HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/26/2019 - RESOLUTION 2019-039 APPROVING A CONSTRUCTION AND PAgenda Item 1
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AGENDA ITEM SUMMARY March 26, 2019
City Council
STAFF
Carol Webb, Deputy Directory, Utilities
Jill Oropeza, Watershed Program Manager
Judy Schmidt, Legal
SUBJECT
Resolution 2019-039 Approving a Construction and Purchase Agreement for Condominium Units Consisting of
Two Floors of a New Water Laboratory Building to be Constructed by RMI2 Properties, LLC at the Innosphere
Site on East Vine Drive.
EXECUTIVE SUMMARY
The purpose of this item is to request approval of a Construction and Purchase Agreement (“C&P Agreement”)
pursuant to which the City’s Water and Wastewater Utilities will acquire condominium units consisting of two
floors containing approximately 17,600 gross square feet (the “City Units”) of a new water laboratory building
containing approximately 26,764 gross square feet (the “new building”) to be constructed by RMI2 Properties,
LLC (“RMI2” or “Developer”) at the RMI2 site located at 320 East Vine Drive (“Innosphere”).
Utilities currently operates two separate laboratories which are in separate buildings and which have not been
significantly renovated since the 1980s. Costs associated with construction and acquisition of the new City
Units are currently estimated based on conceptual plans at approximately $11.5 million, plus equipment for the
City Units and decommissioning cost for a total of $13.5 million, to be split evenly between the Water Fund and
the Wastewater Fund.
The proposal for the New Building in partnership with RMI2 stems from the completion of a laboratory master
plan funded in the 2017/2018 Budgeting for Outcomes (“BFO”) process. Construction of a new facility is
currently included in the Utilities Capital Improvement Plan (“CIP”). Funding for preliminary design of the facility
is included in the 2019/2020 City Council adopted budget.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
The proposal for a new facility in partnership with RMI2 stems from the completion of a laboratory master plan
funded in the 2017/2018 Budgeting for Outcomes (BFO) process.
The master plan focused on evaluation of lab replacement alternatives to meet the City’s objectives for a high-
performance laboratory. Those objectives include:
1. Laboratory Performance Standards. Meeting or exceeding recognized national and international
standards for laboratories, including the ability to control laboratory conditions to prevent cross-
contamination and to meet requirements for lab work flows and efficient lab operations.
2. Energy Efficiency. Meeting or exceeding LEED Gold Standards with a focus on smart lab energy design.
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3. Space Needs. Meeting the Water Quality Services Division space needs for at least the next 20 years
while providing a space that improves the occupant and customer experience.
4. Customer Service. Provide an opportunity for public and private partners to interact and collaborate with
lab staff and to educate customers on the services provided by the Water Quality Services Division.
A detailed evaluation of replacement alternatives determined that the construction of a laboratory in
partnership with RMI2 meets the City’s objectives and provides the highest benefit at the lowest cost to the
City.
Modeled after the public private partnership used to construct the Firehouse Alley parking garage, the terms of
the construction and purchase agreement offer the financial benefits of cost-sharing with RMI2 while
minimizing risk to the City in the following ways:
• City involvement during design and construction of the New Building;
• a competitive bid process for subcontracted work;
• an Approval Period during which the City may terminate the Agreement if certain conditions are not met;
and,
• a condominium ownership model for purchasing the City’s Units (two floors) from RMI2 upon project
completion, which provides full ownership by the City of its own space, independent from RMI2space,
avoiding responsibility and liability for non-City space and limiting responsibility for expenses of
maintaining building structural and mechanical elements, common areas (like entrance lobby, stairways,
elevator) and exterior improvements (like walkways, landscaping, and parking areas) to a proportionate
share.
Project Overview
City staff proposes to collaborate with RMI2 to construct a 26,763 gross square foot, three-story laboratory
building on a lot adjacent to the existing Innosphere building at the Innosphere site at 320 E. Vine. The new
building will house up to 23 employees of the Utilities Water Quality Lab, Pollution Control Lab and the
Watershed Program on the first two floors, and RMI2 will own and lease out lab and office space on the third
floor. The proposed facility meets City’s standards for a best in class laboratory space.
