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Home My WebLink Aboutagenda.council.special.20180730kd TO: Mayor and City Council FROM: Justin Hanna, Project Manager THROUGH: Jack Wheeler, Capital Asset Director DATE OF MEMO: July 27 MEETING DATE: July 30 RE: 517 E. REQUEST OF COUNCIL: The goal of the real estate contract to purchase 517 to move forward with City office space solution. PREVIOUS COUNCIL ACTION: July 7, 2017 – City Council reviewed funding options for the City Offices at Galena. City Staff presented two options for funding. The first cash and the second option was General Obligation Bonds (GOBs) and cash. April 3, 2017 – City Council approved project includes reconfiguration renovate the Rio Grande Building, demolish the existing office structure and construct a new office building. Minor design changes as a result of refinement to internal programming or to meet Building or Engineering code requirements may be approved as part of the building permit review. Minor changes to material and fenestration arrangements may be approved as part of the building permit review. Construction of this project has been delayed as a result o commenced by two local citizens regarding land use issues and a proposed referendum on the project. August 23, 2016 – Staff presented the Galena Option alongside two Armory Reuse Options, with, and one without Powerhouse absent. No definitive decision was made of Armory Reuse, or Galena Option, however Council confirmed to staff that the Powerhouse would only be a temporary use and not part of term City Hall solution, this narrowed the decision to two options. The Galena Option and the Armory Reuse Option. July 19, 2016 – Galena Option previously approved was shown with additional requested options of the Galena Alternate and an Armory Reuse Option with a Purchase of Space. staff to produce more information on the use of the Armory as City H July 5, 2016 – Update on the Galena Option and Galena Reuse additional phasing and cost information on these options as well as the Galena Alternate. March 7, 2016 – Worksession update and humble. Page 1 of 4 MEMORANDUM Mayor and City Council Justin Hanna, Project Manager Jack Wheeler, Capital Asset Director July 27, 2018 July 30, 2018 517 E. Due Diligence Findings The goal of today’s session is to request direction real estate contract to purchase 517 E. Hopkins and review due diligence findings and options to move forward with City office space solution. PREVIOUS COUNCIL ACTION: City Council reviewed funding options for the City Offices at Galena. City Staff presented two options for funding. The first option was Certificate of Participation General Obligation Bonds (GOBs) and cash. City Council gave land use approval for the City Offices at Galena. The approved project includes reconfiguration of three (3) parcels to create two (2) new parcels, renovate the Rio Grande Building, demolish the existing office structure and construct a new office building. Minor design changes as a result of refinement to internal programming or to Engineering code requirements may be approved as part of the building permit review. Minor changes to material and fenestration arrangements may be approved as part of the Construction of this project has been delayed as a result o commenced by two local citizens regarding land use issues and a proposed referendum on the Staff presented the Galena Option alongside two Armory Reuse Options, one without Powerhouse use. Council had 4 members in attendance, with Art Dailey absent. No definitive decision was made of Armory Reuse, or Galena Option, however Council confirmed to staff that the Powerhouse would only be a temporary use and not part of narrowed the decision to two options. The Galena Option and the Galena Option previously approved was shown with additional requested options of the Galena Alternate and an Armory Reuse Option with a Purchase of Space. staff to produce more information on the use of the Armory as City Hall. Update on the Galena Option and Galena Reuse Option 2.0. Council requested additional phasing and cost information on these options as well as the Galena Alternate. Worksession update on the Galena Option. Council requested to keep modest direction by Council for ue diligence findings and options City Council reviewed funding options for the City Offices at Galena. City Staff Certificate of Participation (COPs) with gave land use approval for the City Offices at Galena. The of three (3) parcels to create two (2) new parcels, renovate the Rio Grande Building, demolish the existing office structure and construct a new office building. Minor design changes as a result of refinement to internal programming or to Engineering code requirements may be approved as part of the building permit review. Minor changes to material and fenestration arrangements may be approved as part of the Construction of this project has been delayed as a result of litigation commenced by two local citizens regarding land use issues and a proposed referendum on the Staff presented the Galena Option alongside two Armory Reuse Options, one 4 members in attendance, with Art Dailey absent. No definitive decision was made of Armory Reuse, or Galena Option, however Council confirmed to staff that the Powerhouse would only be a temporary use and not part of a