Discuss Updates on Interim Public Works Facility Options.

The purpose of this case is to update the Council on the status of the interim Public Works facility solution. On April 9, 2019 the Council approved cancellation of the lease for PACT School Bus storage in property that it currently owns at 6701 Hwy 10 (garage space behind the Youth First office).  In addition, the Council directed staff to begin negotiations for the purchase of property located at 8175 Riverdale Drive (former Quality RV), for the purpose of meeting the short-term needs of the Public Works until a new Public Works Campus is constructed. 

Purchase Price of 8175 Riverdale Drive
Anoka County has informed the City that, because this project was funded via nine different funding sources and several of those sources have requested any project savings to be refunded to them, the County needs to sell all remnant parcels at its highest and best use value.  This means that, at a minimum, the county needs to sell this parcel at its appraised value (or at what the market would offer to pay if we put it out for public sale).   Because this parcel is not currently connected to a sanitary sewer, the appraised value of the property is $615,000.  The County has requested that the City inform the County if this price is acceptable to the city.  Otherwise, the County will be putting this property up for sale to the general public.
 
Other Improvements
1. Sewer and water utilities would need to be connected to the building. 
2. There are no existing floor drains in the garage area, drains would need to be installed and connected to the sanitary sewer.
3.  Overhead garage door openers need to be installed on each of the five doors.

Pros of Purchasing existing building
1. Moving the utility department functions to this location would free-up space for our traffic engineering operations at our existing location.
2. Property is located in a commercial area away from residential properties.
3. Property is located next to the Armstrong Interchange making access to the northern part of town convenient.
4. Building contains more than adequate office space for staff.
5.Currently the building is owned by Anoka County and is tax exempt, so purchase by the city would not
 effect the property tax roll.
6. The building is a good size for the utility department operation.
7.When the Utility Department moved back to the new PW facility, staff believes that the site and small size of this facility offer better resale or development opportunities. 
8. Interior remodeling would be performed by City staff.
9. The property is currently appraised at $615K, without the sewer connection.

The initial investment, improvements required to the property for Utility Department use, and the ease of resale, are important factors with this location.

New Public Works Facility Financing Attached are different financing runs for a proposed new public works campus:  The 1st debt schedule is if we bonded for $7.645M Prin & issuance costs) and have an equal payment for the life of the bond levy years 2022-2041 The 2nd debt schedule is if we bonded for $7.6.45M Prin & Issuance Costs) and pay interest only until the Muni Center debt is paid off in 2031 The 3rd debt schedule is if we internally loaned from the Water Fund for $7.5M at a 2% interest rate The 4th debt schedule is if we internally loaned from the water fund for $7.5M at 2% interest rate, but have debt service until the muni debt is paid off at 50% of normal debt service and then inflate payments in 2032. Each of the debt schedules noted above could be reduced by $44,520 for payment years 2022-2028 as this would the savings in tax levy from selling the PW land and paying off the loan early in 2019/2020.   The total of the project is estimated at $15M and these scenarios proposed to finance one-half of the project.  In order to minimize the ammount the City would finance, the other $7.5M would come from the following funds and not paid back:                Water Utility:    $1.875M                Sewer Utility:   $1.875M                Street Lt Util:    $250,000                Storm Utility:   $ 500,000                Facility Fund:   $1M                Landfill Fund:   $2M                       Total               $7.5M

5 minutes

Enterprise (Sewer and Water) Funds would be used for the initial purchase and improvements.  In the future, the property could be sold to a private party of the City's Economic Development Authority for economic development purposes.

 

Kurt Ulric, City Administrator
Grant Riemer, Public Works Superintendent

Concensus direction to proceed to a purchase agreement with Anoka County for this property.