MEMORANDUM 07-109
TO: Mayor Hornaday and Homer City Council
FROM: Walt Wrede
DATE:
SUBJECT:
Ordinance 07-27: Long Term Debt for City Hall /
As you know, the City Council has adopted an expedited design
and construction schedule for the new City Hall and
The projected project schedule contained in the RFP anticipates that the City and the design/construction team will begin preconstruction activities (preliminary design) in September of this year and agree to a Maximum Allowable Construction Cost (MACC) Agreement and GC/CM construction contract in March 2008. If all goes according to plan, Site Civil work will begin in the spring and summer of 2008.
The expedited schedule using the GC/CM method works well given the particular circumstances associated with this project. However, it does present some problems with respect to fund raising. As noted above, the City hopes to enter into a construction contract in March 2008; six months from now. The City cannot enter into a construction contract unless it has all of the funding for the project identified and secured. Further, the City cannot begin to write grants or seek funding from other sources until it has a preliminary design and a more refined preliminary cost estimate. We expect to have this information at around the same time; March 2008. We also have to consider the funding cycles of various foundations, agencies, and legislative bodies. So, as you can see, it will be very difficult to secure additional outside funding beyond the money the Council already has (Approximately $4 Million) before next March.
Therefore, in order to insure that the Council can stay on schedule and move forward with construction if it wants to, (assuming it approves the preliminary design and cost estimates), it is imperative that it have all of the money secured before March. Authorizing long-term debt is one way to do that. The Administration’s goal is to borrow as little money as possible and we are talking to funding agencies about this. So, there is a good chance that the Council would not have to borrow the full amount authorized by this ordinance and the ballot proposition. There is also still the possibility that the Council could decide to enter into a Lease / Purchase Agreement after the preliminary design is complete (and not borrow any money).
So, this ordinance does not lock the City into borrowing any specific amount of money. It simply gives Council the option to borrow money if needed and a tool to keep this project moving and on schedule. Think of it as a safety net.
RECOMMENDATION:
Approve Ordinance 07-27 and forward it to the voters in the October municipal election.