long narrowed the decision to two options. The Galena Option and the Galena Option previously approved was shown with additional requested options of the Galena Alternate and an Armory Reuse Option with a Purchase of Space. Council directed Option 2.0. Council requested additional phasing and cost information on these options as well as the Galena Alternate. quested to keep modest Nov 16, 2015 - Worksession. Confirmed Galena Plaza forward to detailed design November 3, 2015 - The community was asked in an advisory vote if the Armory building should be used as city offices, or for community use. Community use was preferred August 3, 2015 – Worksession - existing Armory for community use was approved to move to detailed design by July 14, 2015 – Worksession – Alternate conceptual designs. Council discussed each design and was in favor of the staff recommendation for the Galena Option 3 September 13, 2016 – Worksession Armory, renovate the Rio Grande building and build new space in the Galena parking area. July 2, 2018-Worksession-Council provided direction to enter into a Real Estate Sales Agreement with 517 East Hopkins Aspen, LLC. Due to the stipulated time lines associated with the contract’s due diligence period council and staff will reconvene on July the purchase of 517 East Hopkins. DISCUSSION: On July 2, 2018 the City of Aspen entered into a real estate contract to buy 517 E. Hopk 517 E. Hopkins real estate contract outlined a 45 16, 2018, at which time if Council decides to remain under contract currently in escrow, goes hard. Council approved staff spending up to $250K to perform due diligence prior to July 30, 2018 work session. Staff has completed the due diligence on 517 E (Exhibit A) the space is an option for city offices however, The Seller of 517 E. Hopkins understood this and approached staff to offer for space on the second level of 204 S. Galena renovate the Armory at a reduced price Upon execution of the restated contract, give the City an additional 30 days of due diligence. Due diligence has included but is not limited to the following, analysis, and refinement of the Council has enough information on the 517 E current plan (the two roof solution) roof solution came up again during public comment so we have included this in the options to be discussed at the work session. Page 2 of 4 . Confirmed - Move the city office project “the Galena Option” at Galena Plaza forward to detailed design. he community was asked in an advisory vote if the Armory building should be used as city offices, or for community use. Community use was preferred - Programing of 51,900 sf at Galena Plaza including reuse of the existing Armory for community use was approved to move to detailed design by Options of Armory Option, the Galena Option, and the Galena Alternate conceptual designs. Council discussed each design and was in favor of the staff recommendation for the Galena Option 3-2. Worksession – Council provided direction for the project team to reuse the Armory, renovate the Rio Grande building and build new space in the Galena parking area. Council provided direction to enter into a Real Estate Sales Agreement with 517 East Hopkins Aspen, LLC. Due to the stipulated time lines associated with the contract’s due diligence period council and staff will reconvene on July 30, 2018 to evaluate the purchase of 517 East Hopkins. July 2, 2018 the City of Aspen entered into a real estate contract to buy 517 E. Hopk contract outlined a 45day due diligence period that ends on 16, 2018, at which time if Council decides to remain under contract, $2.5M of goes hard. Council approved staff spending up to $250K to perform due diligence prior to July 30, 2018 work session. ed the due diligence on 517 E. Hopkins and as outlined in the presentation n option for city offices however, it leaves the City Staff understood this and approached staff to offer for sale the 5 space on the second level of 204 S. Galena, as well as utilizing his builder on the project to also renovate the Armory at a reduced price. An amended and restated contract is being negotiated Upon execution of the restated contract, the original contract would be nullifie days of due diligence. Due diligence has included but is not limited to the following, space programming rough order of magnitude cost estimate. This will ensure tha Council has enough information on the 517 E. Hopkins option, the 517 / 204 option, and the current plan (the two roof solution) to decide which the best plan is moving forward. The o uring public comment so we have included this in the options to be “the Galena Option” at he community was asked in an advisory vote if the Armory building should be used as city offices, or for community use. Community use was preferred. rograming of 51,900 sf at Galena Plaza including reuse of the existing Armory for community use was approved to move to detailed design by a vote of 4-1. ptions of Armory Option, the Galena Option, and the Galena Alternate conceptual designs. Council discussed each design and was in favor of the staff Council provided direction for the project team to reuse the Armory, renovate the Rio Grande building and build new space in the Galena parking area. Council provided direction to enter into a Real Estate Sales Agreement with 517 East Hopkins Aspen, LLC. Due to the