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Home My WebLink About8B - CIP Amendment O PRIO+P ti U 4646 Dakota Street SE Prior Lake,MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: NOVEMBER 24, 2014 AGENDA#: 8B PREPARED BY: KATY GEHLER, PUBLIC WORKS/NATURAL RESOURCES DIRECTOR JERILYN ERICKSON, FINANCE DIRECTOR PRESENTED BY: KATY GEHLER, JERILYN ERICKSON AGENDA ITEM: CONSIDER AN AMENDMENT TO THE 2015-2019 CAPITAL IMPROVE- MENT PROGRAM (CIP) REFLECTING CHANGES IN THE FACILITIES MANAGEMENT PLAN DISCUSSION: Introduction The purpose of this agenda item is for the City Council to consider an amend- ment to the 2015-2019 Capital Improvement Program (CIP) for changes pro- posed in the Facilities Management Plan. History The 2015-2019 Capital Improvement Program (CIP) was adopted on August 11, 2014. The following long-term planning documents are part of the CIP: • Transportation Plan (2015-2024)— identifies the major roadway improve- ments involving both new and reconstruction projects that need to be coor- dinated with Scott County. • Equipment Replacement Plan (2015-2026) - identifies the City's vehicle and equipment needs and establishes a regular replacement schedule. • Park Plan (2015-2039) — identifies the equipment replacement demands for 46 neighborhood parks. • Technology Plan (2015-2025) — identifies hardware and software needs and establishes a regular replacement schedule. • Facilities Management Plan (2015-2037)— identifies major repairs or im- provements to all City-owned buildings. Staff has been working with Honeywell ESG to evaluate projects city wide that have energy savings associated and could be accomplished under a Guaran- teed Energy Savings Program contract. The GESP project consists primarily of a number of replacements identified in the City's Facilities Management Plan (FMP). Through the auditing process a suite of these projects has been rec- ommended to be included in the GESP contract that capture energy savings or are linked to projects that provide energy savings. Staff presented the Guaranteed Energy Savings Program to the City Council during workshops held on August 11, 2014 and October 27, 2014. This in- cluded several options: 1) $2.67 million in projects financed over a 15-year period with $60k annual capital cost avoidance; 2) $1.77 million in projects fi- nanced over a 10-year period with $60k annual capital cost avoidance; and 3) $2.67 million in projects financed over a 10-year period with $151 k annual cap- ital cost avoidance. The City Council provided feedback during the October 27 workshop that they were interested in pursuing option#3. Staff was asked to present an updated Facilities Management Plan (preferably before the December 8 budget hearing) which reflects the projects remaining in the Plan with the assumption that the Council authorizes Option 3. Current Circumstances The updated Facilities Management Plan is attached to this agenda report. The following projects are included in the GESP and are no longer included in the FMP, other capital plans, or the operating budget: • Citywide Lighting Upgrades - Lighting retrofit & fixture replacement (interior&exterior), Lighting controls , where applicable, Memorial Park Field Lighting, Traffic signal LED installation, City Hall emergency light- ing replacement • Citywide Building Controls Upgrades - Recommission existing DDC controls systems; modify setpoints & strategies (City Hall, Police), ex- pand DDC systems to provide energy savings and improved operation of HVAC systems (Fire Station #2). Install new systems, where appli- cable, to allow for citywide remote monitoring (Maint. Ct., Fire Station #1) • Chiller Plant Improvements & Install isolation damper—City Hall • Citywide Building Envelope -Weather strip & seal doors, windows & roof-to-wall junctions • VAV Occupancy Sensors— City Hall, Library, Police Station • Rebalance AHU's—City Hall, Library, FS#1, Maintenance Center, Po- lice Station • Overhead Door Replacement&Controls—Maintenance Center, FS #1 • Replace infrared heaters - Maintenance Center, FS #1 • Replace AHU's — Maintenance Center, FS#1 • Replace MUA Units - Maintenance Center, FS#1 • Replace Boiler— Library Projects that are remaining in the FMP for 2015 are as follows: Fire Station #1 -$87,056 • Epoxy Flooring • Pressure Washer • Water softener • Exhaust Fan Maintenance Center- $598,933 • Membrane Roof • Steel Doors Library/Club Prior-$111,124 • Sidewalk Replacement 2 • Landscape light fixtures • Air Handling Unit Conclusion The Council should consider approving the resolution which amends the Facil- ities Management Plan. Staff will update the proposed 2015 budget for the Facilities Management Fund to correspond with the amended Facilities Man- agement Plan. The proposed 2015 budget will be presented during the Budget Meeting on December 8, 2014. ISSUES: The original FMP was not updated as part of the 2015-2019 CIP process. As part of the review of the GESP and the investment grade audit that was con- ducted, Staff updated the costs associated with the projects and referred to this version of the FMP as the status quo version. The status quo version was the basis for any variances that were cited for presenting the three options. The Council expressed interest in pursuing Option #3 which is a 10-year lease term that includes a $151,000 annual