Forest Lake city council is proposing to tax payers a new $50 million dollar public works building and a 12% tax increase with a new sales tax to help pay for it. Judging by the comment section on the Forest Lake Times social media, residents of Forest Lake are very upset at the cost and tax increases. Not one comment showed support of a $50 million dollar building.
We talked to the mayor Blake Roberts and the city Administrator Mark Statz with 6 questions about the project. Here's the unedited dialog (our questions are in bold):
1.) We all know the current Forest Lake public works building is decades old and hardly worth saving. It needs replacing. What's the most affordable, workable, option? Demo the old and put in a few pull barns? Would that not serve well enough?
Yes, it’s pretty obvious the old buildings are beyond salvageable. I’ve attached the facilities assessment report for your perusal in case you want details on how bad things are. For the most part, my answers to your questions come directly from this report. To the question of “What’s the most affordable, workable, option?”, I would offer a few thoughts…
- There are several major choices we must make to determine what’s most “affordable and workable”
i. Do we want all of our equipment to be stored
- Indoors?
- In a heated space?
- If not all of our equipment, which equipment could be outside? Or in cold storage?
ii. Do we want that space to be built to the same standards we hold private developers and business owners to? That generally means traditional construction, with masonry exteriors (tip up panels, are usually the most economical to meet this standard). Or do we allow:
- Pole construction with metal exterior
- Canvas structures
iii. Are we looking for the lowest initial cost or are we looking for the best value?
iv. For the site work, the same types of questions apply…Do we hold ourselves to the same standards as others?
- Paved parking and equipment/materials storage areas?
- Curb and gutter?
- Landscaping as required by code?
- Number of parking spaces as required by code?
v. Are we building the building for the needs of the city today only, or do we build in a modest amount of extra space to grow into?
vi. There are a number of other choices, that I could go into further as well, such as:
- Should the building accommodate meetings with more people than those who work in the building (i.e. should we host regional meetings, trainings, etc.)
- Is the city in the business of having our own mechanic(s) or do we send all of our vehicles out for repairs, oil changes, tires, brakes, etc. Do we want to take on the maintenance of police and fire vehicles?
- Should the building have a “front desk” or any sort of public space where someone can come and ask a question, vendors could stop by or deliveries could be taken, etc.
If you choose all of the lowest cost options, above and answer “no” to most of the questions about the buildings functionality, then certainly, we can build a structure for far less than $50 M. However, all of the questions above spur other tough questions:
- If you leave a $400,000 plow truck out in the elements year-round, does the vehicle depreciate faster and require more maintenance than the cost it would have taken to put it in a controlled environment?
- How do we tell business owners who want to invest in our town that they need to construct buildings with class 1 materials, when we build a pole shed for our own needs.
- If we build a building that only accommodates today’s needs and then have to come back to the taxpayers in 5 to 10 years to build an expansion to the building that is now more costly than it would have been if it was constructed with the original building, have we done the taxpayer a disservice?
2.) What is the most logically affordable option that'll meet the city needs? Do you really need locker rooms, drafting tables, hydraulic lifts, solar panels, huge indoor heated storage and shop areas, offices, big security gates, room for the sheriff's boats and equipment, and a long list of amenities that were added to the Washington County public works north shop?
- Locker Rooms – the design committee is looking hard at this. We are leaning towards a less costly option of some shared “locker” space, with separate, smaller changing rooms. We’ve all seen large locker rooms that go largely unused. Only a handful of our people truly use the locker rooms to shower or change.
- Drafting Tables – probably a thing of the past. We still do use large-scale paper plans, but certainly, not every desk has to have a table large enough to accommodate that.
- Hydraulic Lifts – this gets back to whether you are going to be in the business of having an in-house mechanic. As we move forward, we will be doing the math to see if that pencils out.
- Solar Panels – No solar panels are programmed at this time.
- Indoor Heated Storage and Shop – This is a big question that we will be investigating. Does the heated storage area’s cost give you a return on your investment in terms of savings on depreciation, repairs, reliability, etc. of the vehicles you store?
- Offices – Not every employee will have an office. Modern offices, especially ones designed for public works employees will take into account how much time each employee needs to be at a computer, etc.
- Security Gates – Again, part of a larger question about risk vs. cost.
- Sheriff’s boats and equipment – There are no plans to store any equipment other than what is used by our public works department.
3.) The Washington County public works north shop was built about 10 years ago for about $20 million, $36 million if adjusted for inflation in today's dollars... Why is this building $50 million? Especially if it isn't going to have all the bells and whistles of the WC PW north shop?
