5.2. & 5.3. SR 06-24-2002MEMORANDUM
TO:
FROM:
DATE:
Mayor and Council
Pat Klaers, City Admi~ps~t!~
June 24, 2002
SUBJECT:
Discuss Public Safety Construction Bids
Discuss City Hall/Utilities Construction Bids
Item 5.2 & 5.3
Jim Beckwith from Kraus Anderson Construction Company is the construction manager for
our two projects. Over 40 building components for each project went out for bids. The bids
are still being compiled and evaluated and are not ready for City Council consideration. Most
of the building components will be ready for Council consideration at the July 8 meeting;
however, some components of the projects will need still further evaluation or will need to
be rebid.
Overall, the bids that were received are positive and are in line with the construction
estimates. However, both projects were estimated at an amount that was higher than the
January figures when the projects took shape and received consensus approval from the City
Council. The project estimates were above the January project budgets because the scope of
each project expanded and, especially for the Public Safety facility, the
furniture/fixture/equipment (FF&E) became better defined and the original estimates were
very low.
Public Safety Facility
In January, the Council directed staff to move forward with a lease purchase approach for
the Public Safety facility. The maximum amount approved by the Council was $8 million. In
January it was estimated that this would generate approximately $7 million (actually the
estimate was $6.98 million) for the project. This included the Geothermal system at about
$200,000, but no gun range components other than the shell and also only the shell for the
upstairs area of the Police Station. The entire Public Safety facility was estimated at 41,000
square feet and fit within the $6.98 million project amount.
Since January, the Public Safety facihty has changed slightly. First of all, the current estimate
for available funds with an $8 million lease purchase project is $6.94 million. Next, the EOC
space was expanded to meet our needs and subsequendy the Fire station above the EOC
was also expanded to match the basement footprint (slighdy over 2,700 square feet was
added to the project). Finally the FF&E estimate that started out at $250,000 is now
estimated at $550,000. (Of this amount, only $105,000 is for actual furniture while security is
coming in at $165,000, the radio system at $48,000, cabling at $130,000, and thc
telephone/voicemail system at $88,000.) All in all, the Public Safety facility is about
$620,000 over the funding level that is available.
The options to close this budget gap include downsize of the building, redesign some of the
building systems, and identify additional funds.
The largest financial component of the Public Safety project to reconsider is the Geothermal
system. This Geothermal system received extensive debate at the committee level and by the
City Council regarding the cost versus benefit for this system, the payback time frame,
replacement cost for the Geothermal pumps, maintenance expenses, etc. In early March, it
was estimated that the pay back would be in the seven- to nine year-time frame and by the
end of March this pay back had been extended to around ten to maybe 12 years. The
estimated cost for the system remained at $200,000.
We don't know for sure yet but the extra cost for the Geothermal system may be around
$250,000 and, if so, then the payback is approaching 15 years. At this cost and this pay back
time frame, serious reconsideration needs to be given to this system. At this cost level and
payback timeframe there does not appear that there is any real savings by way of lower
operating expenses offsetting increased capital expenses. Also, it seems like the equipment
(pumps mainly) will wear out and will need to be replaced somewhere in this ten- to 15-year
time frame. This is still viewed as "new" technology and the City received few bids for this
part of the project. If the City were to rebid a conventional mechanical and heating system,
we would expect a large number of bids to be received and that the savings to the City could
exceed the $250,000 amount. We will have the figure for the extra cost of the Geothermal
system available Monday night.
Another big item to consider is the 4,500 square foot upstairs police station shell area. The
main purpose for this area was to ensure that the facility would meet our 20 year police
needs; however, it is very difficult to estimate the program needs for 20 years and it may be
that the lower level of the facility will be large enough to meet our 20 year needs for police
office space. The police did gain some space early in the process when the attorney office
was moved to City Hall but also "lost" some space with the Geothermal equipment/controls
room and the information technology office. There has always been an expansion planned
for the police station and this will be on the north side of the facility and this is expected to
be two stories. Removal of the upstairs 4,500 square foot shell area would save an estimated
$165,000, although this could be slightly more if there is some redesign work done so that
the elevator would never reach a second level. The question really is two-fold: (1) to remove
the 4,500 square foot shell and/or (2) not even plan for part of the expansion to be on top
of the existing facility. It seems that if we remove the shell at this time there is no need to
plan for any part of an expanded police facility to be on top of the existing footprint.
