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HomeMy WebLinkAbout2008-12-15 Finance Committee Minutes FINANCE COMMITTEE December 15, 2008 Minutes Councilors: Stone, Blanchette, D’Errico, Wheeler, Palmer, Gratwick, Nealley Staff: Cyr, Barrett, Bilancia, Ring, Dubois, Caron Others: Parke Clemons, Jack Burgess, Todd Neal 1. Consent Agenda A motion was made and seconded to approve the Consent Agenda item a. a. Quitclaim Deed – Tracy – 1295 & 1297 Ohio Street 2. Bids/Purchasing a. Proposal – Pickering Square Garage – Phases 3-5 – Becker Structural Engineers In 2005, the City recognized needed maintenance to the Pickering Square Garage. The City needed to keep it running efficiently and effectively and, at that point, went out to bid and hired Becker Structural Engineer who performed a full maintenance study in 2006. Based on that, Phase I and Phase II started in 2007-08 to do the repairs. Prior to that, the City had attempted repairs on its own thinking it knew what needed to be done. Earlier in 2007, staff asked the City for permission to use CSI, the contractor who did the first year repair and just completed the second year. Staff then asked Becker to submit a proposal to do the maintenance plans for Phases III, IV and V. Becker has the best knowledge and handle of the situation. The three-year proposal is $50,700. The fees are on the same basis in Phase I and II with no cost increases. Staff recommended that a contract be executed with Becker do to Phases III, IV and V of the Pickering Square Garage maintenance. Cyr pointed out that the City anticipates spending close to $1M over the next three years for continued improvements and upgrades. Responding to Blanchette, Cyr said Becker will look at what’s been done in their initial maintenance audit provided to the City. Becker will review the audit and set the work plan and the bid specs for the next three phases. Ring noted the garage is approaching 20 years in its life. He said that if the investment isn’t made the garage will fall short of its useful life. He noted that the proposal amounts to about 5% of the value of the estimated construction costs. Gratwick clarified that Becker would recommend best practices. Ring said there are a number of maintenance and service items. Becker has identified the best way to deal with deteriorated elements. Ring is pleased with their work. Wheeler asked what the average cost of annual regular maintenance and operations, what is the average annual revenue stream, and how close to capacity is the patronage. Parke Clemons said the capacity is at about 90%. Barrett noted that the total expenditure budget is approximately $1.7M which covers the entire Parking Fund. Blanchette asked for a detailed breakdown. Cyr will provide it and had left the meeting to retrieve the information. In response to Stone, Wheeler said his questions were strictly for informational purposes. Cyr said the operating revenue for Pickering Square is $423,000 and the parking garage is 80% of the fee paid to Republic Parking. The actual cost for Pickering Square approximates $250,000/ annually. The debt service is significant. The General Fund subsidizes the Parking Fund to make up for the debt service, which is declining at an expected rate. In response to Wheeler, Cyr said the City does not pay maintenance costs which is why the City is at the point of the needed repairs. Wheeler asked about snow removal from the top level and Republic invoices the City. Wheeler said the City is now paying for the lack of regular maintenance or maintenance problems that have cropped up that were not anticipated or foreseen. Barrett said it is a combination of things that are now being paid for. There were some issues involving the initial design of the garage; i.e. the clip issue. Secondly, as the garage approaches 20 years, there are maintenance items that automatically arise; i.e. painting. Becker, along with its overall evaluation and providing a five-year maintenance plan, has also laid out a longer term maintenance plan which identifies what needs to be done on a continuing basis. Wheeler said that the maintenance plan should have probably been started ten years ago. Barrett said the work probably should have been started 5 years after the Garage became operational. Some issues were brought forward but the City wasn’t certain how to solve some of the problems. Blanchette said it took ten years for people to become accustomed to using a parking garage. She agreed that a maintenance stipulation should have been included within the budget from the onset. She asked about the impact of Eastern Maine Healthcare opening up their garage going to affect the City’s revenue. Clemons said there will be an impact, and Republic currently receives about $8,600/month from EMH. On the flipside, the timing is good with the new court system construction. Nealley asked the total annual subsidy including debt service and the revenue generated. Barrett replied that the current subsidy is approximately $260,000 down from $408,000 when the garage first opened. The improvements are being paid through the Downtown Tax Increment Financing District so the City is not adding additional debt to the Parking Fund. Cyr said that last year’s subsidy decreased by $30,000. Nealley asked about the 90% capacity and asked about marketing to bring the number to 100% capacity. Clemons said the Parking Advisory Committee deals with capacity issues. At 100%, there is no room to grow. The Parking Committee manages the City’s parking inventory of 13 lots. Clemons said there should always be a level of vacancy unless some other facility is in the pipeline. Palmer spoke about the positive aspects of the parking garage. A motion was made and seconded to approve staff’s recommendation. Blanchette suggested that before the budget process begins for the upcoming year that the Finance Committee looks at the ins and the outs of the parking garage and what the City needs to do to plan ahead for future parking