HomeMy WebLinkAbout2008-05-27_STUDY SESSIONM emo
To: City Council LO
From: Gordon Hughes
Date: May 23, 2008
Re: Public Works
c
On May 27, 2008, the Council will hold a study session concerning the future
of the Public Works facility. The main purpose of the study session is to
discuss the options with respect to the Public Works relocation to the
Conagra property ( "Conagra ") in light of Opus' withdrawal of their proposal
for the existing Public Works property (the "Public Works property ").
Specifically, the Council will discuss the advisability of acquiring Conagra and
relocating without a buyer in hand for the Public Works property. The
purpose of this memo is to provide information to facilitate this discussion.
Current Status of Conacira.
Opus currently holds a purchase agreement for Conagra in the amount of
$9,226,250. This purchase agreement requires closing by June 12, 2008.
This purchase agreement may be extended to August 12, 2008, with an
additional, non - refundable payment by Opus of $100,000. (All earnest
money payments heretofore made had come from Opus.) Opus may be
willing to exercise the extension to August 12 provided that 1) the City makes
the $100,000 payment and 2) the City reimburses Opus for the cost of
environmental testing and surveying undertaken at Opus' expense. Opus
speculates that it may be able to renegotiate the purchase agreement to
$8,750,000. If the purchase agreement is not extended, Opus believes that
Conagra will list the property.
Status of Development of Public Works Property
Opus would like to extend its designation as the Developer of the Public
Works property until June 2009. (They also mentioned that it may be
possible to secure a replacement anchor tenant for the medical building
concept in the near term.) In light of the circumstances surrounding this
issue, I have advised Opus the Council in all likelihood will not approve this
and will probably seek new proposals at an appropriate time in the future.
Renovation Costs for Conaara
The City has been utilizing the services of J. E. Dunn, a construction
management firm, for the purpose of providing construction cost estimates.
Their work augments our architect Jeff Oertel's work. We have experienced
rather significant budget creep as a result of refinement of the design and the
current pricing of construction. At present, J. E. Dunn's renovation cost
estimate is $12 -13 million. This excludes land cost, but includes all soft costs
such as architect fees as well as the cost to furnish and equip the building.
Jeff Oertel will attend the study session to answer questions. Based on these
estimates, the total project cost including land (assuming no offset for the
sale of the Public Works property) is $20 - 22 million.
Bond Sale
We have again consulted with our finance advisors, Ehlers & Associates, for
the purpose of evaluating the financial implications of the project. Based
upon a $20 million bond issue, Ehlers has prepared the attached preliminary
analysis of the effect of such an issue on Edina taxpayers. This analysis is
based upon a 20 year term and prevailing interest rates. Mark Ruff of Ehlers
will attend our study session to answer questions.
Some things to consider:
• Ehlers does not believe the increase in the principal amount to $20+
million will result in a loss of the City's AAA bond rating.
The issuance of bonds at this particular time is opportune in that the
debt service schedule can be arranged to take full advantage of the
decertification of two large Tax Increment Financing districts in 2009
(Edinborough and 50th and France.) Decertification of these districts
has the effect of infusing a relatively large addition of properties into
the tax base of the City. This has the effect of reducing the impact of
the bond issue to the rest of the City. The attached analysis takes into
account the positive effect of the TIF decertification.
The City has conducted a public hearing, amended its CIP and is authorized
to issue up to $14 million general obligation capital improvement bonds to
finance the project. If the City decided to proceed with this project, it could 1)
conduct another public hearing, amend the CIP and increase the bond issue
authorization to $20+ million, 2) issue the originally authorized $14 million in
G.O. bonds and issue $6+ million in lease revenue bonds to cover the added
costs (these are like the bonds issued to fund City Hall and the Community
Center gyms) or 3) issue the originally authorized $14 million in G.O. bonds,
$4 million in lease revenue bonds and $2 million in utility bonds. The utility
• Page 2
bonds would be repaid from our Utility Fund which would come from sewer
and water charges. On a preliminary basis, $2 million in utility bonds may be
reasonable based upon an approximate allocation of that portion of the
building devoted to utility- related purposes.
Ehlers estimates that lease revenue bonds would bear a higher interest rate
than G.O. capital improvement bond, perhaps 25 -50 basis points more.
