Memorandum 17-093 Police Station Follow Up

Memorandum 17-093

TO:                        Mayor Zak and Homer City Council

FROM:                 Katie Koester, City Manager                 

DATE:                   June 7, 2017   

SUBJECT:          Police Station Follow up

At the May 30th meeting Council requested a number of follow up questions to help facilitate their discussion on the new police station project.

What are the possibilities for local financing (ask former Public Safety Building Committee Chair)

The financing of the building (not as a bond but as a traditional loan) is within local expertise. Such a partnership requires an annual schedule K to each partner for the purpose of income declaration. Mr. Castner is well versed in such partnerships and thinks there are interested local investors, how many, how much and weather the rate can be more competitive than a tax-exempt bond remains a question.

As a reference point, I requested updated interest rate figures from the Alaska Municipal Bond Bank Authority (AMBBA). The scenarios below use an estimate with current (June 5, 2017) rates at 3.70%. However, the potential issuance is in the future, so AMBBA added another scenario at 4.70% to show a broader range. The Bond Bank cautioned that the high volatility in the fixed income and municipal markets could widen the outcome further than this forecast provides.        

$6mm, 25 year level debt service, 3.7%: approximately $370,000 per year

$6mm, 25 year level debt service, 4.7%: approximately $410,000 per year

$9mm, 25 year level debt service, 3.7%: approximately $552,000 per year

$9mm, 25 year level debt service, 4.7%: approximately $612,000 per year

Look at the station recently built in Petersburg and how that building meets the space needs of the Homer Police Department. See the attached memos from Chief Robl regarding space needs and comparing the communities of Petersburg and Homer.

Look at other facilities that are being built in Alaska.

The Municipal Building in Petersburg, which included a police station, was finished early this year for just under $10 million. See attached floor plans for Petersburg.

Skagway just moved into their joint Police/Fire building. This over 24,000 square foot combined facility was constructed for $12.6 M that the community bonded 30 years for. Skagway has a population of 850. Their police department has 11 total employees and they have a small jail. See floor plans attached.

Additional Things to Consider…

Even if Council does not develop a project that is ready to put before the voters this year, I encourage the Council and City to continue working on the project in the direction of shovel ready plans. The City is in a much better position to take advantage of opportunities or potential grants if the basics are lined out for a facility. For example, Governor Walker recently solicited infrastructure project proposals from Alaska municipalities and tribes that might qualify for consideration under a national infrastructure funding program under the Trump Administration.  Projects must meet certain criteria to qualify for consideration:  (1) must have a significant local match or private sector component as part of the overall funding package; (2) should be shovel ready; (3) does not qualify for other federal funding programs; and (4) contributes to one or more of the federal goals for the infrastructure  program.

The new Police Station project meets two of the five federal goals listed.  It rebuilds failing public critical infrastructure and meets an immediate life/safety concern not readily addressable by other means. Council will consider a resolution at the June 26 meeting to submit projects to Governor Walker

Enc:

Building Space Needs Memo from Chief Robl

New Police Station Design Memo from Chief Robl

Petersburg vs. HPD Statistics Memo from Chief Robl

Petersburg Municipal Building Floor Plans

Skagway Police/Fire Station Floor Plans