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Conceptual Cost Model and Financing and Funding Strategy 01-020 Town of Los Gatos, California Conceptual Cost Model and Financing and Funding Strategy June 18, 2007 ANDERSONBRULÉARCHITECTS ............................... ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ èÛÚÐ×ÍÖùÍÎÈ×ÎÈÉ èÛÚÐ×ÍÖùÍÎÈ×ÎÈÉ A.Conceptual Cost Model 1.Introduction and Assumptions......................................................................3 2.Conceptual Cost Model for Civic Center Master Plan.................................7 B.Financing and Funding Strategy 1.Introduction and Assumptions......................................................................9 2.Funding Sources for Civic Center Master Plan .........................................10 ìÛÕ×ÍÖ ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð [[223,510,851,562][11][B,I,][Times New Roman]]Introduction and Assumptions Conceptual cost models are intended to provide an overall conceptual cost to accomplish the project. Conceptual costs per square foot are based on recent regional construction of similar facilities as gathered by the cost consultant and an understanding of the assessment of the condition of and proposed use for the existing facility. A description of the general categories follows: Renovation of Existing Building includes renovation of the existing facility to include life safety only seismic upgrades, some exterior upgrades, minor electrical and mechanical system upgrades and full interior renovation to non-structural walls and finishes. New Facility Square Footage indicates construction of new facility for use as public space for programmed functions (office space, library functions, community functions, support spaces, etc.). Note that the Police facility is an Essential Services Building, which requires a higher level of construction, and is costed accordingly. Community Spaces includes program rooms, community assembly spaces and support areas to these spaces. Sitework includes landscaping, signage, drainage and hardscape of developed property areas outside of the new facilities and parking site coverage. Existing Construction Demolition and Sitework Clearing include removal of any existing facilities and/or parking lot that must be demolished to make way for new construction and/or parking. Parking Costs includes three categories of parking construction: Below-GradeParking includes underground parking garage and ramp system construction and structural support for construction to be placed above the garage level. On-GradeParking includes surface parking lots with landscaping strips and drive aisles as well as on-street parking spaces. Above Grade Parking includes above ground parking garage and ramp construction. ìÛÕ× ÍÖ ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð [[225,568,913,620][11][B,I,][Times New Roman]]Conceptual Cost Model Estimates Following is a high-level summary of the estimates generated by the conceptual cost model. The Conceptual Cost Model on page 7 presents detailed estimated costs for the elements of the Civic Center Master Plan. Service Total Square Feet Total Cost Estimate New Police Facility 18,369 s.f. (new) $11,267,137 Parking Garage 68 spaces $ 2,213,244 New Library 39,821 s.f. (new) $22,060,431 Parking Garage 69 spaces $ 7,712,820 New Community Ctr. 32,040 s.f. (new) $14,832,258 Parking Garage 136 spaces $ 13,972,500 Civic Ctr. Renovation 25,191 s.f. (existing) $ 9,128,708 Total$81,187,098 It is important to note that the cost estimates are based on conceptual, not actual, buildings. That is, the costs derive from the square feet required times an average square footage cost for that type of facility. For parking, the estimate is based on the number of parking spaces required times the average per space cost for either above-ground or below-ground parking. The cost model includes primarily space designated as core in the space program, although some space designated optional is also included. Some optional space is not included, and parking numbers do not account for the optional space not included. If and when any of the facilities are designed for construction, true cost estimates would take into account any difference in architectural design, materials, construction challenges, value engineering, or other factors that may influence costs. These factors could ultimately result in greater or lesser costs for the facilities. [[270,2526,833,2583][12][,I,][Times New Roman]]Parking Cost Assumptions [[847,2526,1672,2583][12][,,][Times New Roman]]Costs for parking are a significant por [[1639,2526,2365,2583][12][,,][Times New Roman]]tion of the total estimated costs. The high costs are largely attributable to the need to provide two levels of underground parking for the majority of the parking demand. The parking estimates used for the conceptual cost model are based on a methodology that included an occupancy survey for the existing Civic Center to determine peak demand periods, comparison of parking demands at similar facilities in other Bay Area jurisdictions, and parking supply recommendations based on projected staff, volunteers and ìÛÕ×ÍÖ ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð ùÍÎÙ×ÌÈÇÛÐùÍÉÈïÍØ×Ð [[225,510,913,562][11][B,I,][Times New Roman]]Conceptual Cost Model Estimates visitors under the built-out Civic Center Master Plan. At the time that any phase of the Master Plan is undertaken, more detailed analysis should occur to determine the specific parking requirements associated with that phase in the context of overall parking demand for the Civic Center. A different level of parking demand could affect estimated costs either way depending on the findings. The cost estimates include a 35% factor for General Conditions/Soft [[479,962,853,1019][12][,I,][Times New Roman]]Costing Factors Costs, which are comprised of contractor costs, standard consultants (e.g., architecture, structural, electrical, plumbing, landscape, etc.) fees, soils and geotechnical reports, development process fees, testing and inspections, specialty consultants (e.g., security, lighting, acoustic, etc), and contingency allowance. More accurate soft cost estimates would need to be calculated in conjunction with any building design process, and with the development of a specific financing strategy. The cost estimates also include a 15% building factor, which accounts for department to department circulation, vertical circulation and width of the exterior walls. Costs not included in the estimate are those for Furniture, Fixtures and Equipment (known as FFE costs). Typical FFE costs for libraries range from $25 to $35 per sq. ft., suggesting an estimated FFE cost for the 39,000 sq. ft. library of from $97,500 to $136,500. Different FFE costs would apply for police facilities (usually higher due to specialty equipment) and for community spaces range (potentially lower due to large open areas). Accurate FFE estimates would need to be calculated in conjunction with any building design process. At the time this is undertaken, estimates for any possible re-use of existing furniture and equipment would be evaluated. Another cost not represented in the conceptual cost model is the cost for operations and maintenance (O&M). These are the costs generated by having additional square footage to operate and maintain a facility. Actual O&M costs would not likely increase proportionate to the increase in square footage, however, to the extent that green technology is incorporated in the design and information technology is used to enhance productivity and streamline operations. O&M costs would need to be calculated in conjunction with any building design process, and ongoing fiscal capacity to cover any increased costs would need to be identified prior to construction. ìÛÕ×ÍÖ ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ öÓÎÛÎÙÓÎÕÛÎØöÇÎØÓÎÕéÈÊÛÈ×ÕÃ öÓÎÛÎÙÓÎÕÛÎØöÇÎØÓÎÕéÈÊÛÈ×ÕÃ [[223,510,851,562][11][B,I,][Times New Roman]]Introduction and Assumptions [[298,564,822,621][12][,I,][Times New Roman]]Financing Strategy and [[847,564,1643,621][12][,,][Times New Roman]]The development of a detailed financi [[1607,564,2332,621][12][,,][Times New Roman]]ng strategy is a critical element in [[430,621,803,678][12][,I,][Times New Roman]]Funding Sources [[847,621,1596,678][12][,,][Times New Roman]]achieving the vision for the CCMP. [[1583,621,2247,678][12][,,][Times New Roman]]A financing strategy takes into account available funding sources and their capacity over a projected period of time. Available sources are paired with eligible elements of the CCMP. This detailed financing strategy will need to be developed as part of implementation of any phase of the CCMP. The table on page 10 describes the funding sources that may be available for the elements of the CCMP if the Council and community so determine. Any improvements contemplated in the CCMP may be funded by a combination of strategies commonly referred to as Pay-as- You-Go and Pay-as-You-Use strategies. The first strategy (Pay-as- You-Go) assumes the use of existing cash, capital campaigns and other fund raising efforts, real property sales, and joint government partnerships. The second strategy (Pay-as-You-Use) assumes the need to borrow funds in some form of future debt financing. An advantage of Pay-as-You-Use financing is that it matches the benefit and cost of the improvements with the actual users of the improvements over time. Pay-as-You Use strategies include Redevelopment Agency Tax Increment Financing and General Obligation Bonds. The table describes the funding source, current and/or projected capacity (if known), and general requirements associated with each. A financing plan for construction of any of the CCMP phases will provide a framework that assesses financial requirements, financial implications related to project implementation, anticipated infrastructure costs, and project expenditure timelines. Development of the financing approach will involve a detailed review and analysis of all available data and information, including available cash reserves, alternative revenue streams, and Town and Redevelopment Agency (RDA) debt capacity, and an assessment of debt burden on Los Gatos property owners, if any. ìÛÕ×ÍÖ ðÍÉõÛÈÍÉùÓÆÓÙù×ÎÈ×ÊÛÎØðÓÚÊÛÊÃéÈÊÛÈ×ÕÓÙïÛÉÈ×ÊìÐÛÎ öÓÎÛÎÙÓÎÕÛÎØöÇÎØÓÎÕéÈÊÛÈ×ÕÃ èÍÅÎÍÖðÍÉõÛÈÍÉùÛÐÓÖÍÊÎÓÛ Civic Center Master Plan Funding Sources Pay-as-You Go Funding Sources (Cash) Pay-as-You-Use Funding Sources (Debt) Capital Redevelopment Sale of Joint General Obligation Campaign / Agency (RDA) Tax Reserve Property PartnershipBonds (GO) Fundraising Increment Financing Accounts The issuance of RDA Another source of debt is potentially financing is the The community available as a funding issuance of voter- and stakeholder source for approved GO bonds. The Town has groups may improvements. The GO bonds are secured The Town has severalundertake Other debt issuance requires by the full faith and several reserve properties that fundraising governmental approval by Town credit of the Town. accounts that are either vacant campaigns to entities or Council/Agency Revenues to repay the are designated or in use by raise monies serviceBoardA recent update GO debt are raised for particular other entities. from non-providers of the Agency's generally by tax levies purposes on a expected future cash on the value of real This source of profits, could partner discretionary funds would be flows indicates that property in the Town foundations, with the basis. Use of potentially companies and Town in depending on when (the Ad Valorem tax). these funds is available should residents constructing the debt financing The latest update not legally the Town sell towards selected jointly -used occurs, and future tax indicates that based restricted to the some portion of improvements. facilities.increment growth upon the Town's current desingated use. its real property. Fundraising is rates, net proceeds of assessed valuation, the often used for approx. $9.6 to $14.5 debt service factor per FFE.million may be $100K in assessed available future valuation is $1.04 per financings. $1 million borrowed. Requires Town The outright Council/Agency One-time cash sale of Town Board Approval. reserves such as property would Partnerships Current RDA law those above GO bonds are generally result in cash. Depending upon would allows Agency funds have no recognized to have the Non-cash the level of require legal to be used for public dedicated source aspects might lowest cost of stakeholder agreements safety facilities, of revenue. also be possible, borrowing for any type involvement and establishing libraries,and Once spent, they such as the of local govt. debt commitment,terms and community centers are not expected potential for financing. GO bonds fund raising conditions including parking to be land swaps. require a super majority may or may not for cost-required to support replenished. Sale of property (2/3rds) voter approval play a sharing and these uses, but Other priorities occupied by before they can be significant role. long-term excludes their use for may exist for tenants would issued. relationships. civic centers. Based the use of need to be on RDA law, the final reserves. coordinated date to issue debt is with the tenants. 2011. ìÛÕ× ÍÖ