However, such bonds could be issued more rapidly without the attendant
requirements associated with the G.O. bonds. If the City were to increase the
principal amount of the G.O bonds, it would need to repeat the public hearing
process and the time periods associated with it. Under this process, we
expect the earliest opportunity to receive bond proceeds would be in
September.
Effect of Lew Limits
The tax bill recently passed by the legislature includes a three year, 3.9
percent limit on annual increases in the tax levy. According to our
understanding of this bill, levies for debt service, whether G.O. or lease
revenue, are outside of this limitation. However, the City should bear in mind
that the additional operating costs associated with a larger public works
building will have to be accommodated in the City's operating budget which
is'subject to levy limits. On a preliminary basis, we estimate that the
renovated Conagra facility will cost $60 — 90,000 more in annual operating
costs compared with our existing facility due to its increased size.
Other Considerations and Alternatives
As you know, the staff has been evaluating opportunities for relocation for
several years. During that time, we have evaluated seven different
properties, each of which exhibited shortcomings for our use. Although
Conagra requires costly renovation, it is the most adaptable building we have
found. Alternatives to this property are not readily apparent.
If the City elects to forego Conagra, we need to discuss short and long term
plans for the Public Works property. As you know, the City has deferred
improvements to our existing building and property based on the prospect of
relocating. If we pass on Conagra, we need to discuss whether some
maintenance items should now be undertaken. The extent of these items will
depend upon the length of time that we anticipate remaining at our existing
property. Certainly, improvements for the health and safety of our employees
are of paramount importance.
Preserving the current Conagra purchase agreement is problematic given
the June 12 expiration date unless the City wishes to risk the attendant
earnest money payment. Further discussions with Opus and Conagra are
warranted should the City wish to pursue this option.
• Page 3
City of Edina, MN
$20,970,000 G.O. CIP Bonds, Series 2008
Public Works Facilities .35% Above Market
$20,000,000 Net Project Costs - 20 Year Term
Sources & Uses
Dated 09115/2008 1 Delivered 09115/2008
Sources Of Funds
Paz Amount of Bonds
$20,970,000.00
Total Sources
$20,970,000.00
Uses Of Funds
Total Underwriter's Discount (0.600 %)
125,820.00
Costs of Issuance
90,000.00
Deposit to Capitalized Interest (CIF) Fund
752,121.69
Deposit to Project Construction Fund
20,000,000.00
Rounding Amount
2,058.31
Total Uses
$20,970,000.00
Ser 08 $20MM GO CIP Bonds I SINGLE PURPOSE 1 5/15/2008 1 2:02 PM
Ehlers i Associates,
Leaders Public Finance
Page
City of Edina, MN
$20,970,000 G.O. CIP Bonds, Series 2008
Public Works Facilities .35%
Above Market
$20,000,000 Net Project
Costs - 20 Year
Term
Net Debt
Service
Schedule
Date
Principal
Coupon
Interest
Total P +I
CIF
Net New D/S
Fiscal Total
09/15/2008
-
-
02/01 /2009
323,697.94
323,697.94
(323,697.94)
08/01/2009
428,423.75
428,423.75
(428,423.75)
-
02/01/2010
428,423.75
428,423.75
428,423.75
428,423.75
08/01/2010
428,423.75
428,423.75
428,423.75
02101/2011
780,000.00
3.100%
428,423.75
1,208,423.75
1,208,423.75
1,636,847.50
08/01 /2011
-
-
416,333.75
416,333.75
416,333.75
02/01/2012
800,000.00
3.200%
416,333.75
1,216,333.75
1,216,333.75
1,632,667.50
08/01/2012
-
-
403,533.75
403,533.75
403,533.75
02/01/2013
825 000.00
3.300%
403,533.75
1,228,533.75
1,228,533.75
1,632,067.50
08/01/2013
-
-
389,921.25
389,921.25
389,921.25
02/01 /2014
855,000.00
3.400%
389,921.25
1,244,921.25
