HomeMy WebLinkAboutFIN 2023-03-13 Item 1D - Public Safety Plan - Public Works Phase 2: Capital Facilities Financing UpdateCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance and Governance
FROM: David Cline, City Administrator
Vicky Carlsen, Finance Director
BY: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: March 6, 2023
SUBJECT: Public Works Operations Campus Phase 2, Financing Report (DRAFT)
ISSUE
Follow up on the February 27, 2023 Finance and Governance Committee meeting regarding
financing for Public Works Operations Campus, Phase 2. At the meeting the Committee asked
staff to provide information on various items. This memo begins the process of creating a
consolidated document to address the Committee's questions. The memo below is organized to
address the topics staff heard in the Committee meeting. The memo will be updated throughout
the Spring to address the items raised by the Committee and new items that might be added as
the process continues,
BACKGROUND
I. Overview of the Public Safety Plan and Public Works Phase Operations Campus
The following provides a brief overview of the City's recent investment in public facilities over
the last 15 years.
Development of the Public Safety Plan
In 2008 the City completed a comprehensive seismic study of city buildings, which was recently
updated in 2022. This report found that several buildings, including fire stations and public
works shops, would be unusable after an earthquake. It was this study that was the impetus for
the City to begin examining how to invest in upgraded facilities, specifically public safety
buildings (fire stations, police, municipal court, emergency management and public works
functions).
In 2015, after a two-year process, the City Council was presented a report entitled, "Investing in
Tukwila: Essential Governmental Services Facilities Plan 2015-2040." The plan recommended
the construction and/or replacement of several public safety buildings, including a new justice
center to house police, emergency management and municipal court; the replacement of three
fire stations; and a combined public works operations facility. The plan also included
recommendations for City Hall and the 6300 building.
This final report was presented to the City Council by the Facilities Committee, made up of
community members, councilmembers and staff. This Committee recommended a public safety
facilities ballot measure, which results in the City Council adopted "Public Safety Plan" to
prioritize:
• the construction of three replacement fire stations,
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INFORMATIONAL MEMO
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• a new justice center (police, emergency management and municipal court),
• a consolidated public works shop, and
• a funding plan for 20 years of fire apparatus and equipment.
In November 2016 Tukwila voters approved the public safety plan bond measure with 60.5%
approval. Funds from the bond measure were used for the new fire stations, fire equipment and
apparatus and the justice center. Separately, funding for the public works facilities would come
from a variety of sources, including general fund and utility funds.
In 2018, this financing and expenditure plan was updated with the D-20 Model, adopted by the
City Council and discussed further below.
In 2018 the City began to identify and acquire land for the public safety plan, based upon the
recommendations of the community Siting Advisory Committee. Existing City owned land was
used for two of the new fire stations (51 and 52); the City assembled land on Tukwila
International Blvd for the Justice Center; and the City acquired three parcels in the north end of
the City for a consolidated public works shop. Public Works Operations Campus Phase 1
(hereinafter "Public Works Phase 1") entailed the construction of the west side of the property
and moving the City's fleet and facilities functions from George Long to the new site. Public
Works Phase 2 will entail work on the east side of the property and will eventually allow the City
to move the street and utilities functions from the Minkler Shops to the site, as well as
consolidating other functions currently found on other sites, such as spoils storage, etc.
The Justice Center and Fire Station 51 went operational in 2020 and Fire Station 52 become
operational in 2021. The Fleet and Facilities building became operational in 2022 (Public Works
Phase 1). In 2022, the City Council authorized the test to fit work for the eastern portion of the
Public Works Phase 2 - Operations Campus, which will conclude in March of 2023.
The Public Works Operations Campus is the final project remaining from the Public Safety Plan.
Funding for design of the Public Works Operations Campus was adopted in the 2023-2024
Budget and construction costs were included the 2023-2028 Capital Improvement Plan starting
in 2025.
Financing the Public Safety Plan- the D-20 Model
In 2018, due to cost escalation from market conditions and initial estimates based on incomplete
data, the City created options for the Public Safety Plan. Throughout the first half of 2018, the
City Council's Finance Committee, together with staff, deliberated on a variety of financing
options (A, B, Cl, C2 and D) to support the Public Safety Plan. In June 2018, the City Council
adopted their recommendation of option D-20 which directed the:
• Construction of two new fire stations (51 & 52) and the Justice Center
• Dedication of $30 million for land acquisition, building upgrades and master planning for
public works shops
• Fire apparatus and equipment funding for ten years
• Issuance of 20 -year bonds
• Use of a variety of financial sources (e.g. Limited Term General Obligation Bonds
(LTGO), Fire impact fees, land sales and one-time funds, ongoing REET 1, General
Fund.)
