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Wednesday, February 06, 2013

City Council to Authorize Use of Funds to Complete Work on City Hall

• Final Project Cost of $ 6.2 Million Seen as an Investment that Will Serve Community


The Malibu City Council at its meeting next week is poised to agree to the final financials for City Hall. The city staff recommendation calls for accepting the work performed by Fidelity and Deposit Company of Maryland for renovating the one-time church into Malibu City Hall as complete and authorize the public works director to submit for recordation a notice of completion for the city-owned building.
The staff recommendation also calls for authorizing the use of surplus funds for City Hall pending improvements and deferred maintenance items.
“If recommended action is approved, the city’s next debt service payment for City Hall will be reduced by $384,751,” wrote Assistant City Manager Reva Feldman, in a staff report.  
The city acquired the building in 2009 at a price of $15 million and proceeded to use what are called certificates of participation or COPs to purchase the building and make improvements.
Feldman, in her staff report, indicated during the course of construction many deferred maintenance items with the building were discovered that were unknown at the time of the approval of the construction contract.
The city took occupancy in May 2011, with additional expenditures necessary in order for the building to operate as a City Hall, according to the assistant city manager.
The final project cost is $6.2 million that includes $580,000 in unanticipated costs. There is another $170,000 of additional items that need to be completed.
Of the $7.4 million appropriated, the amount spent is $6.2 million leaving a balance of $1.2 million.
Feldman is recommending that $384,751 be applied to debt service for City Hall; while another $634,698 is to be kept in the undesignated general fund; $170,214 be used to complete additional items of repair; keeping another $18,000 in the undesignated general fund.
The price tag for ongoing maintenance of the complex is approximately                                                      $50,000 per year for custodial, $3,000 a year for elevator maintenance, $5,000 a year for generator maintenance and propane, $25,000 a year for HVAC maintenance, $6,000 a year for landscaping maintenance and $5,000 a year for onsite wastewater maintenance, according to Feldman’s report.                                  
The city authorized the issuance of $22 million of COPs that provided $15 million for the acquisition.
The payment for the acquisition and the combined public and private uses of the building, the city deposited funds into escrow, including $1.7 million from the City Hall designated reserve. The city received a reimbursement of $15 million when the COPs were sold and the $1.7 million from the City Hall Designated Reserve was deposited into a construction fund with Deutsche Bank, the city’s trustee, for improvement to the building.
At the same time the city entered into a contract with LPA, Inc on August 2009 for the design of the improvements of City Hall and appropriated general funds for the design of the project. The total general fund appropriation for the agreement with LPA, Inc including a subsequent amendment was $640.415.
By Feb. 2010, the city authorized the issuance of $7 million of COPs that provided $5 million in proceeds for improvements to City Hall. The $5 million was deposited into the construction fund with the Deutsche Bank, the trustee for improvements to the building bringing the total of the construction fund to $6.7 million when combined with the General Fund contribution of $640,415, the total amount available for the improvement project was  $7.4 million.
Other costs included furniture and fixtures for meeting rooms, the purchase of additional computer equipment and additional equipment for the broadcast function of the theater.
“These expenditures were appropriately budgeted but are being attributed to the improvement project. The total of items completed is $580,000 bringing the final project cost to $6.2 million,” Feldman wrote in her report.

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