04/21/2008 Meeting Minutes - Laserfiche WebLink

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Regular Council Meeting 4-21-08 Page 14 were building the police station for our police department, not for Progressive even though obviously they impact our bottom line, but this is something that we plan. Years ago, we talked about building a municipal complex. This is certainly not something that just popped up recently. Council President Buckholtz advised Mr. Marquardt that his comments are valued. The other thing he garnered from a couple of people he has talked to is that the cost of materials is expected to go up greatly. Inflation is starting to hit China and all of the pieces and parts that go into it. He does not know the construction trades, but he would have to imagine that the construction people might be getting a little hungry for work about the time we are going out with this bid. It is probably going to get more expensive if we do it later. Dr. Parker asked for clarification concerning the differential between what the anticipated cost is versus what the cost is. What are we looking at? Mr. Brett stated that he has always used a figure of $2,040,000.00. That was just an example. Dr. Parker asked what it is actually. Mr. Brett stated that he has not heard that final decisions have been made as to the total configuration of this. Dr. Parker added that it seemed like when it was discussed in Finance, the number of $3 million was brought up. Mr. Brett stated that was if you took everything on that particular list. Dr. Parker asked if we leave everything in that is on the list are we actually looking at a$3 million differential? Council President Buckholtz stated that is the worst case scenario. Dr. Parker asked, how do we come up with the additional $1 million if we end up doing the whole thing? Mr. Brett replied that would be a decision that Council would make as far as the trade- offs on the building and deciding at that time whether or not to accept the bids. Once we have our numbers in, we could run more specific numbers. Mr. Brett is working with $2 million. If a number of the things that you put on that list are eliminated or if the bid for the overall package comes in better than you expect, it will be closer to that $2 million. If things don't work out that way, it will be more than the numbers. Council President Buckholtz asked if we are preparing for a window somewhere between $2-3 million. Mr. Brett replied, no, he is preparing for $2,040,000.00. That was put into the equation just as a round number for discussion purposes. Mr. Mai-rie asked if it is a two year payout. Mr. Brett said it is. The construction costs are spread out over two years. You would make interest on the portion that you have not spent. There are IRS considerations for arbitrage. Mr. Brett does not think an arbitrage situation would evolve. You would essentially offset the interest that you are paying on the notes with interest that you axe receiving on the money you have not spent. We have been covering soft costs to this date with interest made off of the unspent balance. Those investments are not returning what they did at one point. Mr. Marrie stated that Mr. Marquardt has a strong point. There is no doubt about that. If you want to, wait for it. Personally, Mr. Marrie thinks that we have waited long enough and have no idea what next year is going to be, whether it be Progressive or cost of material and cost of construction. He is not an architect or a construction company, but he cannot see it doing anything but going up next year as far as costs. If you pick up the business section of the paper, everything is going up sky high material-wise. You mention China, that is one of the reasons, they are buying everything. People cannot even get concrete for big construction jobs like this one. Mr. Marrie sees Mr. Marquardt's point, but he does not agree with it wholeheartedly. It is a strong point.