needs. Stone asked Cyr to add it to the agenda in mid to late January. b. Review of Request to Issue Request for Design/Build Proposals for the Replacement of Columbia Street Parking Deck Cyr stated that the Columbia Street Parking Deck has been deteriorating for a number of years. In 2004, Ames Engineering was hired to provide some solutions for the deterioration. In 2005, Public Works did some of the work based on the specs provided by Ames. Ames at that time indicated that major repairs would be necessary but realized that it wouldn’t significantly extend the life of the structure sufficiently to spend $300,000 to repair the structure’s top deck. Staff went out to bid and the bids came in at $1.6M. Staff asked the Committee at that time for permission to ask Becker to do a condition assessment. In the end, Becker’s recommendation was to demolish the current structure with a modified design. Becker did stress that until the structure is demolished the total scope of the work will not be known. Staff then began to discuss a design/build process versus a hard bid. Staff is securing permission from the Committee to issue a RFP for design/build services to replace the Columbia Street Parking Deck. Blanchette asked about the City’s experience with design/build responses. Cyr said the first project to be done is the Station 6 Fire program. Responding to Blanchette, Cyr said the project is on schedule, the actual contracts are coming in at or below their estimates, and every indication shows that they will not hit their guaranteed maximum price in their contract. In the end, she feels that it will come in less than anticipated. The grand opening will be in April. Gratwick asked why the Columbia Street site has problems since it is where the former City Hall was located. He asked if the Committee will be able to look at the proposed design. He asked about putting good money up front to insure a quality product. Ring said that this structure had received some major upgrades in the 1990’s. He said that back in 2004 when staff was talking about repairs to the Columbia Street structure and realized it would be more than a $300,000 deck repair, careful discussion took place about rebuilding and the useful life. Based on the estimated cost of $850,000 it seemed reasonable for the projected length of time. When the bids came back nearly doubled, obviously the City took a different position. Barrett said that the Committee will be shown drawings and pictures of the project. Gratwick talked about a facility that would have a long lifespan. Ring said rebuilding the entire project would insure a better quality facility. Barrett said that maintenance and deterioration are always part of parking facilities. The current structure is 40 plus years old. It is unlikely that more than 40 years would be obtained with a parking structure. It could probably be stretched with ongoing maintenance. Responding to Nealley, Bilancia said that the Columbia Street parking area is one of the highest demands and commands one of the highest per month rates. Even when the court house moves, she feels it will still continue to be in high demand. Clemons said it is approximately $16,000/space for the addition to the parking garage. Stone said he would like to see discussion on the cost of this project, on the cost of tearing down the former police station and perhaps use it for parking. Barrett said many of these options have been discussed by the parking committee and by staff. The next structure will most likely be in the Abbott Square area. After the Columbia Street deck is rebuilt and the former police station is taken down, the City will have the ability to add surface parking in that area. Funding was requested and included this year to do a preliminary evaluation of the possibility of decking over lower Abbott Square as a first step for additional parking in that area. Clemons said cost analyses have been performed for the past ten years for the Columbia Street Deck and Abbott Square. Abbott Square came in at $33,000/space because space is lost in order to gain space. The return investment on the Columbia Street deck will be much quicker than other locations. Clemons feels that there are not a lot of options for the deck. It needs replacement or closure. Gratwick said that Clemons has a good overview presentation. He also spoke of his membership on the Parking Advisory Committee. In response to Gratwick, Barrett said that staff is requesting permission to issue a request for proposals for design/build process. Blanchette made a motion to approve staff’s recommendation. It was seconded by Nealley. Palmer agreed that the Columbia Street Deck replacement needs to be better structurally and aesthetically than what is currently in place. He agreed with D’Errico that the pigeon problem needs to be addressed. He also agreed with Stone that the City needs to make certain this is the best place to put its dollars in terms of reconstruction. He would like to see the full Council receive an update on parking. Blanchette said that if the Columbia Street Deck is falling down it is the City Council’s fault. It sets the budget every year. She spoke about the Fleet Maintenance Replacement Fund which has proven to be most effective. She would like the Council to consider as part of their upcoming budget sessions to start a reserve fund for the City’s parking surfaces. If the structure cannot be fixed, it needs to be closed, she stated. She is concerned about safety issues. Stone asked Cyr to return to the Committee in January for a broader discussion regarding parking. c. Council Order – Contract for Elevator & Escalator Maintenance – BIA - $60,096/year This item was tabled. 