Consideration of Proposals: Purchase of Property For The Core Services Maintenance Facility (Consider proposals submitted in response to RFP 2013-44).

There were a total of nine (9) proposals submitted for the RFP and Baylu Group, LLC (proposed property at far North end of Cortland Blvd, near Country Club and I-40 Interchange) rose to the top as the highest scoring Proposer.  City staff, in conjunction with a local professional design firm, conducted extensive onsite/offsite infrastructure, design, review and construction cost analysis for both Baylu Group, LLC's Cortland Blvd. property and the McAllister Ranch property.  Given the results of the cost comparisons between both properties, Baylu Group, LLC's Cortland Blvd. property would be significantly more expensive to construct the Core Services Maintenance Facility than the McAllister Ranch property.  City staff negotiated with Baylu Group, LLC.  However, an acceptable agreement could not be reached.

We will be committing the $14,000,000 bond money approved by the voters, as well as requesting the reinstatement of the $2.50 per ton surcharge at the landfill to pay for the Solid Waste portion of the new yard.  The reinstatement would produce revenue we could borrow against and that, coupled with what we currently have in our legal reserve fund for this project, would give us $4,400,000 for the Facility.

Address Core Services Maintenance Facility

In 2012/2013, Council rejected the F.W. Thompson (Wayne Thompson) proposed property because an acceptable agreement could not be reached and directed City staff to go back out and advertise a new RFP.

1. Select McAllister Ranch for the site for the Facility.
2. Select the Baylu Property for the site for the Facility. 
3. Reconsider one of the other proposers from the RFP. 
4. Go back out for RFP to see if there are any additional sites to locate the Facility.

In the spring of 2012, a bond question was approved to be placed on the November 2012 ballot for voters to approve $14,000,000 for a new Core Services Maintenance Facility.  The voters approved this bond initiative and the City's Purchasing Section advertised a RFP for the purchase of property for the new Core Services Maintenance Facility. The City received one (1) proposal response from Wayne Thompson and negotiations began.  Negotiations with Wayne Thompson continued into early 2013.  With the parties unable to reach an acceptable agreement, negotiations were formally terminated and the proposal was rejected by Council with direction for staff to go back out with an RFP. The City’s Purchasing Section advertised a 2nd formal competitive (RFP) for the purchase of approximately 20 contiguous acres of developable land for a new Core Services Maintenance Facility for the Public Works Division.  The RFP was structured to allow for the purchase of property only or purchase property and exchange City owned property (specifically the current Mogollon property and the McAllister Ranch property) to assist in offsetting the purchase of any other proposed property. The RFP document also referenced the McAllister Ranch as a competing piece of property along with all other proposed property sites.  The RFP was advertised on July 22, 2013, with proposals due on or before September 24, 2013.  This time frame for advertising the RFP allowed for approximately nine (9) weeks for prospective Proposers to be made aware of the RFP and submit a proposal response. The Purchasing Section held two (2) Pre-proposal Conferences to go over the project description/scope of work and evaluation criteria, as well as answer any questions from prospective Proposers.  The City received a total of nine (9) proposals involving eight (8) separate properties.  One (1) of the proposals submitted involved two (2) different offers for the same proposed property.  The RFP outlined four (4) evaluation criteria as follows:
• Location (30%)
• Offer Price (25%)
• Quality of Onsite and Offsite Infrastructure (25%)
• Functional Existing Facilities That Would Support the Core Services Functions (20%)
The evaluation committee was comprised of a total of nine (9) evaluators, with representation from the following areas:
• Public Works--- (2) evaluators
• Utilities ---(1) evaluator
• Management Services/Finance--- (1) evaluator
• Economic Vitality--- (1) evaluator
• Community Development/Planning---(1) evaluator
• City Manager’s office---(1) evaluator
• Flagstaff Chamber of Commerce---(1)
• APS---(1) evaluator

After a complete evaluation and scoring of proposal responses, Baylu Group, LLC (proposed property at far North end of Cortland Blvd, near Country Club and I-40 Interchange) rose to the top as the highest scoring Proposer. 

