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Home My WebLink About2.a. Fire Station No. 2AGENDA ITEM: Fire Station #2 AGENDA SECTION: PREPARED BY: Dawn Weitzel, Assistant City Administrator AGENDA NO. ATTACHMENTS: None APPROVED BY RECOMMENDED ACTION: Discussion 4 ROSEMOUNT CITY COUNCIL Special City Council Work Session: October 4, 2005 EXECUTIVE SUMMARY ISSUE The bid opening for the Fire Station #2 project was held on September 29, 2005. Todd Christopherson from MOON and architect Mark Vetter will be present to discuss the results of the bid opening and opuons Council may want to consider as the City goes forth in construction of this project. AGENDA ITEM: Fire Station #2 AGENDA SECTION: Discussion PREPARED BY: Jamie Verbrugge, City Administrator AGENDA NO. ATTACHMENTS: Amortization schedule for financing option #4 APPROVED BY: RECOMMENDED ACTION: Give staff direction on how to proceed with the Fire Station #2 project 4 ROSEMOUNT CITY COUNCIL City Council Special Work Session. October 4, 2005 SUPPLEMENTAL EXECUTIVE SUMMARY BACKGROUND Bid results for Fire Station #2 came m approximately $350,000 over the estimated project cost. Staff is presenting options for Council consideration on how to proceed with the project. ISSUE In order to help Council better understand the issues surrounding the higher than expected bid results of the Fire Station #2 construction project, staff has requested that the construction manager, AMCON, and architect, Mark Vetter, be present for the discussion. AMCON will provide an overview of the project cost estimation process as well as walk Council through the process used to solicit bidder interest. AMCON will also overview some of the bidding climate conditions that possibly contributed to the resulting overage in project costs. The items that appear to have contributed to the bid results include• a lack of bidder interest on a number of the project components; market volatility m the price of steel; and unforeseen issues related to the cost of masonry. In terms of evaluatmg options for proceeding with the project, staff provides the following options for consideration: Option #1 Reject Bids /Readvertise in Early 2006 the decision to reject all bids and re -bid the project at a later date, say February 2006, is a calculated risk. Among the issues that factor into this calculation are whether the bidding climate will improve substantially in several months where more contractors looking for projects will result in more competitive bids for project elements; whether fluctuations m the price of steel are temporary or may continue to increase as a result of market demand (e.g., the Katrina effect on building projects nationwide); and, whether potential inflationary increases in materials will negate the potential savings m a more competitive bidding environment. There are some savings to be realized by delaying the project due to costs related to winter construction. These costs are estimated to be anywhere between $40,000- 80,000 Winter construction costs are not specifically itemized within the bidding documents but are reflected in contractor pricmg based on their estimation of cover and heating costs (masonry and concrete work). Option #2 Alter the Project Scope /Design Costs for the project may be reduced by scaling down the building footprint or reducing the aesthetics of the design. It is uncertain how much cost savings can be achieved through redesign, as there will be offsetting costs incurred for the architectural changes. Much of the space that is ancillary to the equipment bays (meeting rooms and offices) has already been reduced during the original design process. Additional reduction of footprint would hkely be seen in eliminating one of the bays (from three to