Washington County Shop – As you mentioned, the Washington County North Shop was constructed for around $20 M. That project was constructed in 2015-16. Our project is slated for 2027 construction and our estimate accounts for inflation to that point in time. The construction cost index for Mpls in 2015 was 113.2. The CCI for Minneapolis in 2025 is 187.2. Add say, 4% per year to that, you would have a CCI of 202.48 in 2027, when our project would be bid. Doing the math, that makes a $20 M project in 2015, a $36 M project in 2027. The county project was 103,580 SF and our proposed project is 102,095 SF, so very similar in size. However, there are a few major differences which greatly affect the cost and explain the difference in the present value comparison.
A few of those differences are:
- The largest difference between the two projects is the fact that the Washington Co. project included 46,000 sf of renovation space. So, a little less than half of the 103,580 sf of building was NOT new construction. This makes it difficult to compare apples to apples. Only 54,000 sf was new construction and about 4,000 sf was mezzanine space. Estimating the cost to renovate a space vs. building new at 50 to 75% puts us at a range of $5 - $10 M in savings (today’s dollars).
- Our estimate includes about $10.5 M in site work. This estimate includes grading, stormwater ponding and a substantial amount of pavement, which adds up quickly. The Washington Co. project was a fully developed site already. Much of the area was already paved and there was no substantial grading needed. The Washington Co. site did have some site costs that we do not have (running sewer to the site). That cost was around $4.5 M in today’s dollars. All in all, I think a fair number for the difference between the two in terms of site costs is $6 M
- Our estimate also includes: $600k - Fuel Island (incl. tanks), $3 M – Cold Storage Building, $750k – Salt and Materials Storage. Their project included a fuel island, but no tanks, and storage building. I was not able to get specific costs on these ancillary buildings on their site, but I would estimate that what they built appears to be about half of what our current program accounts for. So, a conservative estimate of the difference between their project and ours would be about $2 M in today’s dollars.
So, in very rough numbers you would have:
$20 M project = $36 M project today
$36 M + $5 to $10 M + $6 M + $2 M = $49 to $54 M
The broad conclusion here is that it seems like our current estimate is comparable to the Washington County North Shop when we account for inflation and the major differences in the two projects.
I’ve attached the space needs study, as it was presented to the City Council and a slide show highlighting some of the site options we considered. I would point you to page 94 of the pdf on the space needs study attachment. It has the detailed cost estimate. If you’re looking to track my math, please note that I took the construction costs of the various items, then added 10% design contingency, 5% additional contingency and 20% soft costs. So, for instance, when I say the site costs are $10.5 M, that number came from this math: $7.75 M construction cost x 10% x 5% x 20% = $10.5 M
Krause Anderson has been using current bids on both project that they are involved on and ones they are not to check their estimates on rough square foot pricing.
Krause Anderson – Potential Conflict of Interest
The team of Wold Architects and Krause Anderson was chosen by the City Council, in a competitive RFP process to do the work of evaluating the condition of the existing shops and the space needs of the department in general. They have now completed that work (see attached report). The award of this work to the team of Wold & KA does not mean that KA will be the prime contractor on the new project, if it goes forward.
A couple of notable things about the condition assessment and space needs study
- It’s certainly a logical question to ask about whether the architect and construction manager team would have a penchant for declaring existing buildings untenable. However, anyone who has toured these buildings (whether they are a building professional or not) can quickly see that there is almost nothing worth salvaging. We would be glad to host you or anyone else interested in seeing the existing buildings. Just let us know and we can arrange a tour.
- The city’s current facilities total around 30,000 sf. The space needs study concludes that our existing need is around 82,000 sf. If we want our equipment to be stored inside, our needs could not be met by fixing up the existing buildings.
- The city currently occupies several buildings and has equipment and personnel spread out. A goal of the new project would be to consolidate those into one building.
The city recently chose to move forward with the next step in the design phase, called “Schematic Design” (SD). We have chosen to continue working with Wold and KA to complete this work. To date, we have done very little detailed design and the cost estimates are only based on programmatic assumptions and square foot pricing. By moving into SD we will be able to do real design work and cost estimating that will help sus out uncertainties and generalities that are driving some of the conservatism in the current estimate. We are hopeful that things like our site costs and the size of the overall building can be optimized, while not sacrificing functionality.
The city purposefully authorized only the SD phase at this point, ensure that we can pivot or move to a different design team at any point.
