Buidling Proposal 7-1-2013 SALINA-SALINE COUNTY
HEALTH DEPARTMENT
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BUILDING PROPOSAL
City of Salina
July 1, 2013
Presented by: Jason Gage, City Manager
on behalf of the Salina City Commission
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Preface
The City of Saline and Saline County have worked together in the same building for decades.
This has resulted in numerous interlocal agreements for shared services ranging from
community health to emergency management. These shared service agreements have
undoubtedly resulted in benefit to Saline County residents and business people. The city is
proud of this relationship and has the most sincere hope that our joint arrangements continue
into the long-term future.
This Health Department building proposal is provided by the city manager on behalf of and
with the full consensus of the Salina City Commission. It is our hope that you will review it
thoroughly, ask any question that you may have regarding its intended outcome and respond
back to us expeditiously.
History
Kansas state law(K.S.A. 65-201) provides that counties shall inherently act as the board of
health for their respective county. In doing so, they shall either appoint a licensed physician
as health officer, or for counties less than 100,000 in population, a qualified health program
administrator. K.S.A. 65-205 to 210 provides for the creation of a city-county joint board of
health.
On June 28, 1955 Joint Resolution No. 1576 formed the Salina-Saline County Joint Board of
Health (herein referred to as "Health Department". This entity was further supported by
subsequent resolutions. City Resolution No. 04-6132 and County Resolution No. 04-1843
most recently reconstituted this governmental partnership. The result of this local
partnership is what will be referred to as a "triple governance" model. This local model
provides for overall governance by the joint board of health comprised of doctor, dentist,
registered nurse, veterinarian and three at-large citizens. The joint board's primary
responsibilities are:
1) determining and defining policies for the promotion of public health and sanitation;
2) appointment of the administrator/health officer'
3) adoption of regulation and bylaws to govern programs and procedures; and
4) filing with the governing bodies of the county and city a report of activities, statement
of receipts and expenditures, and an annual budget.
The city and county governing bodies are responsible for approving the joint board of
health's annual budget and appropriating funds on an equal basis. For the animal control
function, the funding allocation is city— 85% and county— 15%.
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Building Issue
The current home of the Health Department is 236-240 N. Seventh Street. Purchased by
Saline County in 1992, this building is approximately 100 years old today. Over year ago,
the Health Department building roof framework was inspected and determined by the City of
Salina Building Official to be a "dangerous structure" under Section 302 of the 1997
Uniform Code for the Abatement of Dangerous Buildings. This caused the need to vacate
and repair the building and prompted concerns of the building's ability to withstand high
wind and heavy snow loads. The roof was subsequently determined by a structural engineer
specializing in buildings to have significant truss and mansard structural deficiencies.
Further research resulted in a repair cost estimate, including engineering and construction, up
to S1,025,000.
The remedy of this issue is complicated due to a request by Saline County in 1993 for the
City to be responsible for the structural maintenance of the building. Since Saline County
paid for the building, the city agreed through a Memorandum of Understanding (MOU)to be
responsible for various aspects of structural maintenance, mechanical and electrical systems
and the parking lot. In addition, the city agreed to provide insurance on the building. The
decision to take on this responsibility was premised on a prior architectural evaluation of the
building as contracted for by Saline County. This evaluation determined that all structural
aspects and other systems were in good working order. A recent review of the original
building evaluation by the city has resulted in concerns that the scope of the building
inspection did not include a thorough evaluation of the building's structural framework as
originally thought. A further complicating factor is that the more recent roof inspection by
the City's contracted structural engineer has determined that certain structural modifications
were made prior to Saline County taking ownership of the building and that the severe
deterioration of the roof's structural members also occurred prior to that time. The city does
not see our maintenance role to include remedying serious structural deficiencies of the roof
that were in place prior to Saline County's ownership and were not adequately disclosed to
us at the time the maintenance tasks were agreed upon.
As a result, communication between city and county officials to date have not resulted in an
agreed upon approach for remedying the building problem within a timely manner, though
both parties have aggressively negotiated the issue. This has resulted in the temporary
relocation of Health Department operations to two different locations for the past year. The
city and county have generally discussed many options to remedy the issue. A summary of
those given the most attention include: repair the existing building, possibly with remodel
and expansion; purchase a different building, with remodel; and build a new building on the
existing site, with demolition of existing building.
Factors Considered
In preparing this proposal, the city has taken into consideration the following factors:
o the current and long-term functional needs of the Health Department
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o life-cycle costs of the various building options
• Building repair, renovation and construction costs
• Annual operational costs
o funding availability from all governmental entities
o the current construction market and financing environment
o the time to completion and impact of remaining in temporary facilities
o the triple governance structure and existing impasse to decision-making
o the long-term commitment of all governmental entities to the provision of effective
community health services
Based on the factors considered, the city does not believe that investing in the current
building is the most cost-effective option. This option appears to require an investment of
approximately $1 million just to repair the roof and provide general restoration in an
approximately 100-year old building. Most persons believe that amount would significantly
exceed the value of the existing building, possibly by as much as two times. In addition, this
option would not appear to meet the current or long-term space and service needs of the
Health Department, prompting the need to again look at space, layout and possibly relocation
needs over the next few years. Certainly, this presumes no significant reduction in Health
Department services in future years.
Another option reviewed by both parties includes the possible purchase of a different
community building that can be renovated to meet the Health Department's functional needs.
Most agree there may be an available building in the community that can meet these needs.
