The Shakopee City Council Tuesday voted unanimously on a plan to finance a new, $8.5 million city hall adjacent to the Shakopee Police Department using internal transfers and loans. The project is not projected to require a tax increase.
The city's newly hired Finance Director Darin Nelson presented a proposal to fund the new city hall using approximately $5.9 million in internal transfers, and about $1.65 million in interfund loans.
The internal transfers will be drawn from five funds:
- $330,000 from an expired debt services fund.
- About $3.5 million from the Government Building Asset Internal Service Fund - $1.7 million of which comes in a lump sum, with the remainder to be paid over the course of 10 years.
- $1 million from 2015 General Fund excess reserves.
- $1 million from 2016 General Fund excess reserves.
- $500,000 from the sewer utility fund and the surface water fund.
The Government Building Asset Internal Service Fund is more commonly referred to as the building fund. All city properties pay into the building fund each year. Nelson said it currently has a balance of $5.7 million. The fund is used for major repairs, renovations and new buildings.
Nelson said the $1.65 million interfund loan would come from the Surface Water Utility Fund. The loan would be paid over 15 years at an interest rate of 1.25 percent annually, which Nelson said mirrors the city’s investment rate of return.
City Administrator Bill Reynolds said the new facility will allow the city to house all its personnel under one roof and streamline customer service. The City Council praised Nelson’s plan to finance the project without raising taxes. Mayor Bill Mars said undertaking the project without an extra charge to citizens “speaks volumes” to how the city is run.
Construction manager hired
After approving a financing plan, the City Council unanimously moved to hire Cost, Planning & Management Inc. (CMPI) of Eagan to serve as construction manager for the project.
“We are making a recommendation that we hire a construction manager for the oversight of the city hall project,” Reynolds told the council.
Reynolds said the city contacted six firms about construction management and that four firms submitted quotes for their services. He said final plans for city hall are due April 2.
“I will say that I’m excited about CPMI being part of the team,” Reynolds said. “I’m really interested in the way they communicate the project in very easy to understand terms.”
He said CPMI also offered the lowest price. The city will pay CPMI $295,928 to serve as construction manager.
CPMI Vice President Paul Oberhaus said the firm has focused on municipal work for 45 years. He told council 90 percent of its customers are municipalities, and 80 percent are repeat customers. Cindy Dillahunty, who will serve as project manager for CPMI, said she will be on-site every day planning and facilitating the project.
Reynolds said the city contacted six firms about construction management and that four firms submitted quotes for their services.