City staff has spent extensive time and money on comparing Baylu Group, LLC's Cortland Blvd. property and the McAllister Ranch property to determine the best choice for the City.  Site plans were developed for both properties to determine if and how the facilities would fit on each site and costs associated with building those facilities.  Future expansion of facilities on the Baylu Group, LLC's Cortland Blvd. property would require new construction costs compared to McAllister where future expansion costs would be adding on to existing facilities which is less expensive than new construction.  In addition, the City would have to encumber approximately 7 acres of park land adjacent to the Baylu Group, LLC's Cortland Blvd. property for future expansion.  City staff have taken into consideration not only location but also compared on-site and off-site infrastructure costs for each location as well as estimating the annual operational and maintenance costs associated with each site.  Appraisals were performed on the City's McAllister Ranch and Mogollon properties for purposes of discussing the three options to sell submitted in the Baylu Group, LLC's Cortland Blvd. property proposal.  An appraisal was also performed on the Baylu Group LLC's Cortland Blvd. property to compare it to their asking price.  Staff also communicated with the Baylu Group, LLC representatives during the due diligence process as to our progress and timeline and shared with them the results.

The cost of Baylu Group, LLC's Cortland Blvd. property is $5,660,000 as submitted in their proposal.  This figure is compared to the McAllister Ranch property which is already owned by the City.  A local professional design firm, Shephard Wesnitzer, Inc., performed on-site off-site comparison of costs associated with each property as well as building and construction costs.  These costs are $22,553,679 for the Baylu Group, LLC's Cortland Blvd. property and $21,431,955 for McAllister Ranch.  The appraisal for McAllister Ranch is $2,178,000 and $2,256,000 for the Mogollon Property.  It should be noted here that the appraisal for the Baylu Group, LLC's Cortland Blvd. property is $5,200,000.  There is also an estimated cost, based on the Baylu Group, LLC's Cortland Blvd. property appraisal, for adjacent City owned property needed to make the Baylu Group, LLC's Cortland Blvd. property a viable option for the Facility.  That estimate is $1,926,955.  Operational and Maintenance (O&M) cost estimates for each property were conducted by City staff which shows it would be approximately $77,500 more annually to operate from the McAllister Ranch property than Baylu Group, LLC's Cortland Blvd. property.  We also have the $14,000,000 voter approve debt and $4,400,000 from Solid Waste.

The Baylu Group, LLC's Cortland Blvd. property has 3 sales options:

Option 1.  Proposal Price of $5,660,000.  Adding in the Design, Review, Buildings and Construction costs from SWI of $22,553,679, and the City Land Lost Opportunity Cost for the land adjacent to the Baylu Group, LLC's Cortland Blvd. property of $1,926,222, we have a Move On Cost of $30,139,901.  Our resources for this option are $14,000,000, $4,400,000, $2,178,000 and $2,256,000 for a total of $22,834,000 or a $7,305,901 shortfall.  There is also a Move On Cost Difference Baylu versus McAllister of $10,963,946, which would be reduced upon the City selling our two properties.  At an annual O&M cost difference of $77,435, and a 0% Present Value of Money, it would take 142 years to break even on the up front payout of $10,963,946 to select this option over McAllister Ranch.

Options 2 and 3 are combined for this example.  These options were connected by an offer of a Property Cost of $5,660,000 and a reduction of that Cost for the trade of Mogollon for $850,000 and further discussions on the McAllister property before they would make us a firm trade offer.  The Property Cost of $5,660,000 is reduced by the appraised value for McAllister of $2,178,000 and Mogollon of $2,256,000.  This reduces the Proposal Price to $1,226,000 out of pocket expense. Adding in the Design, Review, Buildings and Construction costs from SWI of $22,553,679, and the City Land Lost Opportunity Cost for the land adjacent to the Baylu Group, LLC's Cortland Blvd. property of $1,926,222, we have a Move On Cost of $25,705,901.  Our resources for this option are $14,000,000, $4,400,000 for a total of $18,400,000 as the McAllister and Mogollon properties are traded in the deal. There is a $7,305,901 shortfall.  There is also a Move On Cost Difference Baylu versus McAllister of $6,529,946.  At an annual O&M cost difference of $77,435, and a 0% Present Value of Money, it would take 84 years to break even on the up front payout of $6,529,946 to select this option over McAllister Ranch.

McAllister Ranch
Proposal Price is $0 as the City owns the property.  The Design, Review, Buildings and Construction costs from SWI of $21,431,995 are reduced by the appraised value of Mogollon of $2,256,000 for a Move On Cost of $19,175,955.  Our funds for this option are $14,000,000, $4,400,000 for a total of $18,400,000 which leaves us with a $775,955 shortfall.

    

The community around the current site on Mogollon will benefit because we will be moving our operations out of the residential area.

Inform
 

 

1. Select McAllister Ranch for the site for the Facility.
2. Select the Baylu Property for the site for the Facility. 
3. Reconsider one of the other proposers from the RFP. 
4. Go back out for RFP to see if there are any additional sites to locate the Facility.