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HomeMy WebLinkAboutpacket 3_47-58_City Shops Complex Purchase and Relocation to Cardinal Distributing Property Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Debbie Arkell, Director of Public Services Chris Kukulski, City Manager SUBJECT: City Shops Complex Relocation MEETING DATE: March 26, 2007 BACKGROUND: The City Shop Complex is located at 814 North Bozeman Avenue on approximately four acres. The 15,900 sq.ft. building was constructed in 1975 and is the headquarters for the water/sewer operations, streets, forestry, parks, facilities and maintenance, and vehicle maintenance operations. Besides the main building, the site contains a 10,000 sq.ft. vehicle storage shed; 1,888 sq.ft. parks barn (944 sq.ft. office and 944 storage/parking); a 600 sq.ft. storage shed (pipe storage), waste oil collection station, public water fill station, above- ground vehicle fuel station, and vehicle and equipment parking on the property. In addition to this facility, the Public Services and Parks Departments utilize the old landfill for asphalt, road mix, and other storage, and the 8-acre lower yards on Rouse for inside (11,529 sq.ft.) and outside storage. Currently, 46 FTE employees report to work at this facility. During the summer months, as many as 30 seasonal employees join the workforce. The complex has no women’s shower facility and a 280 sq.ft. break room, which can seat 18 employees (by building code occupancy), which is not large enough for the existing streets/forestry division to hold a staff meeting or training. The FY2002-2006 Capital Improvement Program (CIP) identified the need for a new Shop Complex. The decision was made to not pursue the project at that time due to lack of finances. The FY2004-2008 CIP retained the project but recognized the need to save money over time for the construction, and moved the construction out to FY08. Nine million dollars was estimated as being needed to acquire a site and relocate the shop complex on 10 +/- acres. 1 157 City Commission Memorandum City Shops Complex March 26, 2007 Page 2 In 2003, an architect was hired to conduct a needs assessment, to assist with determining how much building and land area was needed for a new complex. This study recommended combining this facility with the Lower Rouse storage yard and the Old Landfill storage yard (located behind the Humane Society) on a minimum 20 acre site. The construction of the structures and parking area was estimated at $9+ million. This did not include infrastructure or land costs. The 2003 estimates for a new facility were based on $100/sq.ft. for the administrative area, $80 for the shops area, and $60 for covered equipment storage. 2007 estimates are $140/sq.ft. for administrative, $80 for shops, and $70 for covered storage. These costs would increase the 2003 recommended construction by $802,718 for a total construction cost of over $10 million, which again does not include infrastructure or land costs. With the increase in construction costs continuing to escalate, it is becoming apparent that the construction of a new shops complex will be very difficult. We anticipated such new construction at the Mandeville Farm, next to the proposed Transfer Station. While a new facility on the Mandeville Farm property would be ideal, the cost must be considered. Infrastructure costs alone will likely be in the $3 million range. The recently approved Water CIP and the upcoming Wastewater CIP are proposing the construction of Phase I of a shops complex at the Wastewater Treatment Plant for the water and wastewater operations divisions. This phase would be done in conjunction with Phase I of the WWTP expansion, and is estimated at nearly $5 million. Phase II, which would include area for the Streets, Forestry, Building Maintenance and Parks Divisions, is not included in the next 5- year CIP window. At the time this construction was envisioned, we anticipated being able to abandon the I/P beds and use that land for a shops complex. The beds have not been used for many years, and the DEQ permit in force at the time we were planning this prohibited us from using the beds except for emergencies. Further, when our WWTP Permit was re-issued by DEQ, the permit requires the plant to utilize the beds. While we are currently working with DEQ on revising this permit that would not require the use of the I/P beds, we are hesitant to abandon even a portion of the beds until the new plant is constructed and on-line. Substantial water and sewer infrastructure would have to be constructed to serve this property, at an estimated cost of over $1 million. Further, after the February 16, 2007 water main break and March 12, 2007 snow melt event, it became apparent that the coordinated response to those emergency situations was possible because the employees see each other daily, know each other’s skills, and know what equipment is available. Having these divisions at one site is beneficial for the personnel, as well as most convenient for sharing of equipment. If at all possible, it is my preference that the divisions remain together at one facility. 