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Home My WebLink About2010-01-27 Council Packet - Work Session (2)COUNICL WORK SESSION JANUARY 27, 2010 7:00 P.M. KENAI CITY COUNCIL CHAMBERS AGENDA Open Work Session Discussion -- Tract A -1 -A, Baron Park Subdivision /Confirm and Memorialize Management Authority Discussion -- Library Expansion Project /Financing Summary Adjournment VS, with a Past, a with a Future" MEMO: 210 FideIgo Avenue, Kenai, Alaska 99611 -7794 tabu" Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 lip' 1992 TO: City Council FROM: Rick Koch DATE: January 26, 2010 SUBJECT: Tract A -1 -A, Baron Park Subdivision The purpose of this memorandum is to discuss alternatives and for the administration to make a recommendation to confirm and memorialize management authority for the above referenced property. The property is a 40 acre tract fronting Marathon Road which is owned by the City. At present the Fire Training Facility (managed by Beacon) is located on 10 acres of the original 40 acre tract, and until April 2009 the University of Alaska held a lease for the remaining 30 acres. In 1991 the City's general fund (GF) paid the Airport fund (AF) $ 212,500 to transfer management authority of the 40 acre tract to the GF. $ 212,500 represented the fair - market value of the property, established through appraisal. This represents $ 5,312.50 per acre. In May 1991, the City entered into a lease with the University of Alaska for the 40 acre tract for the purposes of a fire training school, cold water recovery school, or any use reasonably related thereto. The lease was for an initial period of 50 years with a lessee option to extend for an additional 49 year period. The annual lease rate was $1.00 per year. In March 1997, a subdivision of the 40 acre tract was accomplished creating a 10 acre and 30 acre tract. The 10 acre tract was for the City's Fire Training Facility, and the University lease was amended to 30 acres with all other conditions remaining unchanged. In April 2009 The City and University agreed to a termination of the lease agreement for the 30 acre tract. The AF paid the University $325,000 for termination of the lease. The following is a breakdown of the individual components of the $325,000 payment as provided for in Ordinance 2380 -2009: Buildings $ 95,000 Improvement Other than Buildings 136,338 Machinery & Equipment 20,000 Misc. Expenses 73,662 The City Council has directed administration to move forward with the design and construction of a City park to incorporate the water body commonly referred to as "Marathon Lake ". The City has entered into a Memorandum of Understanding with the State Division of Parks & Outdoor Recreation to provide master planning services for the development of the park. For purposes of this discussion, the area of the park is expected to be 8 acres. When the City purchased the improvements and terminated its lease with the University, the City Council agreed the management authority of the property should return to the AF. This was the reason the AF was the source of the $325,000 payment. At the time the expenditure was approved by Council, there was also discussion of repayment to the GF of a portion of the $212,500 which was paid to the AF in 1991 for the portion of the property that was returned to AF management. 22 acres of the original 40 acre tract will be returned to AF management. The calculation is as follows: 1991 transfer of management authority to GF 10 acres remaining under GF management for Fire Training Facility 8 acres remaining under GF management for park Acreage returning to AF management 40 acres (10 acres) (8 acres) 22 acres The decision to be made is if the AF should pay the GF for the return of management authority over 22 acres of property. Administration recommends that in addition to the $325,000 the AF paid the university for the lease termination it should reimburse the GF $43,213 from the original GF payment to the AF. This is based on the following: 22 acres @ $5,312.50 per acre $ 116,875 Less $73,662 paid by AF to University for ( $73,622) Misc. Expenses Amount due to GF from AF $ 43,253 The above does not take into account the time value of money from 1991 to present. Administration believes this is appropriate as our assumption is that, but for the representation there would be a dynamic training facility on the University lease property, the AF would not have transferred its management authority to the GF. If the time value of the $43,253 were included in the calculation, and the value was 3% per year, the present value would be $73,567.24. In summation, the administration recommends the AF reimburse the GF $43,253 and return management authority over 22 acres of the property to the AF, while the GF maintains management authority over the 10 acre parcel supporting the Fire Training facility and the future 8 acre parcel which will be the location of a City park. O 3AV 010VVI U Marathon Rd. CITY OF KI {;NAI LIBRARY h;XPAIN SION PROJh;CT F1NANCING SUMMARY PROJFCT COSTS Project Design Construction Other Project Costs Total Project Costs $ 412,000 4,417,859 370,141 $5,200,000 NAI11 DE,TAIL PROJECT COSTS 1. Design Costs Preliminary Design (Klauder) Schematic Design ASBUILT Survey - Ammendment 1 Engineering Design DD - CD - Design Cost - Ammendment 2 Total Design Cost 2. Construction - Construction Costs New Construction 10K Site Work Utilities Addition Construction Demo / Remodel FF&E Remodel Area FF&E New Area Construction Contingency Total Construction Cost: 3. Other Project Costs A. Inspection / Const. Management - (CA by Engineer) B. Administration - Contract Admin. & Const. Mngt. C. Construction - Permits / Inspections: E. Administration - Advertising, Printing & Public Notices Total Other Costs: Total Project Cost: $10,000.00 $81,820.00 $7,500.00 $312,680.00 $412,000.00 $450,000.00 $78,000.00 $3,000,000.00 $254,859D0 $50,000.00 $85,000D0 $500,000.00 $4,417,859.00 $297,641.00 $59,500.00 $10,000.00 $3,000.00 $370,141.00 $5,200,000.00 PROJECT F DING State of Alaska Legislative Grant Friends of the Library Donation Rasmuson Foundation Grant Capital Improvement Reserve Fund Proceeds from Bond Issuance Unreserved General Fund Balance Total Project Funding $ 250,000 230,000 1,500,000 500,000 1,975,000 745,000 $5,200,000 RF,VIOUSLY APPROPRIAT HD State of Alaska Legislative Grant Capital Improvement Reserve Fund Unreserved General Fund Balance Total Appropriations $ 250,000 250,000 40,000 $540,000 REMAINING APPROPRIATIONS Rasmuson Grant Friends of the Library Donation Capital Improvement Reserve Fund Proceeds from Bond Issuance * Unreserved General Fund Balance * Total to be Appropriated $1,500,000 230,000 250,000 1,975,000 705,000 $4,660,000 * Actual bond proceeds will be determined on the day of sale. Any variations from the $1,975,000 estimate will result in an increase or decrease in the Unreserved General Fund Balance appropriation. FUNDING S CH EDUL H Bond Closing March 10th Ordinance Introduction: Appropriation of Bond Proceeds * March 17rd Appropriation of All Other Sources * # March 17rd Ordinance Public Hearing & Adoption April 7th * Ordinances will be prepared using project estimates. Substitute Ordinances may be presented for action on April 7th based upon actual bid results. # This Ordinance will contain appropriation of Capital Improvement Reserve that will require five affirmative votes for passage. POTHNTIAL F DING ISSUHS Issue - Delay in issuance of Bonds. Solution: Be prepared to appropriate General Fund Unreserved Fund Balance in order to award a construction contract to be repaid when the bonds are issued.