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HomeMy WebLinkAboutMinutes - City Council - 2002-08-01 - Special Meeting 170 City Council, Special Meeting Council Chambers 777 Cypress Avenue Redding, California August 1,2002 5:00 p.m. The meeting was called to order by Mayor Kight with the following Council Members present: Cibula, Kight, McGeorge and Stegall. Council Member Pohlmeyer was absent. Also present were City Manager Warren, Assistant City Manager Perry, Deputy City Manager Starman, Acting City Attorney Tranberg, Administrative Services Director Bachman, Community Services Director Niemer, and City Clerk Strohmayer. I SPORTS COMPLEX BID PACKAGE (P-050-600-200) City Manager Warren stated that at the special City Council meeting on July 26,2002, the City Council discussed whether to include two soccer fields within the bid package for construction of the Sports Complex or to separate the bids into two packages. He summarized the City Council's direction to include soccer fields in the base bid or in a second bid, if possible, and return with a financing plan that would not encroach on the General Fund. Council Member McGeorge interjected that before any lengthy discussion ensued, he wanted to clarify the intent of his motion at the July 26 meeting, which was that the soccer fields be moved to the first additive alternate, but not to borrow more money. City Manager Warren clarified his understanding that Council did not want to disrupt the Big League Dreams (BLD) portion of the bid so as not to violate the existing BLD contract. Mr. Warren reiterated his understanding of Council's direction for staff to come back with a financing pla~, which would not include any General Fund money. .- . ..... Mr. Warren rep9rted that .at a r.ecent meeting with the estimators, Assistant City Manager Perry and Project Manager Danny Baugh identified another $351,000 of cost reductions which brought the current project estimate to $15,849.000. Also, in discussions today with the State Department of Parks and Recreation, staff learned that if the City followed its bid procedures rather than the State's, which is permissible, it would not be restricted to a maximum of 10 percent additive alternates in the bid. I In attempting to come up with a plan to include soccer fields in the Sports Complex project, Mr. Warren said staff explored the least costly and the most appropriate flexible financing methods. He pointed out that the soccer fields' associated costs include rest rooms, landscaping, parking, access to Old Oregon Trail, and project contingency costs. Mr. Warren provided a history of the initial financing strategy for the project in which the City Council allocated $5 million from the General Fund for the Sports Complex approximately two years ago. Subsequent to that time, the City was awarded a $3 million grant from the State, which increased the project scope from $8 million to $11 million; however, $5 million of General Fund money was still dedicated to the project. The City then received another $7 million grant which prompted the City Council to reduce the general fund contribution from $5 million to $3 million. More recently, $550,000 was transferred from the Sports Complex to the Aquatic Center, leaving $2,450,000.00 of General Fund money dedicated to the project, to be financed through bonds. Mr. Warren offered two alternatives to include soccer fields in the Sports Complex project and detailed the proposed financing method: I 1. Include two soccer fields, parking, and the restroom/concession building in the base bid. This would add another $3.5 million to the existing $2.45 million bonded and result in debt service of approximately $250,000 to $290,000. Because the lease payments from BLD are not scheduled to begin until the fourth year of operation and will slowly increase to an adequate level to pay for the debt service on the soccer fields, it would initially be necessary to advance the debt service payments from the Park Development Fund. The lease revenue would then be sufficient to fully 8/01/2002 171 reimburse the Park Development Fund over a 20-year period, and maintenance costs would be approximately $130,000 per year. 2. Increase the bond issue and bid four soccer fields. This would require the issuance of another $1.7 million in bonds for a total of $5.2 million with an annual debt service between $350,000 and $425,000. The same funding strategy would be used with the exception that about $130,000 in annual general fund maintenance costs for the two soccer fields project could be shifted to BLD, which has indicated an interest in operating the larger soccer complex, but not the smaller complex. Therefore, the City's costs for the four-field complex would be comparable to the two- field complex in the short term. Additionally, beginning in the fifth year, more revenue from the soccer portion of the Sports Complex would begin flowing to the City, and that revenue would be used to make payments for the debt service. I Mr. Warren recalled that a similar bonding approach was used for improvements at Enterprise Park. City Manager Warren recommended that the City Council approve Alternative #2 to add four soccer fields, which would increase proceeds from bonds by $5.2 million. In this scenario, debt service payments would be made by a combination of Park Development Fees, lease revenue from BLD, and avoided general fund maintenance costs. The Park Development Fund would be made whole over a 20-year period, and eventually, an increase in BLD lease revenue would cover all debt service and provide a net return to the City. Assistant City Manager Perry clarified that the total cost of the BLD Sports Complex, excluding soccer fields, is $12.2 million, based on current cost estimates. The City only has sufficient resources to cover BLD; however, adding soccer fields to the project would require additional funds. I Mr. Perry further explained that the