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032805 CC WS AgP . . . . ~. '~. . CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, MARCH 28,2005 AGENDA 1. CONVENE WORK SESSION MEETING A. Roll Call 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS Immediately following Regular City Council Meeting Mayor Love _ Liz6e Turgeon _ Callies Wellens B. . Review Agenda 2. SHOREWOOD CITY HALL BUILDING (Att. - Administrator's memorandum) 3. COMMUNICATIONS TO STATE OmCIALS 4. OTHER 5. ADJOURN No action will be taken during this meeting. . CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD. SHOREWOOD, MINNESOTA 55331-8927. (952) 474-3236 FAX (952) 474-0128. www.ci.shorewood.mn.us. cityhall@ci.shorewood.mn.us MEMORANDUM . TO: City Council Craig W. Dawson, City Administrator cb March 24, 2005 FROM: DATE: SUBJECT: Discussion regarding City Hall Improvements - Work Session Item . The beginning of this discussion process was to have started on March 7. At that meeting, Council decided to go ahead with the purchase of 5795 Country Club Road but postpone further discussion until all members of the Council could be in attendance. Bill Baxley, of Boarman Kroos Vogel (BKV) Group, project manager on the City Hall evaluation that was presented about this time last year, will be present at the March 28 work session. He can review the work his team performed and be available to answer questions. Council should consider whether it wants further assistance from BKV Group over the next few months. . Councilmember Turgeon asked if I would put together a list of issues, important dates, and potential schedules that could be identified or anticipated. The attached memorandum ended up being rather lengthy, but identifies the key policy decisions, variables, and dates during the process. For bottom- liners, I put the schedule at the beginning; you may find the context better if you begin at the top of page 3, and then go back to page 1. You should bring your copy of the City Hall Evaluation and/or the attachments for the March 7 special Council meeting. I have attached the two memoranda in the March 7 agenda packet, but not the 11 x 17 color sheet with the summary of the four concepts. . "'" ~~ PRINTED ON RECYCLED PAPER . . . . . Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session Page 4 o If a referendum were to be held with the November 7, 2006, general election, Council would need to approve the question no later than September 11,2006. Reimbursement Resolution The City's 2004-2008 Capital Improvement Plan (CIP) currently identifies a City Hall project in 2006 at $1.5 million. When the Council starts to make expenditures that it wants to be reimbursed from bond proceeds, it has 60 days to adopt a resolution to ensure that its expenses will be covered. Council acted on March 7 to purchase the property at 5795 Country Club Road. The purchase price and closing fees came in just under $310,000. Added to the $1.3 million in the rough estimate made by BKV Group for an enlargement of the current City Hall, the amount to be reimbursed through bond proceeds exceeded the amount currently in the CIP. Consequently, the Reimbursement Resolution was prepared for Council consideration, and must be approved by the April 25 Council meeting to recover the cost for the additional property. A Reimbursement Resolution typically sets a reasonably high amount for eligible expenses. A governing body is not committed to issue the amount stated in the Resolution, and a lesser amount is quite legal and hoped for. A single resolution with a high amount set early in the process saves having to have multiple amending resolutions, and something slipping through the cracks, during the process. Capital Improvement Program The City's CIP typically is updated and approved in the May/June timeframe. This time of year allows streets--a major component of the CIP--to be inspected after winter and evaluated for changes in scheduled improvements or major maintenance. The Council would need to amend the CIP regarding City Hall to the amount noted in the Reimbursement Resolution. The CIP may be amended at any time. If the amount for City Hall were to increase from what is shown in the Reimbursement Resolution, both the CIP and the Resolution would need to be amended. Planning and Zoning Matters The property at 5795 Country Club Road is currently guided and zoned residential. . Comprehensive Guide Plan: To include this parcel for City Hall or park purposes would require an amendment to the Comprehensive Guide Plan. The amendment would redesignate this parcel from Residential to Public. A Guide Plan amendment requires at least 10 days' published notice of hearing by the Planning Commission. Typically, the Commission's record of hearing and recommendation come to the Council about three weeks later. Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session Page 5 . The Guide Plan amendment addresses a matter of appropriate land use, rather than a specific development plan. All public uses would be permitted. In the residential zoning districts, however, all public uses are allowed only through conditional use permits, which have far greater detail. A Guide Plan amendment can be done simultaneously with a CUP. It is preferable to process the amendment earlier, before investing a lot of work in developing plans needed for the CUP. . Conditional Use Permit: A CUP will be needed for City Hall improvements, whether they are made only on the current site or also include the additional property to the south. More definite plans are needed with a CUP: site plan, including building footprint, parking, grading and drainage; building elevations; landscaping plans; and lighting plans. While the CUP focuses on external appearances and site functionality of a development, planning done