When we get to a point where the city is ready to put the project out to bid, there are several project delivery methods for us to choose from (see the last page of the “Council Workshop” attachment). In the “General Contractor” process, the project is put out for bids and any general contractor may bid on it. This of course, assures the lowest cost. However, the city must, then, award the contract to the lowest bidder (or reject all bids). We cannot chose the 2nd or 3rd bid on a value basis. In the CM at Risk scenario, we are required to put the project out for a competitive RFP process. In this case, you can choose the best value and you get a set maximum price. However, this method often produces prices that are 2% higher, due to bonding requirements, etc. The Construction Manager as Advisor process would have the city choose a construction manager to work with (could be KA, could be another firm). That CM then bids out all of the work, competitively.
4.) It appears there is only one construction company working to provide estimates, Kraus Anderson. Wouldn't it be best to have a city engineer (unbiased) or some other government engineer do an estimate? If not, have multiple companies provide bids to get the most responsible public works building plan?
- About a year ago, the city solicited proposals from architecture & construction company teams to complete a facility analysis and space needs study, including a concept design and estimate for a new facility. The team of Wold Architects and Kraus Anderson was chosen from that competitive process. That team completed their work a few months ago and that’s where we got the $50 M estimate. Recently, the Council hired this same team to continue the design process through what is called “Schematic Design”. This is a much more intense look at the design of the building and site and will refine the scope of the project, resulting in a more reliable estimate. The work of this team, through this phase is design only. So, we are a long way from bidding the project. Hiring a separate design team to come up with other alternatives would be an unusual step. If you felt that another design team had better ideas, it would be best to simply hire them and end our engagement with Wold/Kraus. What’s more customary and what we are focused on is to engage stakeholders in the design process and to challenge our design team to research and present options to for the various elements of the project for our staff and stakeholders to review. The group of stakeholders is made up of one member of each of our committees, staff, councilmembers and others. Among those involved in that review committee is former Washington County Public Works Director Don Thiesen. He oversaw the construction of that north building, 10 years ago. He’s also helped other communities build similar buildings. He is a wealth of knowledge with a bevy of experience building public works facilities.
At the end of the design process, we will have choice to make regarding how we procure a contractor to build the project. I believe I went through those options in my previous email (see attached). In short, all of the options involve competitively bidding out a vast majority of the work. Two of the 3 process do involve the direct selection (not based on low bid) of a construction manager partner. If the city goes with one of those methods, they will need to chose who that partner is. If the city wishes to have someone other than Kraus Anderson, we have every ability to make that choice, without penalty. In the end, whatever project manager we hire, they will likely only complete a small percentage of the work themselves. All of the subcontracts will be competitively bid.
5.) There's a proposed temporary sales tax to pay for the building. There's lots of concern that the tax would become permanent, that it would drive business out of Forest Lake, that it'd be a burden on businesses and working families, etc. What can you say to these concerns?
The Local Option Sales Tax idea is in its infancy. A lot of the decision on this issue will be better debated once we have some more information. The key data point will be an estimate of what percentage of the revenue from that tax would come from non-Forest Lake residents. If a substantial majority of the revenue comes from non-FL taxpayers, the question shifts to who you would rather tax…residents or non-residents. State rule on the implementation of a sales tax would require that the tax NOT be permanent and that identity specific project(s) that it will fund. Any extension to it would always need to come back to the voters. To answer the question of whether or not the tax would end up driving out businesses, you would have to know what the impact of NOT having a sales tax in place. Logically, if a sales tax does not take on some of the costs, the entirety of the cost would be borne by property taxes. Businesses in FL all pay property tax. In fact, commercial and industrial properties pay taxes at twice the rate of residential property. In forming their opinions on a sales tax, we would ask business owners to consider not whether or not they want a sales tax, but whether they want a sales tax or an increase in property taxes.
6.) What else should residents know about the proposed public works building?
- First and foremost, know that the city wants their feedback on the issues. We are listening and absolutely consider public input as we move through our design decisions.
- The city intends to recover some costs from the project through redevelopment of the old Public Works site and through the potential development of a 3 – 5 acre portion of the new site (SE corner of CR 50 (202nd St) and TH 61). Whatever the city can get from the sale of these parcels will offset the overall costs of the project, plus it will add taxbase to help spread the costs over a broader base for the years to come.
- Our public works crew is a hard working and professional bunch who isn’t interested in lots of bells and whistles. As we work through the design of the building, I know they will be wary of unnecessary frills. Many of them are taxpayers here, too.