capital cost avoidance contribution. This will have an impact on the tax levy starting in 2016. The remaining projects in the FMP will be funded by the issuance of bond pro- ceeds, contributions from the Water Fund and Sewer Fund and the property tax levy. The action proposed in this agenda report does set the stage for the contract approval with Honeywell so that the GESP Program can be implemented in the next twelve months. FINANCIAL The updated Facilities Management Plan reflects funding from the Water Fund, IMPACT: Sewer Fund, property tax levy, bond proceeds and interest earnings. The prop- erty tax levy contribution begins in 2016. The status quo FMP did not reflect a property tax contribution in 2016. The updated Plan also reflects bond proceeds in the amount of$600k for pur- poses of funding the improvements at the maintenance center. The status quo FMP reflected bond proceeds in the amount of$1.47M. Approval of this amended FMP does not constitute final project approval. Per the Purchasing Policy, purchases exceeding $20k will come before the City Council. All future bonding decisions are approved by the City Council, as well. ALTERNATIVES: The following alternatives are available to the City Council: 1. Approve a resolution amending the 2015-2019 CIP for changes in the Fa- cilities Management Plan; 2. Table the Resolution for a specific reason. 3. Deny the Resolution and provide staff with additional direction. RECOMMENDED Alternative#1 MOTION: REPORTS 1. Resolution ATTACHED 2. 2015-2030 Facilities Management Plan (updated) 3 O� P.RI0 ti U 4646 Dakota Street SE `,IJZSO'0- Prior Lake,MN 55372 RESOLUTION 14-xxx A RESOLUTION APPROVING AN AMENDMENT TO THE 2015-2019 CAPITAL IMPROVEMENT PROGRAM FOR CHANGES IN THE FACILITIES MANAGEMENT PLAN Motion By: Second By: WHEREAS, The purpose of the Capital Improvement Program (CIP) is to protect the infrastructure of the City of Prior Lake by establishing a replacement plan for existing infrastructure and by identifying those improvements necessary to accommodate the growth of the community; and WHEREAS, The CIP is a flexible planning document that attempts to balance the financial resources of the City with its needs; and WHEREAS, It is intended for the CIP to be established for a period of five (5) years and to be updated annually; and WHEREAS, On August 11, 2014, the City Council of Prior Lake adopted the 2015-2019 Capital Improvement Program; and WHEREAS, The City reasonably expects to reimburse the expenditures made for certain costs of the projects included in the CIP from the proceeds of bonds; and WHEREAS, The City reasonably expects to utilize the Guaranteed Energy Savings Program to coordinate and fund other facility improvements. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The City has determined to make a declaration of official intent("Declaration") to reimburse certain estimated costs for projects included in the CIP from proceeds of bonds in accordance with the Internal Revenue Service Reimbursement Regulations (Treasury Reg. 1.150-2). 3. The 2015-2019 Capital Improvement Program is hereby amended to reflect the changes to the Facilities Management Plan. 4. The City may declare other separate statements of reimbursement intent in connection with specific public improvements projects as they are initiated under Minnesota Statutes Chapters 429 and 444, or for other capital projects, with the understanding that such additional declarations of reimbursement intent will supplement this resolution. All reimbursed expenditures will be capital expenditures, costs of issuance of the bonds, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3)of the Reimbursement Regulations. 5. This Declaration has been made no later than 60 days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of bonds, except for the following expenditures: a. costs of issuance of bonds; b. costs in an amount not in excess of $100,000 or five percent of the proceeds of an issue; or c. "preliminary expenditures" up to an amount not in excess of 20 percent of the aggregate issue price of the issue or issues that are reasonably expected by the City to finance the project for which the preliminary expenditures were incurred. The term "preliminary expenditures" includes architectural, engineering, surveying, bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction or rehabilitation of a project other than land acquisition, site preparation, and similar costs incident to the commencement of construction. 6. This Declaration is an expression of the reasonable expectations of the City based on the facts and circumstances known to the City as the date hereof. The anticipated original expenditures for the Projects and the principal amount of the bonds are consistent with the City's budgetary and financial circumstances. No sources other than proceeds of bonds to be issued by the City are, or are reasonably expected to be reserved, allocated on a long term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay such Project expenditures. 7. This Declaration is intended to constitute a Declaration of the Official Intent for the purposes of the Reimbursement Regulations. PASSED AND ADOPTED THIS 24th DAY OF NOVEMBER 2014. VOTE Hedberg Keeney McGuire Morton Soukup Aye ❑ ❑ ❑ ❑ ❑ Nay ❑ ❑ ❑ ❑ ❑ Absent ❑ ❑ ❑ ❑ ❑ Abstain ❑ ❑ ❑ ❑ ❑ Frank Boyles, City Manager 2