for the building interior will drive much ofthe exterior concerns. The level of detail involved with a CUP will require several months of working with an architect. . . A CUP requires at least 10 days' published notice of hearing by the Planning Commission. Typically, the Commission's record of hearing and recommendation come to the Council about three weeks later. Professional Services . The City will need to engage the services of an architect for City Hall improvements. It may also consider engaging the services of a general contractor/construction management firm, similar to what was followed with the public safety facilities project. If the latter approach were undertaken, it would be preferable to have the GC/CM firm engaged just before appointing the architect. The City Council engaged the services ofBKV Group to evaluate the condition of City Hall and conduct a space needs analysis. BKV Group was selected from among several firms that responded to a Request for Proposals (RFP). BKV Group's services were engaged in a competitive process, and if its work has been deemed satisfactory, it is not required to conduct another RFP process for City Hall improvements. It would need to provide an acceptable proposal for services, however. The RFP process would take 45 to 60 days to complete. Similarly, the Shorewood EDA has experience with the GC/CM approach, as it had a competitive RFP process that resulted in engaging the services of Kraus-Anderson Construction Company for the public safety facilities. Kraus-Anderson was selected several months after the architect began working, and KIA's early work was to review the architect's plans rather than to be involved with the development of the plans. KIA's services were engaged in a competitive process, and ifits work has . been deemed satisfactory, it is not required to conduct another RFP process for City Hall . . . . . Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session Page 6 improvements. It would need to provide an acceptable proposal for services, however. The RFP process would take 45 to 60 days to complete. The City could also engage the services of an owner's representative, who would bring expertise during the development of the architect's plans. With this arrangement, it is common to have the building built by a general contractor under a public bidding process. Selection of an owner's representative would likely take 30 to 45 days to complete. So, depending on which course of action the Council decides to take, any major improvements could begin Spring 2006, Fall 2006, or Spring 2007. Occupancy should be possible seven or eight months after construction work begins. . . . . . Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session What follows is first, a discussion of some different timeframes and calendars, and, second, a discussion of several specific items that influence schedules. For better context, you may fmd it helpful to start with the memo at the top of Page 3, and then come back to "Getting Started" on this page. The scenarios below assume, for sake of illustration, that major improvements will be made regarding City Hall. Getting Started The rather lengthy discussion starting on page 3 is important to identify policy and procedural matters. Key questions listed immediately below have a large influence on the schedule. . Should the matter of financing City Hall improvements be put to referendum? If so, should the referendum be a special election or placed on the 2006 primary or general election? If not, then should the EDA be involved? If City capital improvement plan bonding is chosen, then the reverse-referendum possibility needs to be considered, and the submission of a valid petition raises the same question about when to hold the referendum. Should the City continue to work with professional services firms that it has had under recent contracts, or conduct new RFP processes? Should the services of BKV Group be retained over the next few months, and provide assistance as the Council decides which option(s) to pursue? . . Scenario A: Without wishing to appear presumptuous, the most aggressive schedule using capital improvement plan bond financing could look something like this: . April- June 30 -- Work with BKV Group to develop options further; decide on option(s) By April 25 - Adopt Reimbursement Resolution July -- Comprehensive Guide Plan Amendment at Planning Commission and City Council . . If no new RFP process for architect selection, then . July - October 15 -- Develop plans sufficient for CUP October 24 -- Council OK on plans for CUP application December 6 - CUP at Planning Commission February 13, 2006 -- Approval of final plans for bidding; public hearing for capital improvement plan financing March 27, 2006 -- Bids awarded (& no valid reverse-referendum petition submitted) April 3 -- Construction begins; City offices moved to temporary quarters (if necessary) December 1, 2006 - Completion of improvements and occupancy . . . . . . . . . . . Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session Page 2 If there were a new RFP process to select an architect, this schedule would be pushed back approximately two months. Continuances that might arise from the public hearings for the Guide Plan amendment and CUP could also add time to the process. If a reverse-referendum were held, the schedule from the bidding process on would be extended by at least two months. The timeline outlined above would also be essentially the same if the EDA were to be the financing vehicle. There would be some agreements between the City and the EDA that would need to be approved by both governing boards in the early stages of the project. Scenario B: This is a schedule that could result from scheduling a referendum for the September 12, 2006, primary election: . April-June 30 - Work with BKV Group to develop options further; decide on option(s) By April 25 - Adopt Reimbursement Resolution July 1 - August 31 -- Selection of professional consultants (if new RFP processes are used) November - Comprehensive Guide Plan Amendment at Planning Commission and City Council December 1 - March 15, 2006 - Develop plans sufficient for CUP March 27 - Council OK on plans for CUP application May 2 -- Public hearing & recommendation on CUP at Planning Commission May 22 - CUP approved by City Council July 10 - Council meeting deadline for approval of referendum question September 12 - Referendum approved September 25 - Approve advertisement for bids October 30 - Approve bids November 6 - Construction begins; City offices moved to temporary quarters (if necessary) November 13 - Approve bond sale May 2007 - Completion of improvements and occupancy . . . . . . . . . . . . . . The schedule prior to May 22 could be accelerated; the dates shown are ones to get tasks accomplished by. This schedule provides almost four months (from CUP approval to referendum) for public information efforts prior to the referendum. . . . . . Timeframes/Calendars for City Hall Improvements March 28,2005, City Council Work Session Page 3 Referendum: A key question is whether long-term financing should be put to referendum. An enlargement or replacement of City Hall would need to be accomplished with long-term financing. There are three options that will not, may, or will require a referendum. A referendum will add time to the process. A referendum question must be submitted to Hennepin County at least 53 days before the election is held. A referendum can be held at a special election, a day of the Council's choosing. Staff estimates that a special election would cost approximately $3,500 - $4,000 to hold. There are bills in this session of the Legislature that, if adopted, could limit the dates that the City could hold a special election. Regarding the financing options and whether a referendum is necessary: Financing can be done through the EDA without referendum. . The Shorewood Economic Development Authority (EDA) could be involved in a sale- leaseback arrangement, where the EDA would own the building during the period of financing, and issue annual appropriation bonds that would be paid with revenue from the City. This arrangement does not require referendum. As it would not be general obligation financing, however, it would carry a slightly higher rate of interest (0.25 to 0.50 percent). Financing could be subject to referendum through: . Capital Improvement Plan bonding. In 2003, the Legislature made this type of long- term financing possible without referendum. However, it is subject to a 30-day period after the public hearing for residents to submit a petition calling for a referendum to reverse the Council's decision to issue these bonds. A valid petition must be signed by at least 5% of the number of residents voting in the last election (which, after the 2004 election, would be at least 241 Shorewood residents). Consequently, it could be 31 or at least 83 days from the Council decision following the public hearing to know whether the proposed level of funding would be possible. Capital Improvement Plan bonding is a general obligation issue, one which would carry the lowest rate of interest. Financing requiring referendum can be done through: . General Obligation bonding that requires a referendum. A special election requires 53 days - essentially two months - from the decision on the question (including the maximum amount of bonds to be issued). o If a referendum were to be held with the September 5, 2006, primary election, Council would need to approve the question no later than July 10, 2006. .: . CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD · SHOREWOOD, MINNESOTA 55331-8927 · (952) 474-3236 FAX (952) 474-0128 · www.cLshorewood.mn.us . cityhall@cLshorewood.mn.us MEMORANDUM TO: FROM: DATE: SUBJECT: City Council Cb' Craig W. Dawson, City Administrator' '. March 3, 2005 City Hall Building -- March 7,2005, Special City Council Meeting . Back2:round: Late in 2003 and into 2004, the Boarman Kroos Vogel (BKV) Group performed an evaluation of the City Hall structure and a needs assessment of building space. The structural evaluation noted several deficiencies, particularly related to water around the building and to the effects of long-term weathering of the building exterior. The space needs analysis indicated that the current space is inadequate. While there is a lot of space in the basement, it is not suitable for office and meeting uses. Thus more space for uses on the upper level is needed. . BKV Group identified four concepts to pursue: . I) , "Short-term Maintenance", which are minimum improvements to be done ifno further changes were to be made to City Hall. (One of the items, replacing City Hall's roof, was done last fall. It was past the end of its useful life, and a new roof could be considered the cost of doing business to protect everything in the building.) 2) "Bridge Concept", which would provide additional space until such time that a final decision were made on the ultimate size and/or configuration of City Hall. 3) "Addition Concept", which would enlarge City Hall by 2,400 square feet and have significant interior renovations. 