2 158 City Commission Memorandum City Shops Complex March 26, 2007 Page 3 We have been studying the feasibility of utilizing the 4.2 acre Cardinal Distributing property at 1750 Evergreen Drive for public services operations. The property is zoned M-2, Manufacturing and Industrial, and is partially located within the I-90 Entryway Overlay District. This type of city facility is a principal use in the M-2 district. The concrete and metal building located on the property is approximately 41,260 sq.ft. and was built in several phases, beginning in 1976, with the last addition completed in 2000. The building has 6,000 sq.ft. of office and meeting area and the remaining 35,000+ sq.ft. is warehouse space. Within the building, there is a 10,000 sq.ft. area that could serve as the vehicle maintenance area with minor remodel; approximately 12,000 sq.ft. of area that could be used as equipment parking; approximately 6,000 sq.ft. that could be used as shared shop area; and 7,000 sq.ft. for storage, sign shop, and meter shop. The building is lacking human services areas such as locker rooms, adequate restrooms, and a break/training room, and a vehicle/equipment wash bay. We consulted with Place Architecture to help us determine if it was feasible to re-use this site for our shops complex, and they concluded that the subject property would adequately serve present and future needs if an addition for the human services area and wash bays was completed, and if 25,000 sq.ft. of covered equipment parking was constructed, to accommodate the storage at the lower yards. The covered equipment parking was estimated at $1,750,000. Given the size of the site and the cost of such construction, we have concluded it is more cost effective to continue to utilize the two existing storage yards. Some covered equipment storage could gradually be added in the future. The continued use of the Rouse/Griffin yard would not preclude the potential re-use of that site in the future, as long as the uses could be replaced elsewhere. Place Architecture estimated a 2,500 sq.ft. human services area (locker rooms, restrooms and break/training room) and 1,000 sq.ft. wash bay addition would cost approximately $430,000, and the remodel of the shops area would cost $422,000. The addition of over-head doors on the north side of the warehouse and moving a wall will also be needed, as will some minor remodel in the office area, some of which may be able to be accomplished in-house. A publicly accessible water fill station will also be needed. We are estimating the addition and remodel costs to be about $1 million. While this site is not as large as a desired site would be, and the floor plan does not flow as well as a new structure would, with the human services addition it would provide over 15,300 more square feet of building than we currently have at the existing shops complex. It would also provide a large enough central office area to accommodate the parks division, which will make their access to the public, secretarial assistance, and other divisions much more convenient, as 3 159 City Commission Memorandum City Shops Complex March 26, 2007 Page 4 well as office area for the Director of Public Services, and the facility should accommodate the Department’s needs for 10 to 15 years minimum. POTENTIAL DRAWBACKS: The subject property is a 4.2 acre triangular shaped site. Cardinal Distributing owns 3.16 acres of the site. The remaining 1.043 acres will be leased from Montana Rail Link. The property line bisects the building. The site has been developed, and the land leased from the railroad, since 1975 and the current owner has had no issues with the lease. MRL has indicated the property may be available for purchase. Some concern has been expressed by Staff about the closeness of the site and structure to the railroad tracks. There will likely be times when staff will be delayed while waiting for a train to clear the crossing on Griffin, but we currently face that situation on Rouse when traveling from the shops complex to storage yards or north part of town. A train derailment in the area may prohibit access to the site, which would affect our ability to assist with the incident. Main access from the site will be from Griffin Drive, and traffic on Griffin Drive can at times be heavy. This traffic is no more intense than that on Rouse Avenue, but there is a traffic signal at the intersection of Rouse and Tamarack, and there are two other access options, one on North Bozeman, and one on Aspen Street. There are two other access options from the Cardinal site, one further west on Griffin Drive and one from Nikles to North 7th. Left turns from Nikles to North 7th can be difficult at certain hours of the day. An addition, remodel, public water fill site, and UDO screening requirements will need to be completed prior to move in. FISCAL IMPLICATIONS: Section 2.05.020 of the Bozeman Municipal Code requires an appraisal of property purchased, and further states the city may not pay more than the appraised value of the property. The subject property was appraised in May 2006 for $3.2 million. The asking price for the property is the appraised value. The current lease of the MRL land is $6,597. While the lease is assignable, MRL will require the City to enter into a new lease and the annual lease payment will be negotiated at that time. MRL has indicated they may also be interested in selling the land. Street and Tree Assessments would be approximately $1650 more than at the existing complex, unless the property is re-zoned PLI, as the assessments on PLI zoned land are 75% less than on industrial land. If rezoned, the assessment would be approximately $25 higher. 