Agenda - Council - 08/11/2014 - Laserfiche WebLink

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Funding Source: Funding Source: Short Term: Facilities Fund ($182,993 projected balance at year end). Long Term: This work will be refunded via a reimbursement resolution and wrapped up within bonding for the entire project. A reimbursement resolution for this project is attached to this case. What about the bigger financial picture? Considering the bigger picture, the proposed project will have a TOTAL price tag of about $4M (including all soft costs). Staff estimates the annual debt service to be about $284,000 for 20 years. As previously discussed with the Council, debt service for Fire Station #1 will be retired after 2016. The City pays about $140,000 annually for debt service on Fire Station #1. Therefore, if Fire Station #2 was constructed, and Fire Station #1 was paid off, the NET increased annual cost to the City would be about $144,000. Below are other factors to consider: • If Fire Station #2 is constructed in 2015, debt service would begin in 2016 (which would overlap with the last year of debt service payments for Fire Station #1). As a result, if this scenario played out, Staff would recommend capitalizing interest in 2016, and beginning bond payments in 2016 for Fire Station #2. Attached is an example $4M bond run with capitalized interest in year one; and projected capital outlays for the next three years. • One major unknown is the sale and development of the old municipal center site. Previously, Staff has received direction from the Council to pledge proceeds from the sale of the old municipal center site to Fire Station #2. Staff would estimate the 'Asking Price' for the old municipal center site to be near $820,000. • The process to construct a new Fire Station #2 and demolish/clean-up the existing old municipal center site could take well over one year. Marketing the old municipal center siteAS-IS will make a land sale transaction complicated/less attractive to a developer and will yield a lower than market sale price --due to uncertainties (i.e. Who pays for demolition and site clean-up costs? Is a 'subsidy' required? What happens with the identified environmental concerns? Will a purchase agreement become overly complicated with deadlines/requirements? etc.). The City may want to consider administering the demolition of existing buildings and site clean up. Staff intends to discuss this topic in detail with the City Council either at the completion of final design by BKV Group or within the next two months. Recommendation: STAFF RECOMMENDATION (BACKGROUND): What is the general recommendation? The City has completed the first three steps of the process identified in the "Purpose/Background" section of this case. The general purpose of this case is to consider step 4--authorize final design. Staffs recommendation is to authorize BKV Group to complete said work. Why BKV Group? BKV Group is very familiar with this project and the City of Ramsey. BKV Group provided design services in step 1 and 3 of this process. Additionally, BKV Group has worked with the City in the past (new Ramsey Municipal Center). In summary, Staff believes BKV Group has provided quality service to -date. BKV submitted a proposal to the City of Ramsey for steps 4, 5 and 6 of the process outlined in the "Purpose/Background" section of this case; below are highlights; attached is a detailed proposal. • Price: $171,000 total cost. Step 4 $128,000 (this step), Step 5 $9,000, Step 6 $34,000. • BKV Group did discount their original proposal by $19,000 to compensate for work previously completed. • Due to BKV Groups' familiarity with this project, they reduced the proposal price to just below 6% of construction costs (which is competitive by industry standards). Did Staff check with competitors? Staff did not conduct a formal RFP process for this project for the following reasons: • BKV Group has effectively provided professional services for steps 1 and 3 of this process; and is familiar with this project.