4) "New Building", which would demolish the existing City Hall and construct a new 12,000 square- foot building. GeneralDiscussion: In its discussion following the presentation of the report, Council noted that each concept needed to be more thoroughly evaluated. Based on the information developed, however, the Council believed that an addition/enlargement or a new building would be the best long-term uses of funds. . Additional Property?: BKV Group had a simple plan-view sketch showing how the footprint of the 12,000::t square-foot, one-story Vadnais Heights City Hall, which it had designed, would fit on Shorewood's site. Given the poor soils that exist east of the middle of City Hall, the footprint should be placed as far west on the property as possible. In illustration, it appeared that the building would work far more easily if the City could acquire and use the residential property immediately south of City Hall. Thatproperty, at 5795 Country Club Road, has been listed for sale at approximately $300,000, and has had multiple offers. n t.~ PRINTED ON RECYCLED PAPER " . . . . . City Hall Discussion March 7,2005, Special City Council Meeting Page 2 The property at 5795 Country Club Road is guided Residential. If it were to be added to the City Hall property, the Comprehensive Plan would need to be amended to designate its use as Public. Public uses are allowed in Residential zones by Conditional Use Permit. Financin2;: I spoke with our bond counsel about financing that may be done without referendum. State law that took effect in 2003 no longer requires referenda for long-term general-obligation ("g.o.") financing of such essential municipal buildings as city halls, public safety facilities, and public works facilities. The financing ofland has been interpreted not to be part of that exemption. According to bond counsel, however, the City Council could approve a pre-financing resolution, referred to as a "reimbursement resolution", and in it state that the land addition is necessary to accomplish the City Hall project referenced in the Capital Improvement Plan, and that the City would amend its CIP to reflect the addition. Bond counsel is prepared to work with staff quickly to draft the more precise wording appropriate for the resolution. The most practical financing strategy would be to use existing balances in City funds, and to reimburse those funds with proceeds from the subsequent sale of bonds for City Hall improvements. "Internal borrowing" is a financing practice that should be avoided and used only when necessary. Under the present circumstances, it may be the most practical option available. Cost of Improvements: In its March 2004 report, BKV Group gave a rough estimate of$1.3 million for the addition/enlargement of City Hall, and a rough estimate of $3.2 million for a new City Hall (exclusive of any land addition). It should be re-emphasized that these are rough estimates, and were developed to get a sense of the magnitude oflikely costs. In a first-draft pro-forma for the upcoming proposed $1.5 million g.o.-backed water revenue bonds, the annual constant-level payments for 20-year bonds would be $95,000. Assuming that this figure is approximately the same for a g.o. bond for City Hall, $95,000 would add about 2.5 percent to the tax levy collectible in 2005. For the median value homestead, $337,000, the resulting increase in tax would be approximately $25. Or, looking at it another way, each $1 million would cost the median- value homestead approximately $17. 2005 Work Pro2:ram: The City Hall matter is listed on the 2005 Work Program with a note that some decision on what to do or what to pursue can be made by June. This item will be important in developing the 2006 budget. .' . . . . CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD. SHOREWOOD, MINNESOTA 55331-8927. (952) 474-3236 FAX (952) 474-0128. www.cLshorewood.mn.us. cityhall@cLshorewood.mn.us MEMORANDUM TO: FROM: DATE: SUBJECT: City Council t1 Craig W. Dawson, City Administrator .. June 10, 2004 Whither City Hall? -- June 14 Council Work Session Earlier this year Council received the City Hall assessment report performed by Boarman Kroos Vogel (BKV) Group. While Council wished to examine all alternatives presented at a later time, the Council indicated that expansion of existing City Hall, or construction of a new City Hall, seemed sensible for focusing discussion. BKV Group identified water as a significant structural issue, and agreed with staff that evaluation of an associated matter-mold-should be performed. Results could indicate the level of immediacy to make changes in the facility, and what directions those changes could take. The City commissioned Institute for Environmental Assessment, Inc., (IEA) to determine and evaluate the "fungal contamination" in City Hall. lEA took samples on April 1, 2004, and, after taking the time necessary for maturation of the fungi to be measured, issued its report on May 20, 2004. A copy of the lEA report is attached. Summary of Maior Findings: IEA's findings and recommendations are summarized on the first page of its transmittal. It found no fungal contamination in levels that would cause health concerns on the main level, and recommended that the carpet be "HEP A vacuumed to remove excess fungal spores." IEA did find elevated levels of fungi on the lower level that could be mitigated. . Some sheetrock on the north wall of the east storage room had fungal contamination. It "should be removed under 'controlled conditions'." . "Efflorescence on the exterior block walls of the west storage room should be cleaned and sanitized. These remediation actions should be conducted on a regular basis to ensure the growth does not occur in the future." These conditions do not indicate immediate environmental health threats in the building. To assure the health of City employees and visitors, they should be addressed in the near future. Staff will need to do some research to estimate the expense of performing IEA's recommendations. The City should have sufficient funds in the Public Facilities fund or in the balance in the General Fund to perform this work. ..to- ~.1 PRINTED ON RECYCLED PAPER .. . . . . . Discussion re: City Hall June 14,2004, City Council Work Session Page Two Other