This long-range model — D20 - (2018-2039) has been updated several times to reflect changing
revenues and expenditures.
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INFORMATIONAL MEMO
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1. All major projects in the D-20 model are now complete as originally anticipated in
2018. The following is a basic overview of the revenue and expenditures to date in the
D-20 Model. The work outlined below includes all land acquisition costs (Justice Center,
Fire Station 54, and Public Works Operations Campus) construction to date for Fire
Stations 51 and 52, Justice Center and Public Works phase 1 (fleet and facilities);
interim improvements on Minkler; and planning and test to fit associated with Public
Works Phase2. In addition, the initial planning for the Teen and Senior Center was
funded from unused budget leftover from the Justice Center and therefore funded from
the D-20 model. The only remaining items are finishing the roof and siding updates for
the Public Works Phase 1 and the final payment for the 2022 fire engine, which is
expected in 2025.
2. The D-20 Model accounted for all financial aspects of these projects. Data
incorporated two capital project funds, 305 and 306 as well as all debt service funds and
other funds that contributed funding sources (general fund, 301, utility funds). Note,
revenues are forecasted to be higher than expenditures due to financing costs.
3. Other Changes. Sales Tax Mitigation funds were significantly reduced from 2019 to
2020 due to the loss of ongoing Sales Tax Mitigation payments. Council adopted
CARES funding for project costs associated with COVID supply chain delays and added
Teen/Senior Center planning from unspent Justice Center budgeted funds. Additional
general fund and utility fund payments were adopted in 2022 to continue the public
safety plan efforts for the consolidated public works shop.
4. Assuming a successful annexation vote to the Puget Sound Regional Fire
Authority (PSRFA), capital acquisition responsibilities for future fire equipment
and apparatus shift to PSRFA in 2025. A portion of the proceeds from completed land
sales (Travelers Choice and HealthPoint) and approved (still pending) George Long sale
are currently budgeted to support remaining public safety plan financing requirements as
well as Public Works Phases 1 and 2.
5. Land Sales, originally contemplated in the D-20, are no longer required in their
entirety.
a. The updated D-20 model (December, 2022) removes future land sales.
b. Future City Council direction will be needed on use of land revenue (e.g. lease or
sale) for capital facility planning.
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INFORMATIONAL MEMO
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D-20 MODEL FINANCIAL SNAPSHOT 2018-2022
Original
Updated
Updated
Updated
June 2018
Dec 2019
Dec 2020
Dec 2022
EXPENDITURES
Fund 305: Public Safety Plan
$ 114,730,235
$ 122,627,139
$ 120,510,023
$ 109,804,786
Justice Center
$ 68,570,005
$ 66,864,711
$ 65,747,697
$ 65,995,940
Fire Stations
$ 30,334,435
$ 39,936,632
$ 38,936,530
$ 37,791,730
Fire Equipment/Apparatus/Financing
$ 15,825,796
$ 15,825,796
$ 15,825,796
6,017,117
Fund 306: City Facilities
$ 30,000,000
$ 35,700,000
$ 36,200,000
$ 43,150,491
PW Shops Phase I
$30,000,000
$35,700,000
$35,700,000
$36,405,462
Minkler Improvements
$500,000
$500,000
Teen/Senior Center
$395,030
PW Operations Campus Phase 2
$5,850,000
TOTAL
$144,730,235
$158,327,139
$156,710,023
r- $152,955,277
REVENUES
Voted Bonds (UTGO)
$ 77,385,000
$ 77,997,026
$ 77,997,026
$ 77,997,026
Councilmanic Bonds (LTGO)
$ 40,000,000
$ 45,500,600
$ 45,500,600
$ 45,500,600
Fire Impact Fees (Tukwila South- FS 51)
$ 4,750,000
$ 4,750,000
$ 4,750,000
$ 4,750,000
Fire Impact Fee- ongoing
$ 8,517,000
$ 9,817,000
$ 9,497,000
$ 8,244,202
Fund 301 Transfer- REET Funds
$ 3,000,000
$ 3,000,000
$ 3,000,000
$ 3,500,000
Land Sales
$ 15,038,000
$ 13,053,090
$ 13,518,000
3,014,845
REET 1- Ongoing Support
$ 12,813,091
$ 12,813,091
$ 12,852,409
$ 11,000,000
Sales Tax Mitigation
$ 4,017,425
$ 665,909
$ 665,909
Cares Act
$ 300,000
$ 497,247
Investment Earning
$ 707,845
$ 1,480,824
$ 1,725,661
$ 1,626,356
Project Contribution (TeenSenior)
$ 600,000
Project Contribution (General Fund)
$ 141,854
$ 2,991,854
$ 2,991,854
$ 5,950,954
Project Contribution (Utility Fund)
$ 141,854
$ 3,791,854
$ 4,291,854
$ 7,791,854
TOTAL
$ 162,494,644
$ 179,212,764
$ 177,090,313
$ 171,138,993
Completing the Public Safety Plan — Design and Construction of Public Works Phase 2
The last remaining item in the Public Safety Plan is Public Works Phase 2 Operations Campus
in order to move city operations from the Minkler Shops and the Longacres site. The City is still
providing critical public works activities at the Minkler Shops under older, inefficient conditions.