4 160 The purchase of the Cardinal site for $3.2 million and the remodel for $1.0 million is proposed to be paid for from the various enterprise funds as well as the parks division, which is the only general fund affected. The previously approved Water CIP has $1,507,500 allocated for this project in FY08, and the Water Impact Fees CIP has $990,000 allocated for FY08. The Wastewater CIPs are proposed to be identical to the Water CIPs. Because other divisions would be moving to this complex, a proposed funding scenario for the $4.2 million is $400,000 from each of the following funds: Water Operations, Wastewater Operations, Vehicle Maintenance, Solid Waste, Forestry, Parks and Streets divisions (all enterprise or assessment funds with the exception of Parks), and $466,667 from each of the following Impact Fee funds: Streets, Water, and Wastewater. Other financing scenarios based on proportionate share could be considered. If the existing shops complex is not retained for other city uses, such as a police and municipal courts complex, and is sold, the proceeds from the sale of the facility could be applied to the costs of the new facility. At a minimum, the necessary general fund portion of the new facility should be paid for from the proceeds of the sale. RECOMMENDATION: Authorize the purchase of the Cardinal Distributing property at 1750 Evergreen Drive for $3.2 million and the necessary addition and remodel of said facility for up to $1 million, with the financial distribution of the costs to be determined by the Finance Director and City Manager. Once the remodel is completed, this property will become the City’s Public Works complex. ALTERNATIVES: 1. As suggested by the City Commission. 2. Construct Phase I of the Complex at the WWTP, as previously approved, and leave the remaining Department operations at the current site. 3. Construct a Complex on the Mandeville Farm. Respectfully submitted, _________________________________ ____________________________ Debbie Arkell, Director of Public Services Chris A. Kukulski, City Manager Attachment: Staff Report Report compiled on March 20, 2007 cc w/ Attachment: Ed Brandt, Cardinal Distributing Cliff Chisholm, Place Architecture 5 161 CITY COMMISSION STAFF REPORT MARCH 26, 2006 COMMISSION MEETING RELOCATION OF SHOP COMPLEX REPORT BY: Debbie Arkell, Director of Public Services CURRENT LOCATION The City Shop Complex is located at 814 North Bozeman Avenue on approximately four acres. The property is zoned PLI, is within the Conservation Overlay District, and is bordered on four sides by streets, including Tamarack Street, a collector, on the north, and Rouse Avenue, an arterial, on the east. A single family residence is located adjacent to the southeast corner of the property. The property north of the Complex is zoned PLI and is the State Dept of Transportation office and yard, and the County Fairground. The property to the east is zoned Historic Mixed Use (HMU) and is developed as residential. The property to the south is zoned R-2, and consists of residential homes. The property to the west is zoned R-4, and consists residential homes. Existing Shops Complex 814 North Bozeman Avenue The approximately 15,900 sq.ft. building was constructed in 1975 and is the headquarters for the water/sewer operations, streets, forestry, parks, facilities and maintenance, and vehicle maintenance operations. In addition to the main building (3,860 sq.ft. of which is vehicle maintenance), there is a 10,000 sq.ft. vehicle storage shed; 1,888 sq.ft. parks barn (944 sq.ft. office and 944 storage/parking); a 600 sq.ft. storage shed (pipe storage), waste oil collection station, public water fill station, above-ground vehicle fuel station, and vehicle and equipment parking on the property. Total building square footage is 27,488. 