1,244,921.25
1,634,842.50
08/01/2014
-
-
375,386.25
375,386.25
-
375,386.25
02/01 /2015
885,000.00
3.500%
375,386.25
1,260,386.25
1,260,386.25
1,635,772.50
08/01/2015
359,898.75
359,898.75
359,898.75
02/01 /2016
915,000.00
3.600%
359,898.75
1,274,898.75
1,274,898.75
1,634,797.50
08/01 /2016
-
-
343,428.75
343,428.75
343,428.75
02/01 /2017
945,000.00
3.850%
343,428.75
1,288,428.75
1,288,428.75
1,631,857.50
08/01 /2017
-
-
325,237.50
325,237.50
325,237.50
02/01/2018
985,000.00
4.000%
325 237.50
11310,237.50
1 310 237.50
1,635,475.00
08/01/2018
-
-
305,537.50
305,537.50
305,537.50
02/01/2019
1,025,000.00
4.100%
305,537.50
1,330,537.50
1,330,537.50
1,636,075.00
08 /01 /2019
-
284,525.00
284,525.00
284,525.00
02/01/2020
1,065,000.00
4.150%
284,525.00
1,349,525.00
1,349,525.00
1,634,050.00
08/01/2020
262,426.25
262,426.25
262,426.25
02/01/2021
1,110,000.00
4.200%
262,426.25
1,372,426.25
1,372,426.25
1,634,852.50
08 /01 /2021
-
-
239,116.25
239;116.25
239,116.25
02/01 /2022
1,155,000.00
4.250%
239,116.25
1,394,116.25
1,394,116.25
1,633,232.50
08/01/2022
-
214,572.50
214,572.50
214,572.50
-
02/01/2023
1,205,000.00
4 300%
214 572.50
1,419,572.50
1,419,572.50
1 634 145.00
08/01/2023
-
188,665.00
188,665.00
188,665.00
02/01/2024
1,255,000.00
4.350%
188,665.00
1,443,665.00
1,443,665.00
1,632,330.00
08/01/2024
-
161,368.75
161,368.75
161,368.75
02/01/2025
1,310,000.00
4.400%
161,368.75
1,471,368.75
1,471,368.75
1,632,737.50
08/01/2025
132,548.75
132,548.75
132,548.75
02/01/2026
1,370,000.00
4.450%
132,548.75
1,502,548.75
1,502,548.75
1,635,097.50
08/01/2026
-
102,066.25
102,066.25
102,066.25
02/01/2027
1,430,000.00
4.500%
102,066.25
1,532,066.25
1,532,066.25
1,634,132.50
08 /01 /2027
-
69,891.25
69,891.25
69,891.25
02/01/2028
1,495,000.00
4 550%
69,891.25
11564,891.25
1 564 891.25.
1,634,782.50
08/01/2028
-
35,880.00
35,880.00
35,880.00
02/01/2029
1,560,000.00
4.600%
35,880.00
1,595,880.00
1,595,880.00
1,631,760.00
Total
$20,970,000.00
- $11,258,067.94
$32,2289067.94
(752,121.69)
$31,475,946.25
Ser 08 $20MM GO CIP Bonds I SINGLE PURPOSE 1 5/15/2008 1 2:02 PM
Ehlers •
Associates,
Inc.
Leaders
City of Edina
Analysis of Tax Impact for G.O. CIP Bonds for Public Works Building
Project Costs $20M
Total Bond Issue of $20,970,000 in 2008
Interest Rates at .35% Above Market
First Tax In 2010
20 Year Term
Valuation (Pay 2008)
101,047,450
Total Annual Debt Levy at 105%
1,716,750
Less New Taxes from pre -79 TIF
- 815,000
Annual Debt Debt Levy at 105%
901,750
Est. Tax Rates (Debt Service
Divided by Valuation)
0.008924
The figures in the table are based on taxes for the bond issue only, and do
not include tax levies for other purposes. Tax increases shown above are
gross increases, not including the impact of the state Property Tax Refund
( "Circuit Breaker') program. Many owners of homestead property will
qualify for a refund, based on their income and total property taxes. This
will decrease the net effect of the referendum levy for many property
owners.
Taxable
Estimated
Type of Property
Market Value
Annual Impact
$200,000
$18
300,000
$27
400,000
$36
Residential
L 439,000
$39 _
Homestead
500,000
$45
(2008 median value
600,000
$56
home is $439,000)
700,000
$67
800,000
$78
900,000
$89
1,000,000
$100
1,100,000
$112
$50,000
$4
Commercial/
250,000
$25
Industrial
500,000
$54
1,000,000
$112
5,000,000
$576
10,000,000
$1,156
25,000,000
$2,896
The figures in the table are based on taxes for the bond issue only, and do
not include tax levies for other purposes. Tax increases shown above are
gross increases, not including the impact of the state Property Tax Refund
( "Circuit Breaker') program. Many owners of homestead property will
qualify for a refund, based on their income and total property taxes. This
will decrease the net effect of the referendum levy for many property
owners.