Immediate Concerns: The BKV Group report noted several parts or systems of City Hall which were deteriorating significantly. Two systems urgently need attention regarding the viability of City Hall. . The roof must be replaced. Without replacement, the integrity and safety of the entire building and its contents are at increased risk. The cost estimate for the roof replacement is $20,000. It is more of a cost of doing business, rather than a capital investment in the building. . The siding on City Hall is failing. There are many signs of rot or other deterioration. Water intrusion in failed siding will weaken the structural integrity of the exterior stud walls and destroy insulation. While the siding is less critical compared to the roof, it does need to be addressed. If a short-term perspective is taken, some siding should be replaced and the rest treated. The long-term approach would be to replace the siding entirely. This latter approach could point toward expansion of City Hall using the existing structure. Scenarios: Council may recall the four concepts discussed by BKV Group. The costs mentioned below were very rough and meant to be illustrative for orders of magnitude. 1) Short-term Maintenance The minimum improvements that need to be made - including new roof, siding, and windows; addressing water infiltration (short-term fixes); making HV AC changes; ADA accessible restrooms and entry - were estimated to be $215,000. These improvements would need to be done ifno further changes were to be made for City Hall. Not all ofthe short-term maintenance items would be necessary if it were decided that more substantial changes for the building would be made in the near- to mid-term. 2) Bridge Concept This is a stop-gap solution to renovate the existing space while planning to expand or replace City Hall. The guideline cost estimate is $730,000 (in 2004 dollars). This estimate would include the items addressed in "short-term maintenance". In its earlier discussion, councilmembers made several comments that this approach would not be a very prudent use of funds. 3) Addition Concept This concept would add approximately 2,400 square feet of space and involved substantial interior renovation, although there would still be space shortages given current industry standards. The total proj ect cost was estimated to be $1.3 million. 4) New Building The space study indicated a need for approximately 12,000 square feet of space. The total project cost estimate of$3.2 million assumed construction on the existing City Hall property. There are opportunities to add land to the existing site or locating at a different site, but their additional costs were not analyzed by BKV. " Discussion re: City Hall June 14,2004, City Council Work Session Page Three . . . . . An issue with either an addition or a new building is the disruption or relocation of City Hall operations and staff during construction. In the case of an addition, it will likely be more cost- effective and result in greater building integrity to demolish the upper level of City Hall and build everything new. In this way, it also may be easier to excavate around the building for mitiga.tioh of water issues. An addition made in this way would be better termed an "enlargement" of City Hall. Staff has not begun research regarding the duration and cost of temporary space. Timing: Council should have discussion about the optimal timing to make a commitment on any of the four concepts offered by BKV. Immediate needs may be addressed this year. Short-term maintenance could be included in the 2005 budget, but may not be prudent if it is decided that the enlargement or replacement of City Hall should happen within a few years. Another issue with timing concerns the type of process the Council may wish to conduct in arriving at a decision. a) The process about the concept to pursue could be largely an internal one, involving Council and staff, either as a whole or through a committee. b) Recommendations from the process in (a) could be forwarded to a review committee, whose members may include Council, staff, advisory commissioners, and residents. c) Alternatively, the Council may wish to create a task force to study the issue and develop recommendations. d) However recommendations may come to Council for action, if a decision is made to enlarge or replace (and possibly relocate) City Hall, the Council may wish to have a task force regarding architectural design, cost, and, if necessary, changes to Badger Park. It would make sense to have engaged the architect, and perhaps a soils and/or structural engineer, for the project before this task force begins its work. These processes will take several months to complete. There are fewer than three months available before the Council sets its not-to-exceed 2005 tax levy, and about two months after that for preparation of the Council's final 2005 tax levy. Financing preferences: The Council should decide if it wishes to have a referendum to finance an enlargement or replacement of City Hall. With legislation enacted last year, there is no longer a statutory requirement for referendum for long-term (greater than five years) financing of municipal buildings. Financing for land that would take more than five years to payoff, however, is not exempt from the referendum requirement (although land purchase through the EDA may qualify as a referendum-exempt option). The lack of referendum removes the need to use the EDA to issue annual-appropriation (aka lease-revenue) financing, and the City would see the better interest rate it would have with any other general-obligation bonds. If the Council wants to have a referendum, it is questionable whether sufficient information and costs can be developed to forward the ballot question to Hennepin County this fall.