AGENDA #7e

BUDGET WORKING PAPER

TO:                  W. Calvin Horton, Town Manager

FROM:            Bill Letteri, Public Works Director

SUBJECT:      Cost Impacts Related to Move to New Town Operations Center

DATE:                        March 8, 2006

PURPOSE

The purpose of this discussion is to identify impacts on the operating budget for fiscal 2006-07 related to relocation to, and occupancy of, the new Town Operations Center (TOC).

BACKGROUND

We have considered cost impacts related to our occupancy and operation of the new TOC during the last half of fiscal year 2006-07 in terms of the various objects of expenditure primarily within the Public Works and Transportation Departments. The attached tables categorize costs by expenditure for six months at the present site, costs for six months at the new site and overlapping costs for three months at both sites where applicable.

The greatest cost impacts relate to building maintenance (including utilities), landscaping and fuel use charges, both for Transportation and Public Works. We estimate that the total increase next year related to facilities operations and maintenance will be $203,000. In addition, there will be added costs within landscape services at the new site, estimated to be $30,750 next year. The total estimated cost related to relocation and occupancy in fiscal year 2006-07 for both Public Works and Transit is about $397,600.  We note that this cost increase covers only a portion of next year, since relocation is anticipated on or about January 1, 2007. We will have a better picture of future annual costs once we have some history at the new site. For example, we know that some of the costs next year will not recur (e.g., acquisition of new trailer), while others will be required for twelve, rather than six, months.

DISCUSSION

Some of the most significant cost increases will involve utility charges at the new site, with the largest increase both in relative and absolute terms related to electricity. We based our estimates on detailed analysis of blueprints and other documentation related to the new site, consultation with outside experts, discussions with utility company officials and our own detailed staff analysis of fixtures, equipment and load information. We believe our approach to estimating utility costs is reasonable; however, an accurate understanding of these costs will come only upon having occupied and operated the facilities.

In a broad sense, we are moving from a 58,000 square-foot facility (Public Works and Transportation combined) to one comprised of 123,000 square feet of conditioned space.  Our annual cost of building and site related utilities will increase next year from about $142,000 to about $339,000.  This represents a 110 percent increase in building square footage and a corresponding increase of 139 percent increase in utility costs.  A portion of this disproportionate increase relates to a migration to more electrically intensive systems, modernization and increased site lighting.

The new facility is built to modern day electric codes; therefore, the electric service panels to the new facilities have higher capacities to accommodate features that were not contemplated in the 1978 construction of the old facility.  Some examples include computer networks, security systems, more highly automated shop spaces, a higher percentage of air conditioned space, geothermal HVAC systems, motorized main entry gates and greatly improved outdoor security lighting.  The cost of outdoor lighting alone at the new facility is about $69,600 per year.  Some examples of other major features that have no counterpart at the old facility are the automated vehicle washing system and expanded refueling facilities to include more alternative fuels. 

The following discussion by object of expenditure is linked to data identified on the attached spreadsheet.

Streets Program

• Heavy duty trailer (Streets) – cost: $16,000. Unit will be used to transport backhoe tractors between the new site and various work sites throughout town. When Public Works is more centrally located, most of this travel is done on-road without the use of a trailer. Please see the separate budget working paper titled “Capital Acquisition – Trailer for New Town Operations Center.”

Landscape Program

• Maintenance & Repair – Grounds – marginal cost: $4,125. Specific grounds maintenance and repair costs at the present site total $250 per month and are estimated to increase to about $950 per month at the new site. Grounds areas to be maintained are increasing from 22.5 acres to 42 acres, an increase of about 87 percent.  The increased M&R – Grounds cost reflects additional requirements for items such as mulch, fertilizer, grass seed, annual flowers and sidewalk salt.

• Supplies – Grounds – marginal cost: $8,225.  All of this increase next year relates to acquisition of two commercial walk-behind mowers at a unit cost of $4,300. Such mowers will be better suited to the new site because of ease of access to areas to be maintained. Our present complement of riding mowers is more suited to grounds maintenance at large, open areas.  Please see the separate budget working paper titled “Landscape’s Need for Walk-Behind Mowers at the New Town Operations Center.”