base bid going into the last Council meeting would have beenjust BLD plus grading, sewer, and storm drainage for the soccer fields. Based on staffs understanding of Council's direction at the last meeting, the recommended base bid now includes BLD plus two soccer fields. Additive alternates are being suggested for two more soccer fields to afford the opportunity to ascertain their costs and to explore the possibility of a lease package with BLD that would save the City funds by operating the soccer facility. Mr. Perry also explained that the initial capital cost of $3.5 million for the first two soccer fields includes parking and restrooms, and the cost for the next two fields only is $1.7 million. In response to Council member Stegall's concern about corporate risk, City Manager Warren responded that while there would be no risk if the City built just the Sports Complex, excluding BLD, it wouldn't be able to build as much. Without BLD, the City couldn't have had a complex of this caliber because it would not be able to afford the maintenance and upkeep. He recalled that the Sports Complex Committee, in recognizing that the maintenance costs were substantial, recommended a private entity that charges an entry fee, serves alcohol, has the expertise and proven track record to operate and maintain such a facility. BLD will cover the costs for the lighting, maintenance, etc. which relieves the general fund. It will be one of the nicest complexes in the State and even with the soccer fields, the City's general fWId commitment is less than $6 million. I Mr. Warren emphasized that if BLD wasn't in the picture and without that risk, the City wouldn't be entertaining the possibility of including soccer fields. In the event BLD leaves years from now, the worst-case scenario is that the City would assume the bond payments. City Manager Warren confirmed Council Member Cibula's understanding that the City Council has sufficient flexibility in revisiting the decision relative to the number of soccer fields contingent upon the bid results. He suggested that Council authorize a bond issue for the four soccer fields with the understanding that Council is not obligated to spend the money. If the bids were acceptable, two more soccer fields would be included. If not, there would be multiple options, including rejecting bids. Council Member Cibula questioned the timing of going out for a bond issue prior to having the bid numbers and the committal of a $5.2 million bond issue. Administrative Services 8/0112002 172 Director Bachman replied that staff is currently putting together the bond issue but would wait until after the bid opening when the costs become known prior to actual bonding. In response to Council Member Cibula, Assistant City Manager Perry clarified that staff is asking Council to: 1) Confirm whether or not two soccer fields are in the base bid; 2) if two soccer fields are in the base bid, commit to fund those, assuming favorable responsible bids are received; 3) the other two soccer fields be listed as additive alternates; and, assuming prices are satisfactory, staff would come back with a financing plan that would include the option to finance the other two soccer fields. When the bid numbers become known, he said the decision to go forward ultimately rests with the City Council. Council Member Cibula believed it was premature at this time to consider the concept of having BLD operate and maintain the soccer fields and suggested that the subcommittee of the Community Services Advisory Commission assist in exploring this concept, as well as soliciting input from the soccer community and other groups. I City Manager Warren reaffirmed Council Member Cibula's understanding that this venture will have no negative impact on the ten-year financial plan and added that the anticipated revenues from BLD have not been factored into the 10-year plan. In response to Council Member Cibula's reference to the representation that the cost for soccer fields would be significantly less, City Manager Warren reiterated that based on information available today, the cost of two fields is $3.5 million and $5.2 million for four fields. Relative to all-weather fields, Assistant City Manager Perry acknowledged that while they have a higher capital cost, operating costs are lower because no watering, mowing, or fertilizing is required. In observing the endurance of other artificial turf soccer fields, Mr. Perry estimated a minimum ten-year life span. When asked his opinion concerning the concept of BLD managing the soccer fields, Rich Pinnell, District Commissioner for California Youth Soccer Association of the North State, believed it could work but cited the agreement, costs, and other factors as important considerations. To his knowledge, there is no group including the soccer community presently in a position to manage the soccer fields. He related that in other parts of the state, non-profit organizations traditionally handle the management and operation aspect of soccer in the community. However, he believed this approach is worth pursuing with BLD because they are already on site. I As to the question of the advantages of four fields over two, Mr. Pinnell maintained that four lighted fields provide a substantial advantage for tournament play due to the ability to run a 30 to 36-team tournament which is much more cost effective. He added that with the availability of the other three or four fields in the area, a 60 to 80-team tournament could be facilitated with the backup of having four all-weather fields; and, in the event of inclement weather, tournaments could still be completed. Mr. Pinnell explained that the California Youth Soccer Association runs a series of state level tournaments for different levels of competitive play from December through March with different venues hosting various age groups and flights. ~hile he could not guarantee the pre-flight tournaments would