AGENDA #6c

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Concept Plan and Preliminary Budget for Transit Operations Facility

 

DATE:             October 27, 2003

 

 

The attached resolution would establish a preliminary budget for the Transit Operations Facility of $17,916,000 after refund of about $402,000 in sales tax.  The Manager recommends adoption.

 

The purpose of this memorandum is to help the Council set the lowest budget figure sufficient to meet the Town’s operational needs while still honoring its goals of sustainable development, environmental sensitivity and fiscal prudence.

 

This memorandum discusses how costs could be reduced from the initial projections in June, additional costs, and potential revenues.

 

Much of the information in this memorandum was presented to the Town Council at its September 8, 2003 meeting, but some has been updated since then.  On September 8, the Council requested more work on the Public Works portion of the Town Operations Center.  Discussion of the Public Works portion and discussion of the day care facility are included in separate memorandums.

 

SUMMARY

 

We recommend the following in adopting a concept plan and preliminary budget for the Transit portion of the Town Operations Center:

• Reduce costs by phasing development so that the first phase is planned to accommodate the Town’s needs until 2021 instead of until 2036.
• Include the additional costs of moving the OWASA pump station and removing the underground storage tanks at the present site.
• After much consideration, do not use pre-engineered metal buildings.
• Consider the construction of a day care center as a separate project, and make decisions on it in its own context.
• Consider the refund of State sales tax related to the construction over the two fiscal years following the construction of about $400,000.
• Accept that the net costs of the project depend on the amount of federal and State grants that will be available, still an unknown amount.
• The best gross cost projection for the revised Transit Operations Facility, based on the negative and positive adjustments discussed below, excluding the day care center is about 7.4% lower than in June.
• The table below shows the cost projections based on a reduction in the planning horizon from 30 years to 15 years, and some changes in off-site costs.  The cost before refund of sales tax is about $306,500 less than the initial cost projection presented in June.  The proposed preliminary budget is $17,916,000, after a projected tax refund of $402,000.

 

 

Transit Operations Facility

Proposed Preliminary Budget

15 Year Plan

October 27, 2003

                                                                                               

Construction                                                                                             $12,788,100

Equipment                                                                                                    1,828,200

            Subtotal (a)                                                                                 $14,616,300

 

Off-site (utilities, roads, signals)                                                                     1,646,900

Demolition                                                                                                       126,500

            Subtotal (b)                                                                                 $16,389,700

 

10% Design, value engineering, testing                                                           1,638,970

            Subtotal (c)                                                                                 $18,028,670

 

1% for Art                                                                                                       180,286

            Subtotal (d)                                                                                 $18,208,956

 

Relocation expense                                                                                            13,000

Removal of underground tanks                                                                           96,000

            Subtotal (e)                                                                                 $18,317,956

 

Sales Tax Refund                                                                                         -  402,000

            TOTAL                                                                                       $17,915,956

 

 

BACKGROUND

 

Please see Agenda Item #6a.

 

DISCUSSION

 

Since June 23, we have reviewed the validity of the cost projections presented then, reviewed the program and the conceptual plan for opportunities to save money, and have made cost projections for the revised conceptual plan.

 

The more refined the plans are, the more accurate cost projections can be.  Therefore, as long as we have conceptual plans, we will have general, rather than specific, cost projections. The proposal before the Council tonight is to approve a preliminary budget. We would then work with our designers to develop the conceptual plan into a refined design that could be built for the amount budgeted. 

 

Validity of Initial Cost Projections

To review the validity of the cost figures, Corley Redfoot Zack had a second cost estimation firm look at the concept plans and make their own cost projections, and also had a construction firm project costs as if it were preparing a bid.  They found that, although some individual elements and subtotals differed, the bottom lines of all the estimators were consistent.

 

Cost Reduction Opportunities through Changing the Program

The memorandum on the concept plan and preliminary budget for the Public Works portion of the Town Operations Center discusses the possibility of reducing the extent of the rebuilding of Millhouse Road. We propose to include a 30’ roadway width instead of 36’ of asphalt.  The narrower cross-section would still provide wide outside lanes of 15 feet each to accommodate bicycles as well as vehicular traffic, and it meets the Town’s standards for collector roads. The left-turn lane at the intersection with Eubanks Road would remain.   (Removing the curb and gutter from the side of the road which abuts the railroad is presented but not recommended, because it does not meet the Town’s standards that must be met by other developers.) 

 

Cost Reduction Opportunities by Using Pre-engineered Buildings

This area appeared to be a fruitful one to explore.  Please see the discussion in the introductory memorandum in #6a.

 

Cost Reduction Opportunities through Phasing Development

We recommend reducing initial costs by limiting our planning horizon to 15 years instead of 30 years. We would phase construction so that the facility could accommodate needs projected only through 2021. The site plan and individual building designs would be drawn so as to accommodate as efficiently as possible the expansions that would be needed to meet our requirements for the following 15 years.  While we have done our very best to project our needs both 15 and 30 years after occupancy in 2006, we caution that changing demands for transit services, the emergence of new technologies, different environmental safeguards and the like will affect the accuracy of such projections.