1 162 Currently, 46 FTE employees report to work at the 814 North Bozeman facility. During the summer months, as many as 30 seasonal employees join the workforce. Although we have full- time women city service workers and women seasonal employees, the complex has no women’s shower facility or non-public women’s restroom. The 280 sq.ft. break room can seat about 18 employees, which is not large enough for the existing streets/forestry or water divisions to hold a staff meeting or training. In addition to this facility, the Public Services and Parks Departments utilize the old landfill at the north end of Rouse Avenue for asphalt, road mix, and other storage, and the 8-acre lower yards on Rouse for inside (11,529 sq.ft) and outside storage. The lower yards is also used for the Police Department’s vehicle impound yard. PROJECTED NEEDS The FY2002-2006 Capital Improvement Program (CIP) identified the need for a new Shop Complex. In the FY2001-02 CIP, $500,000 total was scheduled in the water, wastewater, solid waste, and general fund for site acquisition and architectural fees, and $5,000,000 in FY2002- 2003 for construction. A 15 year bond was anticipated for funding. The decision was made to not pursue the project at that time due to lack of finances. The FY2004-2008 CIP retained the project but recognized the need to save money over time for the construction, and moved the construction out to FY08. Nine million dollars was estimated as being needed to acquire a site and relocate the shop complex on 10 +/- acres. The CIP notes that 33% of the project cost is eligible for impact fees funding. The proceeds from the sale of the current shops complex at 814 N. Bozeman was anticipated to finance the general fund’s portion of the new facility. If not sold, this property could potentially be utilized for other City services, such as a police department and municipal courts facility. In 2003, an architect was hired to conduct a needs assessment to assist with determining how much building and land area was needed for a new complex to serve present and future needs. This study recommended combining this facility with the Lower Rouse storage yard and the Old Landfill storage yard (located behind the Humane Society) on a minimum 20 acre site. The structures anticipated included an administrative structure of approximately 11,669 sq.ft. (8,774 sq.ft. “usable”, remaining in circulation, walls, etc); various shops areas of 33,780 sq.ft. (vehicle maintenance, water, meter, sign, parks, purchasing); and 33,600 sq.ft. of covered equipment storage. The construction of the structures and parking area was estimated at $9+ million. This did not include infrastructure or land costs. With the increase in construction costs continuing to escalate, as well as other needs (i.e. police and fire) it is becoming apparent that the construction of a new shops complex will be very difficult to finance. We anticipated such new construction at the Mandeville Farm, next to the proposed Transfer Station. When the decision was made to not construct the transfer station and to look at the property for an industrial subdivision, the Commission was split on whether property should be retained in the subdivision for City use, and some comments were made that constructing this type of facility in an entryway corridor should not be considered. While a new facility on the Mandeville Farm property would be ideal, the cost must be considered. Infrastructure costs alone will likely be in the $3 million range. 2 163 The recently approved Water CIP and the upcoming Wastewater CIP are proposing the construction of Phase I of a shops complex at the Wastewater Treatment Plant. This phase would be for the water and wastewater operations divisions and would be done in conjunction with Phase I of the WWTP expansion, and is estimated at nearly $5 million. At the time this was envisioned, we anticipated being able to abandon the I/P beds and use that land for a shops complex. The beds have not been used for many years, and the DEQ permit in force at the time we were planning this prohibited us from using the beds except for emergencies. Further, when our WWTP Permit was re-issued by DEQ, the permit requires the plant to utilize the beds. While we are currently working with DEQ on revising this permit that would not require the use of the I/P beds, we are hesitant to abandon even a portion of the beds until the new plant is constructed and on-line. Substantial water and sewer infrastructure would have to be constructed to serve this property, at an estimated cost of over $1 million. Further, after the February 16, 2007 water main break and March 12, 2007 snow melt event, it became apparent that the coordinated response to those emergency situations was possible because the employees see each other daily, know each other’s skills, and know what equipment is available. Having these divisions at one site is beneficial for the personnel, as well as most convenient for sharing of equipment. If at all possible, it is my preference that the divisions remain together at one facility. POTENTIAL SITE We have been studying the feasibility of utilizing the Cardinal Distributing building at 1750 Evergreen Drive for public services operations, and have utilized the services of Place Architecture to assist in our planning. The building should be empty by June 2007. Various options were considered including leaving one division at the existing complex. After much consideration, it was felt that the operations of the public services department relies on the cooperation and coordination of all divisions within the department, and having these services at one site