In addition, as part of the Public Safety Plan the City identified a goal to move all critical facilities
out of flood -prone areas and the Minkler Shops is located directly behind a levee that has
significant concerns. The Army Corps of Engineers has identified there is a risk of levee failure
in the event of a high-water event or earthquake.
Public Works has moved from George Long into Public Works Phase 1. On November 1, 2023
the City takes ownership of the eastside of the property and the Council adopted a lease
agreement until March 1, 2025 with the current tenant. The City Council authorized the "test -to -
fit" work which developed design options for the entire combined public works site. The "test -to -
fit" will provide the City better cost estimates for the final phase of the project.
In March 2023, the "test -to -fit" will be completed and the City Council will be briefed on cost
estimates for the full buildout and completion of Public Works Phase 2. The City Council will be
asked to move forward with the Public Works Phase 2 design. The 2023-2024 budget includes
$5.85 million for the City to complete the design work and permitting for Public Works Phase 2,
with construction anticipated to begin in May of 2025.
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INFORMATIONAL MEMO
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II. Public Works Operations Campus, Phase 2 Financing
a. The Next D-20 Model, Public Works Campus Financial Model
The D-20 model was a successful tool the City Council approved to track all expenditures and
revenues associated with the construction of the Public Safety Plan. A similar model focused
on the Public Works Campus will need to be developed separately from the original D-20 model.
The table below is a preliminary overview of the current construction estimates in 2023 dollars,
cost escalation, and soft costs.
($ millions)
Construction Estimates
2023 Estimates
Project Related
(Soft) Cost
Construction Costs
(2023 dollars)
Total:
Estimated
Expenditures (2023
values):
$ 29,352
$ 46,835
$ 76,187
January 2026
Escalation':
$ 0
$7,678
$7,678
2026 Adjusted
Totals:
$29,352
$ 54,513
$ 83,865
Sources of Funds
2023/2024 Adopted
Budget
Utility Funds:
Project Related
(Soft) Cost
Construction Costs
(2023 dollars)
Total:
$ 3,000
N/A
$ 3,000
Lease Revenue
(eastern public works
property):
$ 980
N/A
$ 980
306 Fund Balance:
$ 1,964
N/A
$ 1,964
Total:
$ 5,944
N/A
$ 5,944
2025/2026 CIP
Construction Phase (construction and soft costs
merged)
Utility Funds (Bond
supported):
$ 21,750
$ 21,750
Councilmanic Bonds:
$ 21,750
$ 21,750
Lease Revenue
(eastern public works
parcel):
$0
$0
306 Fund Balance:
$ 10,500
$ 10,500
11 January 2026 is the midpoint of construction. The current schedule has construction commencing
on May 1, 2025.
