Fire Station 2 Project Update

PURPOSE
The purpose of this case is to update the Council on the City's initiative to construct a new Fire Station #2 (and to introduce this project to new Council members).  The next step in this process is to consider letting bid (January 27).

BACKGROUND (General):
The City of Ramsey's Fire Department currently operates Fire Station #2 from the City's "Old Municipal Center" site.  The existing location of Fire Station #2 has been identified as a non-feasible/ineffective long term solution for Fire Station #2; and the City's overall fire protection/public safety needs.  As a result, beginning in 2006, the City shifted attention to the property located at 5650 Alpine Drive to become the long-term home for Fire Station #2.  Listed below is a detailed outline of the process previously undergone and projected for a new Fire Station #2.


BACKGROUND (Process):
1. Space Needs Analysis - August 2006
The purpose of this step was to answer a number of questions regarding the existing Fire Station #2 site; and to identify Fire Department space needs.  For example, does the existing old municipal center site work for Fire Station #2?  Can we renovate the old municipal center building?  Should we demolish and rebuild a new fire station?  Attached is a Fire Station #2 Feasibility Report and Space Needs Analysis for the old municipal center site (existing location of Fire Station #2).  This work was completed by BKV Group.  In 2006, it was determined, utilizing the existing municipal center site was not a feasible or practical long term solution.  At that time, a new Fire Station #2 site was identified and proposed--5650 Alpine Drive NW (just northeast of the old municipal center site).

2.Surplus City Owned Property--Summer 2012
In 2012, the City Council identified the old municipal center site surplus City owned property; and provided Staff with direction to identify opportunities to return this property back to the private sector.  As part of that discussion, the current location of Fire Station #2 was identified as a factor in the future development of the old municipal center site.  In order to allow for future development of the old municipal center site, a new location for Fire Station #2 would need to be planned/prepared in order to effectively react to future development.  In June of 2014, the City Council provided Staff with direction to market the old municipal center site for a single family residential development.  Staff is bringing forward a case to list the old municipal center site on August 11 with CBRE, the City's preferred real estate broker.

3.Preliminary Design Stage--November 2013 ($19,000)
The purpose of this stage is to develop schematic designs of what Fire Station #2 could look like (often referred to as preliminary design).  The outcome of this stage is preliminary architectural designs and preliminary site plan documents.  Additionally, a preliminary project budget is developed.  This work was authorized by the Council on November 26, 2013.  Attached are results developed by BKV Group.  Construction costs were estimated at $3,230,000 and soft costs are estimated at $509,500 ($3,739,500 sub total).  If the City bonded for this project, the total bond issue would be estimated just above $4M (total estimated project costs).  

 4. Final Design & Specifications--August 2014 ($128,000)
The purpose of this stage is to develop final site plans, architectural plans, civil plans, landscaping plans, electric/mechanical plans, construction specifications and bid documents.  By completing this step, the City would be in position to move forward with constructing Fire Station #2 in a quick and effective manner.  This work does have a shelf life of approximately five years.  This work will need to be completed in order to construct a new Fire Station #2.  This step was approved by the City Council in August 2014. 5.  Bidding & Bid Award--($9,000)
The purpose of this stage is to bid and potentially award the proposed construction project to a general contractor.  Staff would recommend the City Council have a policy discussion regarding this project before this step is completed.  This would entail a review of the project budget and the proposed funding source (bonding). The outcome of said discussion would be consensus support for construction of a new Fire Station #2, or not.  Bidding and bid award could be completed this spring (which would allow spring 2015 construction and occupancy in the spring of 2016).  Staff is recommending the City Council consider letting bid on this project January 27, 2015.

6.  Construction Administration ($34,000)
Upon awarding a bid to a general contractor, BKV Group will administer the construction process in conjunction with a general contractor.  This stage of the process is execution/construction.


 

NA

No action requested at this time.  Staff will provide a brief presentation at the Council meeting:
 

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 (capital improvement project general obligation bond would be utilized).
 
What about the bigger financial picture?
Considering the bigger picture, the proposed project will have a TOTAL price tag of about $4.16M (including all soft costs and debt issuance costs).  Staff estimates the annual debt service to be about $285,000 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 $145,000.  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 $4.16M 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 received direction from the Council to pledge proceeds from the sale of the old municipal center site to Fire Station #2.  Based on a number of factors, staff would estimate net proceeds from the sale of the old municipal center site to range from $100,000 to $300,000 (depending on various circumstances, may be much higher).  Land proceeds would come into play after permanent financing was in place for the entire project.

NA
 

No action requested.  General comments and discussion welcomed.