Fire Protection Services
During a fire, every minute counts. A fire can double in
size by the minute. As soon as you detect fire, call
Edina firefighters will respond to extinguish the fire, but
we can't help if we don't know there is a problem.•
Edina Fire Department History
The Edina Fire Department was formed in 1942. In 1956,
the first full -time firefighters were hired. Today, the
Edina Fire Department consists of more than 30 full -time
firefighters and a number of "paid -on- call" firefighters.
On the Job: 24/7
Edina firefighters and paramedics work around the clock
to provide rapid, top -of- the -line service to all emergency
situations. Edina Firefighters typically respond to 12
fire - and - rescue calls each 24 -hour shift.
Firefighters respond to emergencies around Edina
from two stations:
T • Station No. 1, 6250 Tracy Ave.
• Station No. 2, 7335 York Ave.
Emergency Medical Services
Time is a crucial factor in all medical emergencies.
Edina Firefighter /Paramedics arrive quickly and
initiate appropriate medical care to the patient
while transporting him or her to the hospital.
Paramedics
Edina Firefighter /Paramedics provide state -of- the -art
Life support service in emergency medical situ s.
Some procedures include I.V. insertion, heart 09
and external defibrillation, advance airway placement
and medication administration.
Initially, Edina Firefighter /Paramedics receive a minimum
of 1,200 hours of emergency medical training. State and
national certification must be updated to maintain
placement within the Fire Department.
$_agency Response Team
The Edina Fire Department provides specially trained
paramedics to the Edina Police Department's Emergency
Response Team (ERT).These members provide medical
care for police officers, civilians and suspects during
situations too dangerous for non -ERT emergency
personnel to respond.
Rescue
Edina Firefighters respond to all vehicle accidents
involving injuries. The firefighters are equipped with the
"Jaws of Life," hydraulic powered cutters and spreaders,
as well as other specialized rescue tools. These tools
enable firefighters to quickly gain access to critically
injured patients. All Edina Firefighters are trained to
mitigate these special calls for help.
Special Operations
Edina Fire Department established the Special Operations
Program in 1998. Members of the Special Operations
Team (SOT) are specially trained and equipped to
respond to many different types of technical rescues.
In 2004, the Edina Fire Department became part of
Minnesota Task Force One, the State of Minnesota
Structural Collapse Team, which responds to statewide
structural collapse emergencies.
r�
LJ
The SOT is currently trained and equipped to respond to
the following technical rescues:
• Structural Collapse
• Rope (High /Low Angle)
• Confined Space
• Trench
• Water /Ice
• Elevator
Fire and Life Safety Education and
Fire Inspections
The Edina Fire Prevention Bureau provides fire and life
safety education to Edina residents and businesses.
Programs include:
• Fire extinguisher training upon request
• Annual open house in October
• Fire safety education for children in all
Edina schools, pre- schools and daycare centers
• Annual Safety Camp for Edina fourth graders
• Seminars for older adults
Edina Fire Inspectors enforce fire and building codes
during inspections of existing commercial and multi -unit
residential buildings. Inspectors work closely with
Edina's Building Inspections Department to review
plans for new buildings and remodeling of existing
buildings to ensure fire and life- safety components
are in place to protect the public.
Smoke Alarms, Fire Sprinklers and Carb -n
Monoxide Alarms Save Lives!
Smoke alarms and carbon monoxide alarms should
tested once a month. Batteries should be changed at
least once a year. Consider installing fire sprinklers.
For more information, contact the Edina Fire
Department at 952 - 826 -0378.
r �►� _ —
v•
45m:
yk jpv,M � a 1 I 1 • Y. w�' .i
r. �•
i i .. IM.
Fire Station No. 1
6250 Tracy Ave.
Edina, MN 55436
952 - 826 -0330
Fax: 952 - 826 -0393
Fire Station No. 2
7335 York Ave.
Edina, MN 55435
www.CityofEdina.com /F
�J
Our mission is to
serve our community
by protecting lives,
property and the
environment in a
safe, efficient and
professional manner.
In Case of Emergency
Dial 911