• Additional Groundskeeper position – cost: $18,400. This new full-time position is funded for the last half of next fiscal year, and will cost about $37,000 annually thereafter. Given the 87 percent increase in grounds area to be maintained, the additional annual labor hours required will be used for a broad range of work tasks, including weed control (additional 364 hours), mowing/trimming (additional 204 hours), mulching (additional 234 hours), litter control (additional 146 hours) and watering (additional 171 hours). This position was identified as an “add” item in the base budget request. Please see the separate budget working paper titled “Additional Groundkeeper for Town Operations Center (6 months).”

Sustainability & Facilities Management Program (Building Maintenance)

• Utilities – (Discussed above.)

• Vehicle Fuel -  In order to arrive at the increased cost of fuel, we examined the fleet composition of each Town department and made some assumptions about the number of times per year that they would need to travel the additional eight miles (round trip) to the new Public Works site for fuel or maintenance.  For the Public Works Department, the fuel budget increased about $27,000 to account for the increased commuting distance.  When all Town departments except for the Transportation Department are included, the fuel budget increase is about $41,000 to account for the increased commuting distance.

Transit bus vehicle fuel cost is expected to increase due to the increased distance from the TOC to the Town center.  Eight additional roundtrip miles are required for a Transit vehicle to travel to the new TOC compared to the existing facility. With over 100 buses, vans and service vehicles leaving the Transit facility daily, the estimated fuel cost increase is $121,000 for the six months in the new location.  The full year cost of fuel in fiscal year 2007-2008 would be approximately $242,000.

These amounts were calculated assuming a fuel price increase of about 20 percent in FY 2006-07 with the estimated cost of gasoline going from $1.80 per gallon to $2.20 per gallon and the price of biodiesel going from $2.00 per gallon to $2.40 per gallon, and the price of kerosene going from $2.10 to $2.50 per gallon.

• Maintenance & Repair Buildings - We have added $17,000 to the budget for preventive maintenance of the additional 48,500 square feet of building space at the new Public Works facility.  This equates to about $0.35 per square foot for this function.  We believe that this will be sufficient funding for six months of minimal preventive maintenance for a facility under warranty. Additional funding will be required in fiscal year 2007-08 when warranties will begin to expire and we will be responsible for all routine maintenance for a full budget year.  We believe that this funding is essential if we are to do the routine preventive maintenance tasks necessary to protect and preserve the complex mechanical systems being installed in this new facility. 

• Contract Custodial Services -  We have added $24,700 to the budget for contract custodial services for the additional 24,700 square feet of area served by the custodial contact.  An additional $16,625 was added for this purpose at the new Transportation facility.  This service is budgeted at $2.00 per square foot for one half of the year.

• Stormwater Management Fees – We have not budgeted an increase in stormwater management fees.  We expect that this fee will rise due to the increase in the size of the facility; however, the increase will not impact our budget until fiscal year 2007-08.  We anticipate that fees in FY07-08 will be approximately $14,000 in the General Fund and $6,000 in the Transportation Fund.

• Contract Services Buildings - We have added  $8,250 to the budget for increases in contract services at Public Works.  These funds will support a new requirement for periodic inspections of the fire sprinkler system, expanded exterminator service and an increase in the quantity of rented safety mat service at building entrances.  We have added $2,550 to the budget for similar service at the new Transportation facility.

SUMMARY

We have proposed budgetary increases totaling $397,600 to accommodate our transition and occupancy of the new Town Operations Center next year.  Of this total, $192,000 is for Public Works and $205,600 is for the Transportation Department.  The buildings and site to be occupied represent a significant departure from our current facility in terms of square footage, site features and building system complexity.  We have applied reasonable methodologies to project costs associated with these changes; however, we again caution that we can not fully understand the impact on operations until we have actually occupied, operated and maintained the facilities.  We believe the proposed budgetary increase will provide reasonable and prudent resource allocations to address our needs. 

ATTACHMENTS

1. Tables with Breakdown of Costs Related to the Transition to the New Town Operations Center (p. 5).