 

By reducing our planning horizon to 15 rather than 30 years and leaving room on the site for expansion when needed later, we can reduce some initial costs.  Parking areas can be graded along with the entire site, but not paved until needed.  The fleet maintenance buildings can be designed to simply have work bays added at one end or the other.  Office buildings cannot be as simply revised, but it is possible to design them to accommodate future expansion.

 

Savings available now through phasing are limited somewhat by the fact that the June 23 plans had already included the following elements of phasing:

• Additional bus parking for about 50 buses was indicated, but not proposed for construction or grading.
• Additional parking for employees and visitors was proposed for grading only.

 

We propose the following additional reductions in initial construction, with the possibility of future expansions as needed.  Projected cost savings are listed below:

 

• Delay two maintenance bays in the Transit Maintenance

      Building                                                                                                     $ 518,500

• Delete a third bay in the Transit Maintenance Building and

      the equipment that would allow bus alignments to be

      accomplished on-site                                                                                 $676,800

• Delay one roofed patio area of the Transit Administration/

Operations Building                                                                                   $  30,200

• Delete one office in the same building                                             $  10,200
• Delete all office furniture from project budget                                 $   67,000

 

Additional Costs

• An addition to the original cost projection is the estimated $400,000 cost of building a gravity sewer line from the existing Larkspur pump station to the pump station that would be built for this project, taking the place of the Larkspur station. Although we have been in discussions about this project with OWASA staff for well over a year, it had not been understood that OWASA policy would require the Town Operations Project to pay the cost of removing the existing pump station and connecting that site to the new pump station located on the Town Operations Center site.  (Additional design work since September 8 has allowed us to reduce this cost projection by $64,000 from $464,000.)  Cost of off-site improvements are split equally between the Transit and the Public Works portions of the project.
• Removal of underground storage tanks from the present site could add approximately $96,000 to the Transit cost of the project.  This number includes the cost of removal and routine testing, as well as the removal and disposal of all the soil within five feet of each of the seven tanks. It is possible that some or all of that soil removal and disposal may not be necessary.
• We have not yet been able to quantify the costs of extending voice, data and radio communication to and from the site.  Fiber-optic connection from Town Hall to the Town Operations Center, a distance of five miles, will need to be made.  However, at this point, we do not have an analysis of the options such as renting a line or installing one ourselves, possibly in conjunction with the updating of our traffic signal system.

 

Net Cost Reduction

Another element of net cost is the estimated total of the refund of sales tax paid on materials purchased, a sum in the range of $400,000.

 

In the State of North Carolina, local governments are required to pay sales tax to the State, but are eligible to receive a refund of sales taxes paid.  Sales taxes are included in the contract prices bid by construction contractors, because they must pay sales tax when they acquire materials and equipment needed for the construction.  With each request for payment, a contractor must include a list of each of his payments of sales tax.  This information is later used by the Town in making its annual application for the refund of sales taxes.

 

The return of imbedded sales tax from construction contractors amounted to $3,200 in fiscal year 2001 and $7,200 in 2002, amounts too low to be highlighted in any budget discussion.  However, the Town has never contemplated a single construction project of the magnitude of the Town Operations Center.  Therefore, we have estimated the proportion of the total cost that will go toward purchase of materials and equipment and project that the sales tax refund will be in the area of $400,000 attributable to the Transit portion of the project. The refund would probably be received in the two fiscal years following the completion of construction, or 2007-2008 and 2008-2009.  

 

Potential Revenues

Because the transit–related facilities are eligible for federal and State funding, we need to separate the costs of these facilities from the rest of the site.  At this stage of planning, we estimate that the cost of all Transit-related facilities to be approximately $17,916,000.

 

If we are able to acquire the maximum amount of grant funding, it would amount to about $16,124,700, or 90% of the costs (minus the sales tax refunds).  We do not know how much of this sum we will actually receive.  It is possible that it may take several years to receive all of the possible grant funding.  If so, timing issues could be accommodated by the use of short-term financing to be paid off by grants as they are received.  If the grants do not materialize, then the short-term financing could become long-term financing.

 

As of now, we are certain that $1,318,289 for architect and engineering services will be available this fall through the North Carolina Department of Transportation (NCDOT). This is noted in the table below.  We also know that we will receive $135,000 from the NCDOT Small Urban Projects Fund to cover the cost of moving the Millhouse Road railroad crossing and installing a traffic signal at the intersection of Millhouse and Eubanks Roads. (Half of this cost would be assigned to the Transit side of the project.)

 

At this point, we believe that there is a reasonable chance that we will receive about $10,124,000 in State and federal transit funding, as noted in the table below. 

 

The table reflects funding from the North Carolina Department of Transportation (NCDOT), the Surface Transportation Program Direct Allocation and the State’s Transportation Improvement Program (TIP).  The table also includes the 10% local match (LM) which would be required, bringing the total of funding expected to $11,248,000.  We assume that the local match would be shared by the three partners in the Chapel Hill Transit System.  We also expect that up to $577,100 already spent on land acquisition for the transit site would be counted as part of our local match.