two). Option #3 Absorbing Cost Overage through Use of Encumbered Funds The City has encumbered funds of $590,000 for building improvements The prelmunary 2006 budget included a recommendation by the City Administrator to transfer approximately $40,000 to estabhsh a repair and replacement fund for the St. Joseph property, which would leave $550,000 m the encumbered account. The original Fire Station #2 project included a contingency fund of approximately $210,000. After reviewing the bid results, staff and consultants are comfortable maintaining a contingency of approximately $100,000 If that $110,000 of contingency were applied to the $350,000 cost overage, it would reduce the remaining gap to approximately $240,000 Utili7mg the encumbered funds for building improvements to cover that gap would leave approximately $310,000 m that fund for future building projects. This would allow the project to continue forward, albeit at a higher cost than originally anticipated. Option #4 Internally Borrow Funds to Cover the Gap Using the same methodology in Option #3 for reordering the project contingency, staff prepared a financing sheet showing absorption of the $240,000 overage In this scenario, funds would be borrowed from CORE, funds and repaid over a 20 -year term paying 5% interest. Interloan funds have been used previously to finance the Pubhc Works Facility expansion and more recently to make funds available for acquisition of property m the downtown area The downside of this approach is there is no security or obligation on the part of future councils to repay the borrowed funds. These obligations could be wiped off the books to the detriment of the CORE funds. Other Items One other issue that needs to be resolved has to do with landscaping and grading between the west side of the budding and the property line. Options to correct the grading issue range from $5,000 to maintain the designed grade with cover vegetation, up to $50,000 for physical improvements including a retaining wall. This cost would need to be factored into the overage absorbed or by further reducing the contingency. It is also possible to defer some project costs for interior equipment and furnishings (e.g., blinds, hoist, and audio visual equipment) until later in the process. These items came in higher than estimated and should be able to be purchased at lesser cost. SUMMARY Council has a difficult decision. Staff recommends that Option #3 be pursued to keep the project on track and to maintain the quality design of the facility. However, if Council determines that the increased project cost is unacceptable for reasons of pubhc pohcy or public perception, then consideration should be given to the risk equation of delaying the project. 2 Dated 12101/2005 i Delivered 12/01/2005 Sources Of Funds Par Amount of Bonds Total Sources Uses Of Funds Deposit to Project Construction Fund Total Uses are ffihw, -20 Ymr A .VNGLEPURM0SE !0/4/2005 10712 AM spr'..n steel $240,000 City of Rosemount, Minnesota Fire Station 20 Years Amortization Sources Uses $240,000 00 $240,000 00 240,000 00 $240,000 00 02/01/2006 16,500 00 02/01/2007 7,300 00 02/01/2008 7,700 00 02/01/2009 8,1000D 02/01/2010 8,50000 02/01/2011 8,900 00 02/01/2012 9,300 00 02/01/2013 9,80000 02/01/2014 10,300 00 02/01/2015 10,800 00 02/01/2016 11,400 00 02/01/2017 11,900 00 02/01/2018 12,500 00 02/01/2019 13,100 00 02/01/2020 13,800 00 02/01/2021 14,500 00 02/01/2022 15,200 00 02/01/2023 16,000 00 02/01/2024 16,800 00 02/01/2025 17,600 00 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5 000% 5.000% 5.000% 5 000% 5 000% 5 000% 5.000% 5.000% 2,000 00 11,175 00 10,810 00 10,425 00 10,020 00 9,595 00 9,150 00 8,685 00 8,195 00 7,680 00 7,140 00 6,570 00 5,975 00 5,350 OD 4,695 OD 4,005 0D 3,280 00 2,520 