stipulated time lines associated with 30, 2018 to evaluate July 2, 2018 the City of Aspen entered into a real estate contract to buy 517 E. Hopkins. The day due diligence period that ends on August of earnest money goes hard. Council approved staff spending up to $250K to perform due Hopkins and as outlined in the presentation the City Staff short on space. sale the 5,500sqft , as well as utilizing his builder on the project to also ed contract is being negotiated. the original contract would be nullified and it would space programming, a daylight This will ensure that , the 517 / 204 option, and the moving forward. The one uring public comment so we have included this in the options to be FINANCIAL IMPACTS: · Construction + contingency projections (excluding sunk costs) range from $46.1M to $55.8M · Assume roughly $22M in cash between AMP, · The remaining amount needs to be financed (GF, · All option under current 2019 schedule generate rough annual debt service payments of $1.4M - $1.5M; 2-year delay options generate annual debt · All options constrain future appropriations, limiting future council actions on additional capital and operational expansions as annual debt service increases at a minimum of roughly $400K-$500K over previously budgeted estimates · Certificates of Participation would be included in the funding strategy. RECOMMENDED ACTION: solve our space needs long term option. In July 2016 Council gave us the direction that the number one design criteria for solving the space needs long term was that “City Hall” remain in its historic location, at the Armory. If this is still true then 517/ 204 seems to be a viable solution. CITY MANAGER COMMENTS: Exhibit A – Presentation Page 3 of 4 Construction + contingency projections (excluding sunk costs) range from $46.1M to Assume roughly $22M in cash between AMP, Transportation, and Parking Funds The remaining amount needs to be financed (GF, Stormwater, IT, APCHA All option under current 2019 schedule generate rough annual debt service payments of year delay options generate annual debt service at roughly $2.0M All options constrain future appropriations, limiting future council actions on additional capital and operational expansions as annual debt service increases at a minimum of $500K over previously budgeted estimates. Certificates of Participation would be included in the funding strategy. RECOMMENDED ACTION: Staff does not have a recommendation. All however, there seems to be much more certainty in the 517/204 option. In July 2016 Council gave us the direction that the number one design criteria for solving the space needs long term was that “City Hall” remain in its historic location, at the Armory. If is still true then 517/ 204 seems to be a viable solution. CITY MANAGER COMMENTS: Construction + contingency projections (excluding sunk costs) range from $46.1M to Transportation, and Parking Funds , IT, APCHA Funds All option under current 2019 schedule generate rough annual debt service payments of service at roughly $2.0M All options constrain future appropriations, limiting future council actions on additional capital and operational expansions as annual debt service increases at a minimum of the options will , there seems to be much more certainty in the 517/204 option. In July 2016 Council gave us the direction that the number one design criteria for solving the space needs long term was that “City Hall” remain in its historic location, at the Armory. If RESOLUTION A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, APPROVING A CONTRACT BETWEEN ASPEN LLC., AND AUTHORIZING STAFF TO CONDUCT A DUE DILIGENCE INVESTIGATION OF THE PROPOSAL. WHEREAS, there has been submit by and between the City of Aspen of the contract and an addendum WHEREAS, such contract is specifically conditioned upon the approval of City Council. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, That the City Council of the City of Aspen hereby appro City of Aspen and 517 East Hopkins Aspen LLC; copies annexed hereto and incorporated herein, and does hereby authorize the City notice to the Seller of the Council’s approval of such contract as provided i thereof. Further, Council hereby directs staff to perform such due diligence as staff feels is appropriate regarding such purchase and to report such efforts to Council no later than forty days from the date of this resolution. INTRODUCED, READ AND ADOPTED by the City Counci the 2nd of July, 2018. I, Linda Manning, duly appointed and acting City Clerk do certify that the foregoing is a true and accurate copy of that resolution Colorado, at a meeting held on the Page 4 of 4 RESOLUTION _99______________ (Series of 2018) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, BETWEEN THE CITY OF ASPEN AND 517 EAST HOPKINS , AND AUTHORIZING STAFF TO CONDUCT A DUE DILIGENCE INVESTIGATION OF THE PROPOSAL. WHEREAS, there has been submitted to the City Council a contract for Purchase of Real Estate City of Aspen and 517 East Hopkins Aspen LLC. True and accurate cop of the contract and an addendum are attached hereto as “Exhibits “A” and “B”; and, such contract is specifically conditioned upon the approval of City Council. