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02-05-2024 City Council Work Session Minutes CHANHASSEN CITY COUNCIL SPECIAL MEETING – WORK SESSION MINUTES FEBRUARY 5, 2024 Mayor Ryan called the work session to order at 7:00 p.m. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilman McDonald, Councilwoman Schubert, and Councilman Kimber. COUNCIL MEMBERS ABSENT: Councilman von Oven. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Charlie Howley, Public Works Director/City Engineer; Eric Maass, Planning Director; Jerry Ruegemer, Park and Recreation Director; Kelly Grinnell, Finance Director; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: Dan Kjellberg, Kraus-Anderson Bryan Harjes, HKGi Paul Michell, BKV Group (via Teams) Mike Healy, BKV Group (via Teams) Debbie Lloyd, 7302 Laredo Drive Janet Paulson, 7305 Laredo Drive Linda Norderhaug, 7603 Frontier Trail CIVIC CAMPUS DISCUSSION Bryan Harjes from HKGi reviewed the agenda and began the presentation with a summary of the project needs and goals. The needs focused on the facility study results of the existing city hall and the cost to renovate versus building new, projected growth, and following the guiding principles of the 2017 Downtown Vision Plan. The goals included creating a destination civic and park space, supporting a vibrant downtown, providing year-round activities, and offering multi-generational amenities. Mr. Harjes reviewed the overall project site plan showing the building and amenity locations and off-site infrastructure improvements. Floor plans for all three levels of city hall were presented followed by the floor plan for the Park Pavilion building. Renderings were presented showing multiple city hall exterior elevations as well as the first-floor lobby entrances and stairs. Mr. Harjes provided details of the overall park space, including a number of integrated features around the park pavilion. These features included the stage component, and the flexibility of the performance space for yard games, farmers market, concert series, etc. Renderings provided at the December 2023 open house were presented which included the gateway monument signage, playground, hang out area, park pavilion seat wall and stairs, splash pad, stage and concession area, and outdoor living room. Multiple layouts of the performance area space were presented. City Council Special Meeting Work Session Minutes – February 5, 2024 2 Mr. Harjes presented a budget comparison showing the major differences between the original concept plan to the current design development plan. An overview of the current development design project budget was presented which included current project revenue sources as well as potential additional revenue sources. Current construction costs were presented, including a list of value management items, soft costs, and the project budget summary. Tentative project add alternates were reviewed along with a project budget summary with these alternates. Mr. Harjes presented current costs in the project to help manage the budget, including pre-bid design contingency and escalation costs and post-bid construction contingency costs. Mr. Harjes paused at this point for questions. The council asked about the relocation of the fire department monument, and soil and geotechnical concerns and associated costs. Mr. Harjes presented three scenarios for council consideration and discussion: • Scenario 1 or 1B – Current design track with or without add alternates: Base Bid = $1,035,000 over budget with add alternates range = $0 to $894,000 • Scenario 2 or 2B – Reduced base bid plus expanded add alternates or park pavilion building as add alternate: Base Bid = +/- $310,000 over budget to +/- $1,005,000 under budget; add alternates range = $0 to $2,934,000 • Scenario 3 – Match concept budget: Base Bid = $0 over budget Mr. Harjes asked the city council to consider the following questions: 1. Which scenario should staff and the design team follow? 2. What is the council’s comfort level for the base bid relative to budget? 3. What are the desired add alternates for the project? 4. What is the desired direction for the stage cover? Council Discussion Mayor Ryan asked the council for their input on the budget and the scenarios presented. Most of the city council did not want to use additional funding sources. The bid package dates were discussed. Mr. Kjellberg responded that Bid Package 1 was published today, but tonight’s discussion will drive Bid Package 2. Mayor Ryan expressed frustration that the project is over budget and that the council is being asked to answer the questions at the eleventh hour. Mr. Harjes responded that they are providing more knowledge and trying to articulate a framework for tolerance, as well as trying to find strategies to achieve a comfort level for all based on the city council’s priorities. He suggested that they may have to wait for the council’s decision until after Bid Package 1 results are received. Mayor Ryan asked if there is a way to find a percent to cut back within our forecasted budgets to issue bonds for the cost overage. Finance Director Kelly Grinnell responded that interest rates have been falling and are projected to fall even more. Based on the projected October interest rates provided by Ehlers compared to the current rates, they are down 38%, which amounts to $400,000 annually from the city’s debt service payments. The 2025 original projected levy City Council Special Meeting Work Session Minutes – February 5, 2024 3 increase to 7.4% which includes the debt service payments. If we kept the bond amount at the current level of $34.6 million and factored in issuance costs and the first year of interest payments, the 2025 levy increase would drop to 6.6%. If $2 million was added to the bond amount, assuming lower interest rates, the 2025 levy increase would be 7%. Ms. Grinnell also said that when the bonds are issued, the proceeds would need to be spent within two years to avoid having to pay back any interest earnings. Mayor Ryan appreciated this information but would like to see hard numbers to reduce the 2025 budget at a future meeting. She asked if there was time to wait for Bid Package 1 results or what could be recommended prior to the council choosing one of the scenarios. Mr. Kjellberg stated that the numbers will be available on February 29. City Manager Laurie Hokkanen asked the council if they choose to stick with the $35 million budget, then they could get relatively close with Scenario 2 which would include the park pavilion and the stage structure. Staff can bring ideas to the next meeting on how to pay for any overages and discuss the levy impact to the increase in the project cost. FUTURE WORK SESSION SCHEDULE February 26, 2024 • Commission Interviews • 82nd Street Design Team Presentation March 11, 2024 • Commission Interviews • Discuss Commission Appointments • Downtown Design Guidelines and Wayfinding Plan Review March 18, 2024 • City Council Roundtable • City Manager Performance Review (CLOSED SESSION) Mayor Ryan adjourned the work session at 8:30 p.m. Submitted by Laurie Hokkanen City Manager Prepared by Kim Meuwissen City Clerk