In terms of additional money being put into the project, it is recommended that we add
$25,000 from the 2002 City Council contingency fund. This money would be applied to the
FF&E. This $25,000 matches the building permit fee for the Public Safety facility.
Another consideration to add money to the project would be to use reserve funds. Finding
approximately $100,000 would be a challenge but could be done. The hope would be that all
of the building construction contingency will not be needed and, therefore, that these other
reserve funds will not be needed for the project.
Altogether the above figures for removal of' the Geothermal ($250,000), removal ore the
upstairs shell ($165,000), adding contingency funds ($25,000) and adding reserve funds
($100,000), gets us to $540,000 in adjustments. This is close to the $620,000 figure we are
currently estimating as our shortage for the public safety building. It should be noted that
with these adjustments the Police Department is still not getting its key component added to
the project. This key component is the six additional garage spots at a cost of approximately
$80,000. The police have indicated their desire to have this as part of the project from very
early on, going back to the first meetings at the City Council level on the proposal in
November and December 2001.
City Hall
In January the City Hall facility (construction timetable from 6/03 to 5/04) was estimated in
the $2.7 - $2.8 million range. The source of funds for this project is the government building
reserve. The government building reserve receives its money from the landfill surcharge. It
was (and still is) estimated that the government building reserve will have approximately $2.8
million in early 2004, with about another $500,000 being available by the end of 2004. This
assumes that revenues continue to be received at the same pace for the next few years as
what we experienced in 2000 and 2001.
Since January the City Hall project has expanded in the amount of space being shared with
Utilities and in taking ownership of part of the basement beneath the Utilities building.
These additions plus the recent decision to have the mechanical and heating controlled by a
digital system pushed the City Hall project to slightly over $3 million. Finally, a new roof
system for the existing facility was recommended due to the ongoing problems with the
current roof plus the expected life cycle of the roof was to be ending within a few years. The
estimate for the roof was just under $150,000 but it now has become clear that additional
work to the structure of the roof needs to take place and the new estimate for the roof
project is in the $250 - 300,000 range. This new roof, regardless of any other remodeling or
expansion project, would need to take place.
Overall, there is generally less of a concern about the City Hall project budget as compared
to the Public Safety project budget. This is due to the limited amount of funds that are
available for the Public Safety project versus the use of reserves for the City Hall project.
However, if the landfill revenues going into the government building reserve were to slow
down or stop then alternative funding sources need to be identified for the City Hall project.
The slowing down of revenues is possible but having the funds stop altogether for an
extended period of time seems unlikely. The best reserve option available to the city is the
NSP reserve. An alternative is to use some street reserves but these reserves are planned to
be used for the street replacement program. A last resort alternative is the general fund cash
flow reserves. If everything comes together without interruption then the entire City Hall
project should be able to be funded by the end of 2004 with only some internal loans for 10
months being necessary.
With the City Hall facility, it is recommended that the project move forward as designed.
The City will have to use some internal loans in order to make the project cash flow. The
City will also have to make sure that other reserve funds are available in case the government
building reserve funds are not received as projected. With the City Hall project the addition
besides shared space and basement space has been the new roof on the existing facility and
this would need to be done regardless of any remodeling or expansion. (There is also a metal
roof versus a shingle roof issue that can save the City $25,000. This is substantially less than
the $50,000 original estimate that was the difference between the metal and the shingles. A
number of locations for metal roof examples will be available Monday evening and the City
Council to take a look at these buildings prior to the July 8 meeting when bids are awarded.
The life span of a metal roof is substantially longer than the shingle roof and would pay for
itself over time, providing that the appearance is acceptable.)
At this point, information is being provided to the City Council as an update on the status of
the project. Staff needs Council feedback mainly on the Geothermal component of the
project. If the Geothermal component is to be removed, time is of the essence in order to
rebid this part of the project and have the endre project move forward in a timely fashion.
We can wait until July 8 to make a decision on the upstairs of the Public Safety facility but if
the Council knows which direction they want to take on this issue, then feedback on this
component would help.
s:~council~pat~ch-ps bids6-24.doc