The city of Bellevue will pay about half of a $20 million cost overrun on the new City Hall, and the bill could take money away from street and park improvements, officials said Friday.

The city reached a settlement this week with the building's architect, SRG Partnership. The City Council is expected to approve the deal Monday night.

The $122 million City Hall opened downtown in February to rave reviews, but the city and its builders have been fighting over the cost of the project for more than a year. The city reached a deal with its contractor, Lease Crutcher Lewis, in March that requires the company to pay $4.8 million of the overrun, but the rest of the bill was up in the air until the city resolved its complaints with SRG.

Since then, the total overrun also has grown from $19.6 million to an estimated $20.3 million because of new claims filed by subcontractors. The city is not expected to have a final cost for the project until next month, but Planning Director Matt Terry said he does not think the overrun will get bigger.

The overrun is the fault of the city, contractor and architect, city officials say, and all three parties will share a substantial chunk of the cost. Under the settlement, SRG will pay $5.2 million, with the city paying most of the remaining $10.3 million.

City officials have said the cost of City Hall went up for many reasons, including bad architectural drawings, poor construction planning and problems with the old Qwest building that was remodeled into city headquarters.

The city's share of the cost will probably go down by a few hundred thousand dollars when a legal dispute with the city's insurance broker is resolved in the next month or so, Terry said.

Mayor Grant Degginger, an attorney who specializes in representing cities and hospitals in construction disputes with contractors, said he was satisfied with the city's share of the overrun.

"Getting someone to pay half or slightly more than half is a pretty good result for an owner," he said.

So how will the city pay the $10 million?

According to Terry, the council will have three potential sources of money: the capital-improvement program, which pays for street and park projects; a budget surplus; or the funds raised by issuing new bonds.

The surplus is not big enough to pay for the entire overrun, so the council will have to tap at least one of the other sources. And if the council issues bonds, the debt on the bonds also would be paid by the capital-improvement program, Terry said.

The council probably will decide how to pay the overrun when the final cost of the building is determined next month.

Ashley Bach: 206-464-2567 or abach@seattletimes.com

IF YOU GO

The Bellevue City Council will consider a new City Hall legal settlement at its 6 p.m. meeting Monday at City Hall, 450 110th Ave. N.E.

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