Braun Engineering Study on City GarageTO: Mayor and City Council April 21, 1981
FROM: City Manager
0
SUBJECT: City Garage
You have now been furnished, in the packet for this Council meeting,
with a complete copy of the Braun Engineering study of the land Mr. Milbert
has suggested we obtain from the Centurion Company (formerly part of our
landfill property). You also have, from last time, an analysis of that
report by the Bonestroo engineering firm, noting that the minimum cost
for soil correction on that site would be $160,000 (building only) and
that further expense could be expected regarding parking and other
outside facilities (fuel, etc.).
Thus the figures furnished at budget review time last year can now be
revised as follows:
EXPENSE
Land Cost
Soil Correction
Building
Rehabilitation
Assoc. Costs
(fuel area, fencing,
blacktop).
Total $500,000
INCOME
Property. Sales
present site
Landfill 110, 0006
Net'Cost
Allows fire
Truck south of tracks
An Meets plan
zoning
Present Site
MOO
384,000
100, 000
16,000
$1,260.,600
1,260., 000 $1,320,000
$390,000 960 ,000
Landfill County Site
$269000
$1,000,0003
100,000 60,000
$160,000t
$1,000,000
300, 000 300,000 s
110, 000
T
1. 4 acres at $1.50 /sq. ft.
2. 80x120 ft., at $40 /sq. ft.
3. 40,000 sq. ft., at $25 /sq. ft.
4. Insulating and repair of current buildings.
5. For constructing 150 units at $2,000 per unit.
6. 2400 sq. ft. bldg., $10 /sq. ft., equals $24,000 plus for acres
at $.50 per sq. ft. (approx. $86,000).
910,000
Q
0
Obviously, if Council does not wish to sell the existing garage
site, the $300,000 item must be removed from the second and third
alternative, and thus added to the net cost. Perhaps not so obviously,
the cost of demolishing the existing structures ($40,000 plus) and
redoing the site for whatever park use you might have in mind (grass,
parking lot, game courts, etc.) would have to be added to the net cost of
the project.
Chris Nielsen and I have run some projections of the financial
requirements for this project. In big round numbers, we have
$400,000 on hand in.the Real Estate Sales Fund which has been earmarked
for this project for some years, with the balance requiring internal
or external borrowing. The source of funds for repayment of such a
borrowing would be the interest on the principal of the P.I.R. fund
(the method used to nay off the City Hall borrowing), additional annual
funds paid by the self supporting utilities as "rent" for the new
facilities, and (in the last extremity) a property tax levy. Now, the
P.I.R. fund interest on principal can be expected to be about $58,000 per
year (7% times $830,000). The utilities cannot reasonably be expected
to pay more than their percentage of vehicles in the city fleet (about
13 or perhaps $160,000 total). Each utility would end up paying
$11,600 annually for 10 years, or $8900 for 15 years. In either case,
enough money would be generated to pay off the garage without a tax levy,
since a 9% internal or external borrowing would require $78,000 to pay off
annually over ten years, or $62,000 over 15 years.
Unfortunately, the same cannot be said about a borrowing $350,000
larger. Annual repayments would be about $132,500 over ten years, or
$105,500 over fifteen. We know of no way to pay off a borrowing of that
size without a tax increase (voted levy). It is possible that the expansion
of Central Park is a separate item which should be considered on its
own merits, and taken to the voters separately if necessary.
In the meantime, the clock is running on our old facility. Please see
the attached summary of fuel consumption and costs down there remembering
that 1980 was mild. We need some policy direction from you on this issue
as soon as possible. Obviously, the city staff thinks that you have gotten
your money out of the existing facility over the years. We believe
that construction costs during the current slump are the lowest you will
achieve. Although we believe an entirely new facility is justified, we
will gladly rebuild the existing structures if you prefer. You are losing
money right and left, operating money, at the old garage due to energy
cost, vehicle maintenance cost, and the expenses due to split -up
department operations. We would respectfully request that a decision
be reached on the alternative you prefer to follow, and the staff be
directed to prepare building and financial plans in support of the
alternative selected.
Resp .ectfully submitted,
f
h�". P': Craig
City Manager
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