was beneficial for the personnel, as well as most convenient for sharing of equipment. If all divisions move, it is imperative that the two existing storage yards on Rouse Avenue continue to be used for storage, as there is not adequate storage at the Cardinal site. If we retained the existing shop complex for a portion of our operations, the storage facilities at the Rouse/Griffin site could possibly be eliminated, although it is a preferred site for sand storage. The subject property is a 4.2 acre triangular shaped site. Cardinal Distributing owns 3.16 acres of the site, and they lease 1.043 acres from Montana Rail Link. The property is zoned M-2, Manufacturing and Industrial, and is partially located within the I-90 Entryway Overlay District. This type of city facility is a principal use in the M-2 district. The property to the south and west are M-2 zoned lots located within the Evergreen Business Park and house a variety of uses including Crescent Electrical Supply and Simms Fishing Products. A vacant lot owned by the Exxon Mobil Oil is also to the west of the property, and north of Crescent Electric. Inquiries were made to Exxon regarding the possibility of purchasing or leasing the vacant land for equipment storage and they responded they have no interest in selling or leasing the land. Railroad tracks are located to the east of the property, and a rail spur can serve the property, but the spur has not been used for several years. 3 164 CARDINAL DISTRIBUTING SITE 1750 EVERGREEN DRIVE The concrete and metal building is approximately 41,260 sq.ft. and was built in several phases, beginning in 1976, with the last addition completed in 2000. This is over 15,300 square feet of building area more than we have at the existing complex. The building has 6,000 sq.ft. of office and meeting area and the remaining 35,000+ sq.ft. is warehouse space. The warehouse floors are 10 to 12” thick concrete. In November 2005 a Site Plan application was approved for a 42,857 sq.ft. addition to the existing building. The business elected to relocate to the Valley Ice Garden and the addition was not constructed. There is a 10,000 sq.ft. area that could serve as the vehicle maintenance area with minor remodel; approximately 12,000 sq.ft. of area that could be used as equipment parking; approximately 6,000 sq.ft. that could be used as shared shop area; and 7,000 sq.ft. for storage, sign shop, and meter shop. The building is lacking human services areas such as locker rooms, adequate restrooms, and a break/training room, and a vehicle/equipment wash bay. We consulted with Place Architecture to help us determine if it was feasible to re-use this site for our shops complex. Place Architecture compared the existing complex, 2003 needs assessment, and the available square footage at the Cardinal property, and concluded that the subject property would adequately serve present and future needs if an addition for the human services area and wash bays was completed, and if 25,000 sq.ft. of covered equipment parking was constructed. The covered equipment parking was estimated at $1,750,000. Given the size of the site and the cost of such construction, we have concluded it is more cost effective to continue to utilize the two existing storage yards. Some covered equipment storage could gradually be added in the future. The continued use of the Rouse/Griffin yard would not preclude the potential re-use of that site in the future, as long as the uses could be replaced elsewhere. Place Architecture estimated a 2,500 sq.ft. human services area (locker rooms, restrooms and break/training room) and 1,000 sq.ft. wash bay addition would cost approximately $430,000, and the remodel of the shops area would cost $422,000. The addition of over-head doors on the north side of the warehouse and moving a wall will also be needed, as will some minor remodel in the office area, some of which may be able to be accomplished in-house. A fueling station could be added at a later time, and in the meantime staff could use the Pacific Pride fueling site. A publicly accessible water fill station will also be needed. We are estimating the addition and remodel costs to be about $1 million. 4 165 The 2003 estimates for a new facility were based on $100/sq.ft. for the administrative area, $80 for the shops area, and $60 for covered equipment storage. 