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INFORMATIONAL MEMO
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Total:
$ 54,000
$ 54,000
Total Additional
$ 23,921
Funds Needed in
2026:
Possible Additional
• Enterprise Funds2: Councilmanic Bonds (General Fund)
Sources of
• Land Sales Revenue (One Time)
Revenue
• Land Lease Revenue (Ongoing, support debt service)
• Sales Tax Credit Back to Project (One Time)
• Permit Fee Credit Back to Project (One Time)
• Grants (One -Time): Federal and/or State Appropriations
• Decant Facility Capital Contribution (Ongoing or onetime)
• REET Funds
b. Bond Capacity
Information to be added.
c. Construction Delay Costs
Construction is currently anticipated to begin on May 1, 2025, shortly after the existing tenant's
lease expires. Current estimates are that for every month in delay the project's construction
costs would increase approximately $300,000 per month.
d. Phasing of the Project
A question came up at the February 27 Finance and Governance Committee meeting regarding
a previously discussed phase 3 of the project. This comment seemed to be related to cost
management and reducing the scope of the current project.
In 2019 the City Council authorized SHKS Architects to do site design planning for the public
works shop site. A copy of the conceptual site design planning, including a three -phased total
project is shown in the attachment provided. That proposed phasing would have resulted in the
City demolishing and moving out of the Fleet and Facilities building. However, the City Council
directed staff not to pursue the three phase plan and to instead plan around the Fleet and
Facilities building remaining in its current location. The City Council also provided additional
funds to improve the seismic status of the building to be one that can be useable after an
earthquake.
Staff has taken this direction from Council and the project does not currently include a third
phase and assumes the Fleet and Facility building will remain for the useful life of the building.
Staff is working with the SOJ and Miller Hayashi to understand what, if any possible staging
might be possible to the current Phase 2 program. However, most of the significant cost items
will need to be completed early in the project. There might be some initial cost deferrals for the
delaying construction of the proposed decant facility, but these would be cost deferrals and
could result in added costs since construction costs would likely continue to rise.
2 Upon completion of the project, the city will true up all costs associated
with Public Works Operation's Campus.
INFORMATIONAL MEMO
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Ill. List of City Facilities
Name
Year
Built
Seismic
Risk
Risk
Assessment
Estimated
Value
Recent
Improvements
Can be
surplus?
Other?
HealthPoint (already sold)
Information to be added.
Information to be added.
Information
to be added.
George Long (proceeds
currently dedicated. 1/2 to
repay debt service and 1/2
for PW Shops soft costs)
Information to be added.
Information to be added.
Newporter
Information to be added.
Information to be added.
Old Fire Station 51
Information to be added.
Information to be added.
Old Fire Station 52 (one
parcel that includes old
city hall and Hazelnut
Park; deed restricted; can't
be sold. Would revert
back to the Tukwila School
District if not in community
use).
Information to be added.
Information to be added.
Old Fire Station 53
(Allentown)
Information to be added.
Information to be added.
Longacres
Information to be added.
Information to be added.
IV. Monetization of Surplus City Properties
The City has been exploring possible ways to monetize (sale or lease) several city
properties that could be surplus.
Property Name
Status
Estimated Value
Travelers Choice (already
sold)
Information to be added.
Information to be added.
HealthPoint (already sold)
Information to be added.
Information to be added.
George Long (proceeds
currently dedicated. 1/2 to
repay debt service and 1/2
for PW Shops soft costs)
Information to be added.
Information to be added.
Newporter
Information to be added.
Information to be added.
Old Fire Station 51
Information to be added.
Information to be added.
Old Fire Station 52 (one
parcel that includes old
city hall and Hazelnut
Park; deed restricted; can't
be sold. Would revert
back to the Tukwila School
District if not in community
use).
Information to be added.
Information to be added.
Old Fire Station 53
(Allentown)
Information to be added.
Information to be added.
Longacres
Information to be added.
Information to be added.
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INFORMATIONAL MEMO
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6300 Building
Information to be added.
Information to be added.
Minkler Shops
Information to be added.
Information to be added.
V. Intergenerational (Teen/Senior) Center Update
Information to be added.
VI. Minkler Shops and Levee Issues
Information to be added.
VII. Public Works Phase 2 Specific Questions
a. Can Public Works Phase 2 Be Done in Stages?
b. Can spoils be located somewhere else doing design and construction phase?
c. Other
DISCUSSION
Information to be added.
FINANCIAL IMPACT
Information to be added.
RECOMMENDATION
This is intended to be a dynamic memo to be updated throughout spring to present a
comprehensive report to the full City Council.
ATTACHMENTS
• SHKS Architects Phasing Outline
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