However, none of the buildings reviewed to date meet all the factors considered. In addition,
a full and complete location, site, and architectural analysis, and related cost estimation
would still need to be completed for each location. This ensures a professional, apples-to-
apples comparison rather than relying on anecdotal opinions as to functional compatibility
and cost. This level of review has not yet been completed and will take many additional
weeks to complete. In addition, this alternative would also require agreement by all three
governmental entities along each step of the review and decision-making process. Each of
these approaches presumes a preserved funding partnership among the entities.
Building Proposal — general
The City proposes that a building with the following characteristics be constructed in place of
the existing facility. These characteristics are concept at this point and can certainly be
refined in the design process to ensure that budget goals and utilization needs are met.
o New, 2-story building on existing site
o Request that Saline County demolish the existing 100-year old building
o Estimated square feet: 18,000 to 20,000 with unfinished basement for current
storage and future growth
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o Project management by the City in coordination with Joint Board of Health officials
o City ownership and lease of the building to the Joint Board of Health only until the
bonds are paid in full. Then, the building is to be transferred to the Joint Board of
Health, fully recognizing Saline County's asset investment.
o Formalize the status of the Joint Board of Health through an intergovernmental
agreement between the city and county, allowing them to lease and eventually own
the building
o Formalize this conceptual proposal through an agreement approved by the city and
county governing bodies
o Once agreement occurs, immediately commence design services of new building and
coordinated demolition plan of existing building
o Estimated timeline:
• Design of new building completed by year-end 2013
• Demolition of existing building completed by year end 2013
• Commencement of construction in mid-March, 2014
• New building completion and move-in by year-end 2014 or early spring 2015
Building Proposal - financial
o Estimated design and construction cost: $3.7 to $3.9 million
o Cash allocation of$1.8 million from three governmental entities as follows:
• Saline County: $500,000 (in reserve)
• Joint Board of Health: $800,000 (in reserve)
• City of Salina: $500,000 (in reserve)
o Financing of$1.9 to 52.1 million gap by the city (GO Bonds @ 3% interest—20
years)
o Marginal cost covered by Joint Health Board flexible lease payment of$130,000 to
$150,000 per year(considered available based on historical trend line). The concept
of a flexible lease payment would require a minimum payment of one-half the actual
lease amount, with the remaining balance to be paid only if the Joint Health Board's
year-end carryover fund balance target is preserved. The presumption is that the Joint
Health Board may not be able to make a full lease payment every year due to
fluctuations in their grant revenue, but that this capacity is available when taking into
consideration average revenues/expenditures over time.
o Joint Health Board flexible lease payment participation requires the following
financial management strategies to be adopted by the governmental entities:
• Preservation of existing level of City/County operational funding with annual
incremental increases similar to those historically applied
• Establishment and preservation of a 20% carryover fund balance target for
Joint Health Board finances to ensure long-term financial viability
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• Any excess annual revenue (over 20% fund balance) is to be swept into a
restricted Joint Health Board account to ensure payment of future lease
payments and coverage of partial, prior year lease payments.
Taxpayer Benefits
The city believes that our proposal to re-build a new structure on the current site will provide
the following taxpayer benefits to those in Saline County, as follows:
o Lowest life-cycle cost compared to all options currently available due to: age of
building, elimination of further expansion needs, low interest rates, energy efficiency
and reduced maintenance
o Provides longest building life
o Provides for short-term and long-term functional needs of the Health Department
o Preserves core community location
o Allows for space arrangement to match functional needs and improve customer
service
o No tax increase is necessary
Saline County Benefits
The city also believes that our proposal would provide the following benefits directly to
Saline County, as follows:
o Eliminates the need for debt issuance by Saline County
o No tax increase is needed
o Capital funding from Saline County is limited to that already reserved for the building
($500,000). This means that Saline County has no financial risk if the cost of the
building is higher than expected or for future bond payments.
o No lost County staff time for project management
o No increase in annual funding allocation for the building cost repayment
o Future maintenance concerns for a 100-year old building are eliminated
o No need to consider future building additions or relocations for at least 30 years
o All building-related goals of both City and County are met
o Preserves and formalizes valuable City/County partnership for community health
Consideration of Termination
At the City Commission's regular meeting on Monday, July 1st they will be reviewing
Resolution No. 04-6132, the joint resolution re-constituting the Joint City-County Board of
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Health. This review may include any and all provisions, including Section 6 "Termination".
Staff is recommending this review due simply to the inability of both governing bodies to
agree on key aspects of the building issue, which has highlighted a key weakness of the
current triple governance structure. A formal notice is required by July 1st for termination to
be effective at year-end. Authorizing the notice now is necessary to preserve the City's right
of termination for calendar year 2014. If approval of a notice of termination should occur,
both governing bodies still have an opportunity to come to terms and reconstitute the existing
joint relationship prior to year-end. Termination of the joint agreement is not the preference
of the city.
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STATEMENT OF PARTNERSHIP
The City both recognizes and respects the role of Saline County as the
statutorily recognized provider.of community health services within
the county and the owner of the existing building.
The City recognizes the difficulty of both governing bodies in trying
to find resolution to a very difficult community problem that is both
time sensitive and allows for more than one successful approach.
The City is very appreciative of Saline County's efforts to preserve
our partnership and find community consensus on this issue over the
past few months.
The City hopes that Saline County recognizes the City's most sincere
attempt to formalize a proposal for you that limits the county's long-
term financial risk while also meeting all of the Salina-Saline County
Health Department's functional and customer service needs for the
long-term benefit and preservation of county-wide public health
services.
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THANK YOU for your partnership and for this opportunity!!!
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