3. Consolidation of Polling Places for Special Elections Dubois said that in June of 2009 and 2010 there will be a school budget validation vote as part of the School Budget Consolidation process recently passed by the State. Typically on special elections the voter turn-out is particularly low, usually 10% or less. In the primary election, there was a 12% turnout and the year prior with just a referendum election there was a 7% turnout. She requested the Committee to consider returning the number of polling places to one on special elections. The Ordinance designates that there be one polling place per legislative district and suggested the wording could be changed to one polling place per legislative district except for special elections. The Council could set the polling places prior to each election. Several Maine municipalities use one polling place for special elections such as this. Responding to Wheeler, Dubois said there would still be early voting available. Blanchette would like to see one standard polling place at the Bangor Civic Center for every election held in the City of Bangor. She made a motion, seconded by Palmer, to bring the suggestion to full Council for their review and vote. Dubois said in order to have one polling place for the June 2009 election the polling place has to be set 60 days prior to June. Barrett said the normal process would be to have an item on a Council agenda for first reading and referral. When the City changed from eight to four polling places three years ago, Dubois worked with a group of citizens from the community and individuals who represented political parties. He suggested Dubois meet with the group again to get their feedback prior to having the item placed on a committee agenda for discussion purposes. Blanchette said that if the item goes forward to Council it could include a committee a date certain for it to return to a committee. It would allow Dubois time to work on the project. Stone noted that the vote was unanimous. 4. Council Resolve 09-020, Appropriating $4,000 for Audio Improvements in the City Council Chambers A motion was made and seconded to recommend approval to the full Council. 5. Racino (Arena) Fund Update Cyr said there are two sources of revenue from the racino operation. One is what is considered rent and the other is a host community fee, which is paid to the City from the State. Prior to the racino opening, the Council established a special fund for all of these monies to be deposited into and the money was to be used specifically for construction of a new arena/meeting facility to replace the current auditorium and civic center as well as costs incurred in locating the racino operations. Those reimbursements have been made to date. In 2005 staff did some initial financial projections as to what was expected to accumulate over time and by year, and Cyr included that information with the committee’s packet. For 2006, the City took in $506,000 versus estimated $325,000; for 2007 the City anticipated to be at an ending balance of $1, 575,000 and was actually at $1,686,000. At this point, as of June 30, 2008, there was nearly $3.4M in the racino fund and the projection had been $2.9M. The major expenses from the account have been reimbursement to the City for costs incurred (legal and lobbyist) to actually get the operation up and running and another large portion was to relocate the gaming facility to the other side of Main Street. On the revenue side for 2006 and 2007, revenues were about 20% greater than anticipated. It dropped off some in 2008 and went to 14% through June 30, 2008. In the new facility, in 2009 revenue is expected to be about 25% below the revised estimates. With drop off in the economy, Palmer felt it is important to keep this information in front of the Finance Committee and the Special Committee on Arena Implementation. Cyr said that in the six months since June 30, 2008, another $977,000 has been received. Gratwick asked how much is needed to start a new arena. Cyr said the higher the better. It depends on the price of the facility -- $60M, $80M or $100M. She said that the projections have never included private dollars or grant money. The original projections did assume there would be $7M-$10M before the project would be started. Stone asked about the debt service on $70M. Cyr said the projections have been over 20 years. Cyr said on average it would be 7-8% on average annually or roughly $5M/year, which includes principal. Nealley said he would like to see the first full year of the new facility in operation providing significant revenue for a better indication for projection. In response to Nealley, Cyr said the financial information is always kept in front of the Special Arena Committee and that she would be setting up a meeting of the Special Committee’s financial subcommittee within the next few weeks. The City has the ability to amortize debt up to 30 years. She has always been conservative picking the 20 year approach. Blanchette said that Penn National will appear before the Gambling Control Board on December 18 to obtain authorization to open the slots on 8 am on Sunday mornings. If this passes and they do open on Sunday mornings, she requested that three months from now that another report be provided regarding revenue. Barrett said that Penn has already made estimates that it would produce an additional $1M in revenue to the state which would approximate $2M total. Blanchette asked when the City last spent $70M on any project. Cyr said never. Blanchette said the City should look to go out for 30 years. Cyr said in order to bond at that level, the City would have to go to the State Legislature to get the statutory bonding authorized raised. Cyr said the City assumed it would see increased slot revenue to $2.9M. On an average year, based on the way the temporary facility worked, $1.4M would have been expected for the first six months of the fiscal year. It will be somewhere around $1.12M. Wheeler asked how much would be in the racino fund if the 60% increase remains consistent. Cyr said $2.4M should be added. Before adjourning, Blanchette noted her absence at the next evening’s TIC Committee and that she had asked Palmer to chair it. A motion was made and seconded to adjourn at 6:25 pm.