On October 9, 2012, Council was presented a recommendation for the Planning and Community Services Department to proceed with negotiations for office space in the Miller Building at 2825 3rd Avenue North.  The site was selected after a careful and unbiased process that began in June, 2012.  At the previous meeting, Mr. Jerry T. Ray approached Council with another proposal indicating he would "beat the adverticed price by 2% of the recommended property".  Council considered both staff's and Mr. Ray's recommendation and agreed, on a 6 to 5 vote, to postpone taking action on staff's request.  Council also requested additional information on the availability of parking and asked staff to confirm the cost of monthly fiber optic service.  Because Norman Miller released the City from confidentiality and because Mr. Ray has made his proposals public, those two properties are identified by location.  The name and location of the other properties will remain undisclosed and are referenced by the same letter as they are referenced in the attached spreadsheets.  The following information on parking was provided by each of the proposers:

Miller Building - 12 dedicated onsite (also within 2 blocks of 23 free City parking spaces at Lincoln Center)
Crane Building - 60 onsite
A - 10 onsite (near City parking garage)
B - Shared onsite parking lot available to all tenants (attached City parking garage)
C - 0 (attached City parking garage)
D - 60 onsite and within 1 block
F - 20 onsite shared with other tenants (also within 2 blocks of 23 free City parking spaces at Lincoln Center)
G - 60 onsite
H - 0

Monthly fiber optic costs were obtained from Century Link and are based on 100 MB service as recommended by IT.  All sites, except the Miller Building, will require monthly payments of $4,150.  This price includes the connection with City Hall and the proposed site.  The Miller Building is located a half block from the line that will be extended from City Hall to the new Library.  The estimate to connect with the City-owned line is $50,000 but there would be no monthly charge.  The Planning and Community Services Department cannot afford the monthly line charge.  A one-time transfer of General Fund money would pay for the connection to the City's fiberoptic cable. 
Staff is working on additional site information and will send it to Council on Friday, October 19. 

The Planning and Community Services Department advertised for 12,500 square feet of office space. Many of the proposals were for space that had yet to be configured as office space. The cost of bringing these buildings up to code and to meet PCSD needs is prohibitive. Also, the time required for remodeling would extend the availability date beyond what would be acceptable. The PCSD considered the possibility of purchasing the property which would go further to justify the extensive remodeling required. The City, however, is not in the position to purchase properties of this magnitude without having a reasonable plan for future City facilities. For that reason, the properties that required extensive remodeling and/or tenant improvements were not considered in the final selection. The finalist is essentially move-in ready office space with monthly utility, janitorial and maintenance costs included in the proposed cost/square foot.  Additionally, the Miller Building is well-configured for public meetings, is located to take advantage of additional public meeting space, if needed, in the new library and within 2 blocks of free parking for employees. Onsite parking is available for customers.  The location of the Miller Building also lends itself to convenient access to City Hall, the County Courthouse and the Big Sky Economic Development Authority offices; all visited frequently by staff.

Three of the four Divisions in the Planning and Community Services Department rely on property tax and/or fees for operating revenue. The Community Development Division relies on federal funding that is capped for administrative activities, including rent. None of the sites considered were affordable to the Community Development Division without subsidies from the other Divisions or the General Fund. For that reason, the Community Development Division is seeking separate office space at a price or other arrangement that the Division can afford. The other three Divisions have historically paid between $90,000 and $135,000 annually in rent. The recommended office space is proposed to cost up to $124,650 the first year. The final lease terms have yet to be agreed to, but are estimated to be less than the proposed figure. This cost does not include space for the Community Development Division.  Should Council approve moving forward with negotiations with the Millers, options to include Community Development in the building will be discussed. After exact costs are known, the Council may be asked to supplement CD's budget for those costs.

Staff is recommending that Council allow the Planning and Community Services Department to begin negotiations to lease office space at the Miller Building located at 2825 3rd Ave. North.