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Bothell City Council discusses new City Hall, taking public comment Tuesday
One of the biggest expenditures the city of Bothell will ever make is for a new City Hall in downtown. In 2011, the cost estimate was more than $42 million. The city has been working on the project for six years but delays have taken the project out of the spotlight during the past two years.
City staff brought the issue back for public discussion on a defining part of the project during the Nov. 12 council meeting.
“Due to the unavoidable delay of the Bothell Crossroads project, which is currently under construction, as well as the slow economic recovery from the recession, the construction of the City Hall has proceeded in a more conservative phase approach than originally planned,” said Bothell City Manager Bob Stowe during the Nov. 12 meeting.
The Council will again address the issue of approving a Predevelopment Agreement amendment with the developer on Tuesday and public comment will once again be sought.
"This really cements the relationship between the city and the developer," said Bothell City Councilman Andy Rheaume.
Council discussed the proposed Predevelopment Agreement, which would cost the city $835,646, with City Investors Development, Inc., also known as Vulcan Real Estate.
"We have to refresh the plans and then make a decision on whether to go forward," said Stowe.
The agreement would complete the design proposal for the new City Hall, allowing Vulcan to present the city with an updated guaranteed maximum price for the project, which is expected to have increased since 2011.
Vulcan's guaranteed maximum price is expected to curb costs.
“We know that in a lot of our public contracts that change order costs have been significant,” said Councilman Bill Evans. “In this particular bidding climate, people are bidding it low to get the job and then making up those costs as they go through the project. I think that the fact that there is a guaranteed maximum price is a way to curb that. We may pay a little bit more in finance charges but we certainly save overall on the project.”
The city has already completed the first part of the project by acquiring the land, relocating utilities and demolishing the buildings on the property. The proposed building would be located on the same block as the current City Hall building.
The Predevelopment Agreement is the second part of the plan, taking the building's design from 70 percent completion to 100 percent and bringing the design into compliance with recent updates to Washington state building and energy codes. Then the city could acquire the building permits.
The facility's financing is planned as a lease development project using a nonprofit public benefit corporation, City Investors LLC, to issue tax-exempt bonds. Vulcan would build the new City Hall and corresponding parking garage. The city would then lease the building from the non-profit for 30 years at a projected $3 million a year.
But many people, including Councilwoman-elect Tris Samberg, took issue with the cost.
“The city has never generated more than two consecutive years of REET (Real Estate Excise Tax) revenue greater than $3 million a year,” said Samberg during the meeting. “How does the bill get paid in the years when the city does not have enough REET revenue? … Have you asked the voters if they want $75 million of our tax dollars spent on a new crystal palace? A financial decision of this magnitude should be decided on by the voters, not council.”
Stowe said the last time the issue of a new City Hall was placed on the ballot was in 2002 as part of a facilities measure with the Northshore School District that failed.
Stowe responded to the inquiry of funding through the REET when directly asked by Mayor Mark Lamb.
“We do project the ability to continue to raise our REET out to 2030, which hits more than $7 million," said Stowe. "We do recognize that in the beginning of any sort of City Hall lease debt … the bulk of the REET resources could be dedicated to the City Hall development."
Bothell's Director of Finance Tami Schackman said that the city is on track to receive $2.5 million in REET for 2013 and that is above the original projections. Those same projections show Bothell going back over $3 million during the next few years.
But waiting to go forward with the project could cost taxpayers, according to city officials.
With interest rates expected to go up, the city estimates that the project could cost the city $24 million more if built in 2017 and $44 million more in 2019.
The city has also looked at ways to bring the cost of the project down. One of the ideas would be to eliminate one or two levels of the three-level parking garage, which would be built under the new City Hall. Another idea is to eliminate a floor from the four-floor City Hall building. That fourth floor could be left empty after the building is constructed to save on costs but in place for any future city expansion.
“It is difficult to imagine a scenario in which additional annexation areas would not be served by the city, which would require additional office space during the lifespan of the City Hall,” said Stowe.
Councilman Patrick Ewing, who asked why the city would even need the fourth floor, took exception to assuming there would be annexation during the life of the building, noting that annexation votes have failed.
The few people who showed up to the meeting were surprised by the agenda item.
“I want to build a new City Hall as much as any of you do but I want to point out to you that the last time this topic was on the agenda for discussion with the public was in June 2011,” said Bothell resident Dick Paylor during public comment.
But it wasn't just the few citizens who regularly attend council meetings. Rheaume was taken aback by the apparent haste at which the city brought the issue back, stating that it had not been on the projected agenda items list.
"It has been two years since the council has talked about this," said Rheaume. "This is a $50 million decision. It was surprising to me to have people who are for the project asking for more time and more public input."
City staff disputed that issue.
"It was on there for a week or a week-and-a-half in advance," said Stowe. "We never had any intention of making any decisions on (Nov. 12)."
Stowe confirmed that the item was added to the projected agenda on Nov. 1.
"The discussion tonight was never on the projected agenda," said Paylor. "So unless you had been watching the agenda every week you would not even know that this is being talked about tonight, yet it is probably the biggest financial decision the city has ever made. I am here to ask you to take a time out and step back and engage the public on where you’re at."
Three of the four speakers at the Nov. 12 meeting expressed concern for the timing at which the agenda item was brought back to Council for approval.
City officials decided to hold the vote on the Predevelopment Agreement and take more public comment on Tuesday.
The existing City Hall was built in 1939. The city utilizes City Hall and the Dawson Buildings for day-to-day operations. Both buildings have drawbacks. Lamb asked Stowe about the costs of maintaining those buildings.
“The last roof repair and HVAC system was close to $260,000-300,000 of expense that will likely repeat itself for the next decade,” said Stowe.
If the council approves the Predevelopment Agreement, it will still have to take a final vote to approve the construction of the new City Hall building in May 2014.