2007 estimates are $140/sq.ft. for administrative, $80 for shops, and $70 for covered storage. These costs would increase the 2003 recommended construction by $802,718 for a total construction cost of over $10 million, which again does not include the cost of land or necessary infrastructure improvements. While this site is not as large as a desired site would be, and the floor plan does not flow as well as a new structure would, it would provide over 15,300 more square feet of building than we currently have at the existing shops complex and would save about $6 million in construction costs alone. It would also provide a large enough central office area to accommodate the parks division, which will make their access to the public, secretarial assistance, and other divisions much more convenient, as well as office area for the Director of Public Services, and the facility should accommodate the Department’s needs for 10 to 15 years minimum. PLANNING ISSUES: The Assistant Planning Director has confirmed that the use of this building would be a principal use in the M-2 zoning district. A 4,000 sq.ft. addition could be done through the re-use/further development process, meaning it would undergo internal staff review with all modifications subject to approval by the City Commission (UDO Section 18.02.080). Screening for parking of large trucks and equipment would likely be required, per UDO Section 18.42.160, which requires areas designated for vehicle and equipment storage to be screened from the street and adjacent properties. We would also need the fencing for security purposes. Per the UDO, this area is not subject to paving or landscape requirements. These costs have not yet been determined but could be in the $10,000 to $15,000 range. POTENTIAL DRAWBACKS: The subject property is a 4.2 acre triangular shaped site. Cardinal Distributing owns 3.16 acres of the site. The remaining 1.043 acres will be leased from Montana Rail Link. The property line / lease line bisects the building. The site has been developed, and the land leased from the railroad, since 1975 and the current owner has had no issues with the lease. Some concern has been expressed by Staff about how close the site and structure are to the railroad tracks. There will likely be times when staff will be delayed while waiting for a train to clear the crossing on Griffin Drive, but we currently face that situation on Rouse Avenue when traveling from the shops complex to storage yards or north part of town. A train derailment in the area may prohibit access to the site, which would affect our ability to assist with the incident. Main access from the site will be from Griffin Drive, and traffic on Griffin Drive can at times be heavy. This traffic is no more intense than that on Rouse Avenue, but there are two other access options from the existing complex, one on North Bozeman, and one on Aspen Street, although we currently do not use the Aspen Street access on a daily basis. There are two other access options from the Cardinal site, one further west on Griffin Drive and one from Nikles Drive to North 7th Avenue. Left turns from Nikles Drive to North 7th Avenue can be difficult at certain hours of the day. An addition, remodel and fencing will need to be completed prior to move in. 5 166 FISCAL IMPLICATIONS: Section 2.05.020 of the Bozeman Municipal Code requires an appraisal of property purchased and further states the city may not pay more than the appraised value of the property. The subject property was appraised in May 2006 for $3.2 million. The asking price for the property is the appraised value. The current lease of the MRL land is $6,597. While the lease is assignable, MRL will require the City to enter into a new lease and the annual lease payment will be negotiated at that time. MRL has indicated they may also be interested in selling the land. Street and Tree Assessments would be approximately $1,650 more than at the existing complex, unless the property is re-zoned PLI, as the assessments on PLI zoned land are 75% less than on industrial land. If rezoned, the assessment would be approximately $25 higher. The purchase of the Cardinal site for $3.2 million and the remodel for an estimated $1.0 million is proposed to be paid for from the various enterprise funds as well as the parks division, which is the only general fund affected. The previously approved Water CIP has $1,507,500 allocated for this project in FY08, and the Water Impact Fees CIP has $990,000 allocated for FY08. The Wastewater CIPs are proposed to be identical to the Water CIPs. Because other divisions would be moving to this complex, a proposed funding scenario for the $4.2 million is $400,000 from each of the following funds: Water Operations, Wastewater Operations, Vehicle Maintenance, Solid Waste, Forestry, Parks and Streets divisions (all enterprise or assessment funds with the exception of Parks), and $466,667 from each of the following Impact Fee funds: Streets, Water, and Wastewater. Other financing scenarios based on proportionate share could be considered. If the existing shops complex is not retained for other city uses and is sold, the proceeds from the sale of the facility could be applied to the costs of the new facility. At a minimum, the necessary general fund portion of the new facility should be paid for from the proceeds of the sale. RECOMMENDATION: Authorize the purchase of the Cardinal Distributing property at 1750 Evergreen Drive for $3.2 million, negotiation of the railroad lease, and the necessary addition and remodel of said facility for an estimated $1 million, with the financial distribution of the costs to be determined by the Finance Director and City Manager. Once the remodel is completed, this property will become the City’s Public Works complex. 6 167