come to Redding, he said locations with all-weather soccer fields and/or little rain are highly favored. As to the economic benefits, Mr. Pinnell referenced a past soccer tournament in which Redding hosted 58 teams, and participants filled up the hotels and spent money in the community generating healthy sales and transient occupancy taxes. I Mr. Pinnell also discussed the demonstrated need for more soccer fields in the community. He maintained that all fields in the community are heavily impacted through mid-November. The tremendous demand has hindered the ability to rest the fields to allow their recovery. With four additional soccer fields at the Sports Complex, he said the Enterprise Park soccer fields could be converted to a sideways configuration for younger age groups, thereby creating four sideways fields. They could then be returned to their normal state for tournament or other major event. In addition, it would allow more opportunities to rest the fields, thereby significantly improving the condition of the fields. 8/01/2002 173 I Leo Graham, member of the Community Services Advisory Commission, who sat on the ad hoc committee that reviewed the parks, recreation, trails and open space planning process in development of a Parks Master Plan (Plan), indicated that while soccer fields are an excellent addition to the Sports Complex, he was concerned that utilizing Park Development Funds (PDF) might preclude development of other worthy parks and recreational facilities identified in the Plan. He questioned the use ofthe PDF that was thought to be available to achieve the goals of the Plan for what he termed a "unique limited for-profit complex". Mr. Graham related that the goals include development of neighborhood and community parks and also meeting recreational needs throughout the City based on meetings with a number of groups in addition to soccer groups. According to Mr. Graham, these groups are looking forward to having community-based, not-for-profit, not-for-fee local facilities. He explained that while the Sports Complex was counted toward a needs assessment, it was not considered part of the issues for capital funding and development of the Plan because it was a well- defined project, which was already moving forward with funding sources and goals, and it became for-profit. He cautioned that there is going to be competition to see the Plan achieved along with the question of how to fund it. Mr. Graham said that unless Council is prepared to identify other funding sources, he feared that earmarking the PDF to fund the Sports Complex debt service would defer achieving the goals of the Plan by up to ten years. Administrative Services Director Bachman clarified that the proposal to build soccer fields contemplates advancing PDF fees as necessary until revenue generated from BLD is adequate to meet the debt service. Thereafter, it would be refunded back to the PDF with BLD proceeds. He said the question of park development priorities and policies rests with the City Council, and it indicated that soccer fields are a high priority. As one of the recreational elements lacking, he believed soccer fields to be a reasonable use of park development fees. I Relative to the comment about pushing the Park Plan back ten years, Mr. Bachman explained that this proposal doesn't push the entire Plan back the number of years referenced nor does it deplete the PDF. He estimated that anywhere from $250,000 to $300,000 in PDF fees would be involved. Currently, the City receives approximately $600,000 in PDF fees per year, but that is projected to increase and in a few short years will be over $1 million per year because the impact fees were phased in over a period of five-years and they are increasing each year. Mr. Graham recalled that the PDF was created as a result of building activity within the City. He contended that the decision to use it to fund the debt service at Enterprise Park was made during a time when building activity was very high. The building activity subsequently dropped off resulting in a reduction ofPDF revenue, thus debt service ability declined. He reported that the Parks and Sports Complex Ad-Hoc Committees met in joint session with the Community Services Commission prior to this meeting and were advised that aside from the Enterprise Park debt service, what is proposed for this project, and the uncertainty of the building activity over the next 10 years, it appears that at least half and perhaps substantially more than half of the PDF will be obligated at least for the next five years. He re- emphasized his concern over the potential for sacrificing another community park or a series of community and neighborhood parks that the community needs pursuant to the needs assessment in the Master Plan. I Kent Dagg, Sports Complex Ad-Hoc Committee Member, recalled that when this process began many years ago, the direction of the City Council at that time was to study the idea of building a sports complex under certain parameters. One criterion was that it had to be a "top drawer, Grade A, best we can build and maintain." At that time, the budget was $2 million, and the committee concluded its study with a report to Council that it could not be done within existing resources. Two years later, the City Council asked the committee to revisit the concept because new funds became available, so the committee studied the feasibility of a Sports Complex a second time with the same parameters. The committee concluded that a recreational facility of this caliber would not be affordable unless it was privatized with a gate fee, and the ability to sell beer because it could not be maintained. Subsequently, the committee discovered BLD as a potential operator. Upon visiting their facility, the committee concluded that it met the exact criteria discussed with the City Council. Mr. Dagg recounted Council's position about ten years ago was that if such a facility