12/09/2014 - City Council SpecialSPECIAL CITY COUNCIL MEETING
TUESDAY
DECEMBER 9, 2014
5:30 P.M.
EAGAN ROOM - EAGAN MUNICIPAL CENTER
AGENDA
ROLL CALL AND ADOPTION OF THE AGENDA
II. VISITORS TO BE HEARD
III. PUBLIC BUILDING FINANCE PLAN
IV. OTHER BUSINESS
V. ADJOURNMENT
Agenda information memo
December 9, 2014 Eagan Special City Council meeting
III. Public Building Finance Plan
Actions To Be Considered:
To provide feedback and /or direction on priority, timing, funding source, and financing options
for the following proposed capital projects:
• Fire Station consolidation, including remodel of existing Station 4
• Old Town Hall restoration
• Central Maintenance Facility space needs
• Police /City Hall space needs
• Cascade Bay filtration system
Background:
At the August 11 budget workshop, five capital projects related to City facilities were identified
for the Council's consideration at some later time after space needs studies had been
completed:
Fire Station Consolidation
The City Council received a full report on the Fire Station consolidation project at the June 10
workshop. Council indicated support for the project and asked for additional discussion as part
of the 2015 Budget process. Construction of a new Fire Station at the recently- acquired Holden
property was projected to cost $4,550,000. Remodeling of Fire Station #4 ($780,000) to
accommodate additional fire apparatus is part of the Fire Station consolidation plan. The total
estimated cost for the Fire Station consolidation project is $5,330,000. Capital improvement
bonds could be issued for construction of the new station. Remodeling Fire Station #4 could be
funded by cash from either the General Fund balance or the Community Investment Fund. A
sale of the Fire Station #5 property could reduce the amount of bonding required.
Old Town Hall
At its November 12 workshop, Council directed staff to proceed with the "repair -in- place"
scenario for restoration of Old Town Hall at an estimated cost of $290,000. The project could be
funded by cash from either the General Fund balance or the Community Investment Fund.
Agenda information memo
December 9, 2014 Eagan Special City Council meeting
Central Maintenance Facility Space Needs
At the September 9 Council workshop, results of the space needs study for the Central
Maintenance facility were presented. The report includes a Phase 1 estimated project cost of
$4,581,000 and a Phase 2 project cost of $3,580,000, for total of $8,161,000. Capital
Improvement bonds could be issued for this project.
Cascade Bay
At the November 18 regular Council meeting, a contract for filtration and pumphouse
improvements to Cascade Bay was approved. The total project cost, including architectural
fees and other soft'(fosts, is estimated at $762,000. Approximately $250,000 of this cost has
already been set aside in the renewal and replacement account; the $512,000 balance could be
funded by cash from the General Fund balance or the Community Investment Fund.
Police Station /City Hall Space Needs
The City Council approved hiring CNH Architects to complete a space needs analysis of the
Police Station and City Hall campus. The Council will receive details of the findings at a
workshop in either January or February. While preparation of a final report is still in progress,
one of the main findings is a need for additional office space for both Police and several of the
City Hall departments. Very early cost projections range from $6,590,000 to $9,200,000. The
wide range is due to (a) the uncertainty of construction costs and (b) the question of whether
the existing Fire Administration building is to be utilized for some of the additional office space
needs or sold instead. Capital Improvement bonds could be issued for this project.
Facts:
➢ The City's financial advisor, Dave MacGillivray from Springsted, will present information
about the financing options for the bondable capital improvements.
➢ The focus of the presentation is to identify the dollar capacity the City would have to
take on additional debt without increasing the capital /debt service portion of the City's
property tax levy.
• Two capital /debt service levies are set to expire in the coming years:
■ $1.1 million /year for debt service on Community Center expires 2020
■ $1.2 -1.3 million /year for overpasses /exchanges expires 2019
• Should the Council wish to bond for any or all of the three large capital projects
(Fire Station, Central Maintenance, Police /City Hall), Mr. MacGillivray will discuss
how much the City could raise from two separate bond issuances in 2015 and
2017/18 without increasing the levy.
➢ Overall, the total preliminary cost estimate of the three large projects is in the range of
$19 -22 million.
Agenda information memo
December 9, 2014 Eagan Special City Council meeting
➢ Variables that may influence how much of the three projects that can be completed
without affecting the tax levy include:
• Bond interest rates –they are at all -time lows right now; if rates rise, that will
reduce the amount the City can borrow without increasing taxes.
• Construction costs – currently they are running very high as there is a shortage
of labor and materials due to high construction demand (e.g., Vikings stadium,
North Dakota oil boom). The preliminary estimates prepared a year ago for the
Fire Station, for example, are probably too low in today's market.
• If the City is willing to reduce the exchanges /overpasses levy by half and extend
the final year of the levy from 2019 to 2022, that will add to the City's capacity to
issue bonds.
➢ For the projects to be funded by cash reserves, two sources could be considered:
• General Fund balance –The Council has established a fund balance target range
of 40 -45% of next year's budget. Utilization of $900,000 would reduce the fund
balance to 45% (top end of range). Utilization of the full $1,900,000 needed for
the three cash - funded projects would reduce the fund balance to 42 %.
• Community Investment Fund – Fund balance is about $2,400,000.
Public Policy Questions:
➢ Is the Council willing to replace the soon- to -be- expiring levies for the Community Center
bonds and overpasses /exchanges with new debt service for public building projects
and /or operational needs?
➢ Are there projects that should be advanced? If so, in what order of priority, and when?
➢ For the Old Town Hall restoration, Fire Station #4 remodel, and Cascade Bay pumphouse
projects, which cash source(s) should be used for funding — General Fund balance
and /or Community Investment Fund?
Attachments: (1)
Springsted PowerPoint presentation
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