 

 

 

 

Potential Funding for the Transportation Operations Facility

 

	2002-03	2003-04	2004-05	2005-06	TOTALS
NCDOT Statewide earmark	$1,318,289    164,786      164,786 $1,647,861	?	?	?	$1,318,289 US      164,786 NC      164,786 LM $ 1,647,861
STP-DA		$    560,000         70,000         70,000 $   700,000	$   800,000      100,000      100,000 $1,000,000	$  800,000     100,000     100,000 $1,000,000	$2,160,000 US      270,000 NC      270,000 CH   $2,700,000
TIP (in lieu of Homestead Rd.)		$2,320,000      290,000     290,000 $2,900,000		$3,200,000      400,000      400,000 $4,000,000	$5,520,000 US      690,000 NC      690,000 LM $6,900,000
TOTALS	$1,800,000	$3,600,000	$1,000,000	$5,000,000	$  8,998,289 US     1,124,786NC     1,124,786LM  $11,247,861

US = federal    NC = State  LM = local match

 

This funding is spread out over four years. Additional funding could be available for this project for up to five years beyond its completion in 2006-2007.

 

We intend to aggressively pursue funding from the NC Moving Ahead program. If more funding becomes available from that program, then it may be necessary to forego the STP-DA funding in order to meet eligibility requirements for the Moving Ahead moneys.

 

In addition to the funds noted above, we would anticipate receiving another approximately $1,000,000 annually from the NCDOT Statewide earmark. An earmark directly from the federal bill is a possibility. Also, the recent designation of Orange County as an air-quality non-attainment area means that the Town is eligible for funding by the Congestion Management Air Quality program.  We are also working with local NCDOT highway officials to explore possibilities for funding portions of the off-site road and signal improvements that will need to be a part of this project.  (Funding of the railroad crossing and the associated signals has already been approved.)

 

CONCLUSIONS

 

We now are able to present better and more detailed cost projections than we were last June.  Since then, we have identified additional areas of cost. We also have determined ways to reduce the total initial capital costs of the project, resulting in a net decrease of about 7.4% for the Transit portion of the project.

 

We believe that it has been valuable to assess our needs for 30 years as well as for 15 years, so that we can propose phasing capital investment to accommodate Town operations for the shorter period, while still preparing for efficient expansions necessary to accommodate needs at a later date.

 

We also note that some costs are not yet available, even as general estimates.  As we are able to provide more information on the cost of fiber optic cable and if or when we see the need for significant revisions in today’s information, we will report to the Council.

 

It is important that there be a preliminary budget established for the Town Operations Center project, so that design work can proceed and the Town will be ready to vacate the current premises of the Transportation Department on University land. 

 

RECOMMENDATION

 

We recommend adoption of the following resolution, amended as the Council wishes, which would establish a preliminary budget for the Town Operations Center.  The preliminary rounded budget figure of $17,916,000 after the sales tax refund of $402,000 are detailed in Attachment 1.

 

ATTACHMENTS

 

1.      Transit Operations Facility Project Costs, Comparison of September 8, and October 8, 2003 (p. 9).

 

A RESOLUTION ESTABLISHING A PRELIMINARY BUDGET FOR THE TOWN OPERATIONS CENTER (2003-10-27/R-12)

 

WHEREAS, the Town must relocate its two largest departments, Public Works and Transportation, by December 31, 2006; and

 

WHEREAS, the Town of Chapel Hill has acquired an 88-acre site for a Town Operations Center on Millhouse Road; and

 

WHEREAS, a needs assessment, site analysis, and preliminary concept plan have been developed; and

 

WHEREAS, the Council considered on June 23, 2003, the preliminary concept plan and the initial cost projections; and

 

WHEREAS, the Council considered on this date potential cost reductions, additional identified costs and potential revenues;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council adopts a preliminary budget for the Transit Operations Facility at the Town Operations Center of $17,916,000 after refund of $402,000 in sales tax.

 

This the 27^th day of October, 2003.

ATTACHMENT 1

 

Transit Operations Facility

of the

Town Operations Center

Projected Costs

15 Year Plan

 

                                                             September 8, 2003              October 27, 2003

 

Construction                                                   $12,788,100                      $12,788,100

Equipment                                                          1,828,200                          1,828,200

            Subtotal (a)                                       $14,616,300                      $14,616,300

 

Off-site (utilities, roads, signals)                           1,844,400                          1,646,900

Demolition                                                             126,500                             126,500

            Subtotal (b)                                       $16,587,200                      $16,389,700

 

10% Design, value engineering,

testing                                                     1,658,700                          1,638,970

            Subtotal (c)                                       $18,245,900                      $18,028,670

 

1% for Art                                                             182,500                             180,286

            Subtotal (d)                                       $18,428,400                      $18,208,956

 

Relocation expense                                                100,000                               13,000

Removal of underground tanks                                 96,000                               96,000

            Subtotal (e)                                       $18,624,400                      $18,317,956

 

Sales Tax Refund                                               -  406,600                          -  402,000

            TOTAL                                             $18,217,800                      $17,915,956