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY That the City Council of the City of Aspen hereby approves the Contract 517 East Hopkins Aspen LLC; copies of which contract and addendum annexed hereto and incorporated herein, and does hereby authorize the City Manager to notice to the Seller of the Council’s approval of such contract as provided in paragraph 27, Further, Council hereby directs staff to perform such due diligence as staff feels is appropriate regarding such purchase and to report such efforts to Council no later than forty days from the date of this resolution. RODUCED, READ AND ADOPTED by the City Council of the City of Aspen on Steven Skadron, Mayor duly appointed and acting City Clerk do certify that the foregoing is a true and accurate copy of that resolution adopted by the City Council of the City of Aspen, rado, at a meeting held on the 2nd of July, 2018. Linda Manning A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, 517 EAST HOPKINS , AND AUTHORIZING STAFF TO CONDUCT A DUE DILIGENCE for Purchase of Real Estate rue and accurate copies ; and, such contract is specifically conditioned upon the approval of City Council. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY ves the Contract between the contract and addendum are Manager to provide n paragraph 27, Further, Council hereby directs staff to perform such due diligence as staff feels is appropriate regarding such purchase and to report such efforts to Council no later than forty-five l of the City of Aspen on Steven Skadron, Mayor duly appointed and acting City Clerk do certify that the foregoing is a adopted by the City Council of the City of Aspen, Linda Manning, City Clerk City of Aspen –City Offices Work Session City Council Presentation –July 30, 2018 Where we are… •Under contract for due diligence period for 517 E. Hopkins. •Restated purchase agreement –includes 517 E. Hopkins, 204 S. Galena and the Armory building renovation. •Extends due diligence period for 30 days for mutually executed Contract. •$2.5 mil in Escrow as earnest deposit. Fully refundable until August 16. City Offices Four Options •Option A –Two roof solution (Rio Grande parking lot and Armory) •Option B –517, Armory, Rio, ACRA •Option C –517/204, Armory, Rio •Option D –One roof Solution (Rio Grande parking lot site) Space Program Recap *Plus 2,700 sf ACRA space Option A –Two Roof Solution (current plan) City Offices Two Roof Solution Vicinity Map •Insert map Option A –Rio Grande Street Level Option A –Rio Grande Mid-Level Option A –Rio Grande Plaza Level Option A –Armory Garden Level Option A –Armory Main Level Option A –Armory Second Level Option A –Armory Third Level Option A -Cost Option A Pros •City staff in two buildings. (Armory and Rio Parking) •Increase size of Galena Plaza green space. •Lower cost than option B & C •Ability to provide geothermal mechanical system. •Powerhouse and Mt. Rescue Empty •Two locations for customer service. Cons •Greater construction impact on town. •Current lawsuits. •Uncertain construction start/finish date. •Two locations for customer service. Option B –517 E. Hopkins (w/out 204) Option B –517 Vicinity Map Insert Vicinity map Revise Current MAP Option B –517 Atrium Level Option B –517 Main Level Option B –517 Second Level Option B –Rio Grande & ACRA Option B –Cost Option B Pros •Construction start 2018, finish late 2021. •More certain costs •Armory campus •City Hall stays at historic location. •Powerhouse and Mt. Rescue empty. Cons •High percentage of space is below grade. •2,600 SF space shortfall. •Four roof solution. Armory, 517/204, Rio Grande, ACRA Option C –517 E. Hopkins with 204 Option C –517/204 Vicinity Map •Insert map Option C –517/204 Atrium Level Option C –517/204 Main Level Option C –517/204 Second Level •Insert Floor Plan Rio Grande and ACRA remain as is Option C –Cost Option C Pros •Construction start 2018, finish early 2021. •Armory campus •City Hall Stays at historic location. •Rio Grande and Mt. Rescue empty •Restaurant space stays •Three roof solution plus ACRA. 517/204, Armory, Rio Cons •High percentage of office space is below grade. •Three roof solution plus ACRA. 517/204, Armory, Rio Option D –One Roof Solution Option D –Perspective Option D –One Roof Vicinity Map •Insert map Option D –Ground Level •Programming slides –insert here Option D –Mid Level Option D –Plaza Level Option D –Cost Option D Pros •City staff in one buildings. •Increase size of Galena Plaza green space. •Lower cost than option B & C •Ability to provide geothermal mechanical system. •Powerhouse and Mt. Rescue Empty •Two locations for customer service. Cons •Greater construction impact on town. •Current lawsuits. •Uncertain construction start/finish date. •Two locations for customer service. DJA PRESENTATION 10-15 Minutes OPTION 2019 2020 2021 DELIVERY DATE NOTES A. Rio Parking lot, & Armory $46.1M $50.7M*$55.7M*?Entitled &Permit submitted B. 517, Armory, Rio,& ACRA $50.3M Late 2021 Entitlement amendment submitted. Design 50%DD. 2600 sf shortfall C. 517, 204, Armory,Rio, & ACRA as is $51.3M Early 2021 Entitlement amendment submitted. Design 50%DD. Restaurant stays D.One building at Rio site $48.0M 52.8M*$58.1M*?All inclusive Decision Point *Based on 10% annual escalation 517 Exterior •Insert map 517 Exterior •Insert map 517 Atrium Lower level •Insert map 517 Atrium Upper Level •Insert map 204 Community Room •Insert map 517 Main Level offices •Insert map 517 Atrium Main Level •Insert map Armory Exterior •Insert map