were built, it would free up the K fields and other fields in town for other uses and for other age groups. The K fields and other fields would all become available for all groups 8/01/2002 174 including the schools. He suggested that if Council moves forward with the soccer fields, it should be inside the gate and be maintained by a private entity. Relative to the risk factor of BLD walking away, Mr. Dagg, was confident that because Redding is a strong sports-minded community, the City could successfully put the maintenance and operation out to competitive bid for another private concessionaire to take it over, similar to the catering at the Convention Center or other services for which the City contracts. Council Member McGeorge was not receptive to incurring more debt for the Sports Complex project in light of other project obligations such as the Plunge renovation, Library, and the commitment to build more softball fields at Enterprise Park. I Mayor Kight disagreed with the characterization that the project is a for-profit operation and stated that there is a vast difference in that the City will build and own the complex but contract for its management. While he acknowledged that there are always risks in such ventures, BLD appears solid today. He thought Redding's economic health is strong pointing out that it has experienced steady growth in the last ten years. He also believed the City Council has successfully balanced the needs of the community with the Plunge Project, Library, Civic Center, and has accomplished a number of other projects concurrently while exercising prudent fiscal responsibility by staying within the 10-year plan. Mayor Kight supported staffs recommendation to include four all-weather soccer fields in the Sports Complex as an appropriate use of Park Development funds, and he also supported the concept of having BLD manage them. Assistant City Manager Perry clarified that while BLD's contract provides for a vinyl tent structure pavilion without HV AC, the City Council authorized staff to procure a design for an upgrade to a fully enclosed building with HV AC as an additive alternate in deference to Redding's climate. City Manager Warren explained that there was significant forethought involved in including the pre-fab all-weather metal building as an additive alternate. The rationale was to allow consideration for the upgrade at the time bids were received; and, if those numbers looked good, it could then be upgraded to an all-weather pavilion. The upgraded facility would not only increase BLD's success but limit their risk and the City's, as well. I Council Member Cibula indicated that because soccer fields are his highest priority, he favored including two soccer fields in the base bid. He said that Council would have to see where the figures come in before it makes a final decision as to which and how many additives are pursued. After Council discussed including soccer fields in the base bid, listing them as additive alternates, or paring down the project, City Manager Warren cautioned that if the base bid includes two soccer fields, the City is obligated to financially support the bids that come in. Therefore, if Council votes to include the two soccer fields, it is also approving the financing plan to fund the bid package. However, if they are listed as an additive alternate and bids exceed the budget, the soccer fields would not be built. Council Member Stegall did not support raising bond money for this project although she fully supported the City's contract obligation with BLD and the $12.2 million already earmarked for the Sports Complex. Therefore, she favored soccer fields as an additive alternate to the base bid. Ms. Stegall cited numerous other important projects under way in the community and the limited Park Development Fund being stretched too thin. While she acknowledged soccer as important and popular to the community, she did not want to jeopardize the possibility for other park development. She said Council had to give library people very hard news, and it had to cut back on the Plunge Project for which the final cost is not yet known. I Council Member Cibula said that if other Council Members concur, he would be willing to include soccer fields as deductive alternates, because he wanted the opportunity for the soccer fields to be built. Council Member McGeorge concurred with Council Member Stegall that Council is obligated to honor the BLD contract, and although he would like to see soccer fields, he did 8/01/2002 175 not support borrowing more money. He did not have a problem, however, with including soccer fields as additive alternates. When asked if it was necessary to prioritize additive alternates at this time, Assistant City Manager Perry said that State law requires additive alternates be prioritized, and the City must state how it will award the bid; therefore, Council must select its additive alternates preferences prior to distribution of the bid packet. I Council Member Stegall and Mayor Kight supported bidding the base bid with the first additive alternate being the upgraded pavilion; the second alternate would be the first two soccer fields with parking and restrooms; third alternate: soccer fields three and four; fourth alternate: water feature. MOTION: Made by Council Member Stegall, seconded by Council Member Cibula, authorizing a base bid package for the Sports Complex in accordance with the BLD contract provisions, including additive alternate bids as follows: First alternate - Upgraded metal multipurpose pavilion including geothermal HV AC system; Second alternate - two soccer fields with restrooms and parking; Third alternate - next two soccer fields; Fourth alternate- water feature. The Vote: Unanimous Ayes ADJOURNMENT There being no further business, at the hour of6:37 p.m., Mayor Kight declared the meeting adjourned. APPROVED I p~ teyL Mayor . ATTEST L:,~ ~'1 City Clerk I 8/01/2002