OD 1,720 00 880 OD 18,500 00 18,475 00 18,510 00 18,525 00 18,520 00 18,495 00 18,450 00 18,485 00 18,495 00 18,480 00 18,540 00 18,470 00 18,475 00 18,450 DO 18,495 00 18,505 00 18 480 00 18 520 00 18,520 00 18,480 00 Total $240,000 DO $129,870 00 $369 870 00 Date Yield Statistics Bond Year Dollars Average Life Average Coupon Net Interest Cost (NIC) True Interest Cost (TIC) Bond Yield for Arbitrage Purposes All Inclusive Cost (AIC) IRS Form 8038 Net Interest Cost Weighted Average Maturity ))3 fvhon -20fla 4 1 s Pf4'OVE 10/4/_/00 10 32,IM $240,000 City of Rosemount, Minnesota Fire Station 20 Years Amortization Debt Service Schedule Principal Coupon Interest Total Pi-I $2,597 40 10 823 Years 5 0000000% 5 0000000% 5 0008762% 5 0008762% 5 0008762% 5 0000000% 10.823 Years CONTRACT C -01 C -02 C -03 C -04 C -05 C -06 C -07 C -08 C -09 C -10 C -11 C -12 C -13 C -14 C -15 C -16 C -17 C -18 C -19 C -20 C -21 C -22 C -23 C -24 C -25 C -26 C -27 C -28 C -29 C -30 C -31 C -32 C -33 C -34 Extra ALAIVICOI'J DESIGN /BUILD I CONSTRUCTION MANAGEMENT I GENERAL CONTRACTING ROSEMOUNT FIRE STATION #2 ROSEMOUNT, MN BIDS VS. BUDGET DESCRIPTION BUDGET Excavation 120,960 Site Utilities comb. w /C -01 AC Paving 64,350 Landscaping 51,350 Exterior Concrete 39,640 Concrete 119,190 Masonry 366,669 Steel Fabrication 153,034 Steel Erection 36,320 Precast Concrete 11,040 Carpentry 18,940 Drywall 60,620 Roofing 115,935 Caulking 4,000 Specialties 13,750 HM, Doors, Frames 30,250 Glass Glazing 50,481 Specialty Doors 26,394 Plumbing 247,093 HVAC /Controls comb. w /C -19 Fire Protection 30,000 Electrical 287,896 Tiling 30,360 Flooring 15,146 Painting Coatings 36,225 Acoustical Ceilings 9,625 Lockers 13,260 Signage 8,000 Flag Pole 4,000 Architectural Woodwork 41,020 Window Treatments 2,250 Metal Panels 14,520 Audio Visual Systems 3,500 Electrical Chain Hoist Spray Insulation TOTAL 2,025,818 LOW BID 110,969 comb w /C -01 70,000 57,483 43,900 106,500 515,900 213,200 64,800 8,789 42,380 57,969 176,300 1,834 18,932 34,800 76,700 26,394 214,000 comb w /C -19 35,400 281,000 48,600 19,320 27,109 12,250 12,300 4,000 4,000 46,025 25,345 49,990 8,590 6,200 9,800 2,430,779 DELTA 9,991 (5,650) (6,133) (4,260) 12,690 (149,231) (60,166) (28,480) 2,251 (23,440) 2,651 (60,365) 2,166 (5,182) (4,550) (26,219) 33,093 (5,400) 6,896 (18,240) (4,174) 9,116 (2,625) 960 4,000 (5,005) (23,095) (35,470) (5,090) (6,200) (9,800) (404,961) 10 4 2005 1715 Yankee Doodle Road, Suite 200 1 Eagan, Minnesota 55121 -1616 1 Tel 651 379 9090 I Fax: 651.379.9091 Email custsery @amconconstruction.com Webs to www amconconstruction com s -1 Bond Referendum (Net Proceeds) S -2 I nterest Income S-4 Transfer of Funds (CIP) 10/4/2005 Funding Source AAicoN DESIGN /BUILD 1 CONSTRUCTION MANAGEMENT 1 GENERAL CONTRACTING ROSEMOUNT FIRE STATION #2 ROSEMOUNT, MN PROJECT BUDGET Total 2,500,000 250,000 2,750,000 2,750,000 Code Expenditures Base Design Current Land Acquisition Development 1 Land Cost 2 Project Development Costs 3 A/E Services Allowance (incl Civil, Struct M /E) 154,675 4 A/E Reimbursed Expenses 15,000 5 Geotechnical Services 2,600 6 Construction Testing 18,000 8 SAC/WAC fees 5,800 9 Bid Advertisement and Printing 25,000 Subtotal Subtotal 221,075 221,075 Construction Cost 10 Construction Management Fee 77,338 $77,338 11 Survey Staking $0 12 Construction Hard Costs 2,209,646 $2,614,607 13 Voice, Video, Data Equip Connectivity (project costs) 13,000 $13,000 14 FFE (project and design costs) 17,941 $17,941 15 Contingency 211,000 $211,000 Subtotal 2,528,925 2,933,886 Total 2,750,000 3,154,961 Fund Balance 0 (404,961) 1715 Yankee Doodle Road, Suite 200 1 Eagan, Minnesota 55121 -1616 1 Tel 651.379 9090 1 Fax 651 379 9091 Email custsery @amconconstruction com 1 Website www amconconstruction com