It.

Gaithersburg’s city council approved a construction contract for its new City Hall in a 5-0 vote on Oct. 19, two weeks after tabling the same contract 3-2. The guaranteed maximum price, $24,705,523, came in 54.4% over the $16 million budget written into the city’s 2025 construction-manager contract, according to a Moderately MOCO review of the council’s Oct. 19 meeting packet.

The project renovates an existing 75,000-square-foot, five-story office building the city bought in 2023 at 12 South Summit Avenue in Olde Towne, plus the adjacent vacant lot at 8 South Summit Avenue, to consolidate four scattered city departments, including permitting, licensing, inspections and records, into one building. Montgomery College keeps its fourth-floor lease through 2027, paying the city $440,000 a year, according to an Oct. 5 memo from City Manager Tanisha Briley included in the packet.

A contract tabled, then approved

The Mayor and City Council first took up the construction contract on Oct. 5, when, according to the Oct. 5 minutes, “several City Council Members expressed concern with the level of documentation provided, citing the need for greater transparency given the project’s scale.” The council voted 3-2 to table the item for two weeks and bring it back Oct. 19. Neil Harris, Yamil Hernández and Robert Wu voted to table; Lisa Henderson and Jim McNulty voted against tabling.

Staff returned Oct. 19 with a letter from the owner’s representative, O’Connell & Lawrence, the construction-manager contract and trade bid sheets. The council then approved the amended contract 5-0, with Harris, Henderson, Hernández, McNulty and Wu all voting in favor, according to the Oct. 19 minutes.

The price, and why it rose

The city’s June 9, 2025, contract with Plano-Coudon, LLC set a $16,000,000 budget for the guaranteed maximum price, according to the contract text in the Oct. 19 packet. Staff negotiated a final guaranteed maximum price of $24,705,523, which is $8,705,523, or 54.4%, over that figure. Added to the $97,000 already paid for design work, the amended contract totals $24,802,523, to be paid from the city’s Capital Improvement Budget under the resolution the council adopted.

O’Connell & Lawrence, the city’s owner’s representative, wrote to Briley on Oct. 8 that the price reflected competitive bidding: the project drew 110 subcontractors across 30 bid packages, with three to six bids per trade. City staff and the firm “concluded that the price is fair and reasonable and was competitively bid,” the Oct. 19 staff report says. At the Oct. 5 meeting, Briley told the council the renovation was already included in the city’s approved fiscal 2027 capital budget with roughly $29 million allocated, plus about half a million dollars more for relocating Pepco utility lines, according to the Oct. 5 minutes.

Total project cost and how the city is paying

The Oct. 19 staff report puts the full project, not just the construction contract, at $30,137,148:

• Construction (design and construction phases combined): $24,802,523
• Furniture: $2,500,000
• Architecture and engineering: $1,478,415
• Pepco utility relocation: $494,975
• Project management and owner’s representation: $468,720
• IT equipment: $260,000
• Building commissioning: $132,515

Where the $36.1 million figure comes from

Hoodline reported Oct. 26 that the project’s cost rose 54% to $36.1 million, citing an FY25 capital improvement plan it said projected $23.5 million in cumulative spending from fiscal 2024 through fiscal 2029, and reporting that the council “unanimously adopted a total project cost of $36.1 million” by May 4.

Neither figure, $36.1 million or $23.5 million, appears in the city’s May 4 council packet, the May 4 minutes, or the Oct. 19 packet and minutes, which Moderately MOCO read in full. Those records instead show $16 million, $24,705,523, $24,802,523 and $30,137,148, the figures described above.

What changes for residents, and when

The renovated building is meant to work as what the city calls a “one-stop shop” for permitting, licensing, inspections, records and passports, replacing counters now split across four buildings, with shorter wait times and more meeting rooms, according to the staff report’s project description.

Construction was tentatively scheduled to start Oct. 26, 2026, the staff report says, about seven months later than the roughly March 2026 start date in the original 2025 contract. A detailed project schedule dated Oct. 14, 2026, and included in the packet lists substantial completion for Feb. 2, 2028, and final completion for April 26, 2028, about a year later than the March 2027 completion date the 2025 contract had anticipated.

Still unanswered

• Why did the 2025 contract set a $16 million budget for the guaranteed maximum price when the city says the project was already carrying roughly $29 million in the fiscal 2027 capital budget?
• Has the city reviewed or responded to Hoodline’s $23.5 million and $36.1 million figures?
• What caused the construction start and completion dates to slip from the 2025 contract’s original schedule?

We have not yet put these questions to the City of Gaithersburg; this story will be updated with any response.

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