As the project/building owner, RMI2 will manage the project through development review, design, and
construction phases. The City will have representation on the project team for the duration of the project to
ensure it meets City standards and expectations for delivery. Upon completion, the new building will be divided
into three condominium units (one for each floor). Upon completion of construction, the City will take
ownership of its units and pay RMI2 a total purchase price for the City units (floors one and two) equal to two
thirds (2/3) of the agreed-upon construction costs for new building and the City’s costs to equip and finish the
City units plus a $400,000 initial payment (paid within 70 days after execution of the Agreement).The City will
also have the option to purchase the third condominium unit (third floor) beginning 8 years after closing.
Summary of Agreement Terms
A summary of the key terms of the Construction and Purchase (C&P) Agreement is provided below. The
complete agreement is attached to Resolution 2019-039 as Exhibit A.
• Agreement Structure. Construction and Purchase Agreement to jointly develop a combined laboratory
building and real property at 308 E. Vine Drive. City’s pro rata share is equal to 2/3 for construction of the
new building facilities and a $400,000 initial payment representing land costs for the 2/3 interest in the
developed lot on which it will be built.
• Facility Design and Construction
o Three floors and approximately 26,700 gross square feet of wet lab and office space. City units include
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approximately 17,600 gross square feet on first two floors.
o Cost split is 2/3 City and 1/3 RMI2 for land, core, and shell of building built to City standards.
o City pays 100% of “exclusive costs” to finish its floors (e.g. higher end tenant finishes on City floors).
Project costs are fixed unless the City has approved a change order.
o Utilization of RMI2’s design team and construction manager/general contractor with City
representatives on the project team. All subcontracted work and no less than 75% of total project costs
will be competitively bid.
o RMI2 will begin construction following City approval of final plans, itemized project costs, and City
Council appropriation of funding based on approved guaranteed maximum price.
o Conformance to all City design and construction standards and participation in the City’s IDAP
(Integrated Design Assistance Program) to support an energy efficient design.
• Financing
o City pays RMI2 $400,000 within 70 days after signature of the C&P Agreement to be applied to
project costs. If the Agreement is terminated, this payment will be refunded, less real costs
attributable to the City’s portion of the project design costs. (Any failure to correct an identified title
issue and provide specified parking within the first 60 days after signature of the Agreement also
permits termination, in which case the City’s initial $400,000 payment will not have yet been made).
o RMI2 funds all other costs of design, including City’s pro rata share of project costs and City exclusive
costs, except for Owner’s rep fees.
o The City pays the balance of the purchase price (based on 2/3 share of cost to construct the building
and all City exclusive costs) upon issuance of a Certificate of Occupancy and recording of
condominium map and declaration.
• Parking
o RMI2 to pursue a written agreement with adjacent landowner to the east for development of at least 25
parking spaces to meet the City’s employee parking needs. Cost share proposal is City 1/3 and RMI2
2/3 for the cost of acquiring and improving the parking lot.
o Developer must use its best efforts to obtain a written agreement from the landowner and to come to
an agreement with the City on contribution for costs within 60 days after signature of the Agreement
(before the initial payment of $400,000 is made) or the C&P Agreement may be terminated.
• Condominium Association. The property and New Building will be condominiumized upon completion of
construction into three (3) separate units. Ownership will be 2/3 City (with first two floors) and 1/3 RMI2.
The Association Board of Directors will reflect the City’s 2/3 ownership interest, so that in most
circumstances, the City will have the controlling voting interest in the Association and on the Association
Board.
• Post-Closing Management. A third party will provide property management services for common
elements of the New Building via the Association. The City anticipates that it utilize its facilities
maintenance staff for its two floors. The City may also elect to utilize front office staff reception services
in the main Innosphere building by separate agreement. All utilities to be metered separately.
• Purchase Option. City and RMI2 will enter into an Option to Purchase Agreement that will allow the City
to purchase the top floor, in its discretion, after 8 years at fair market value based on appraisal.
Project Timeline and Genesis of Partnership
Prior to initial discussions around a potential partnership, the City and RMI2 were on separate paths for
addressing their respective needs for improved and additional laboratory spaces. The following timeline
chronicles the two planning efforts and their ultimate merger into a proposal to construct a combined lab facility
in partnership that meets the operational and space needs of both parties.
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Innosphere Phase I
Innosphere constructed their current headquarters building at 320 E. Vine in 2010 (Innosphere Phase I)
utilizing contracts with Dohn Construction, DNA Design+Architecture, and CPI Group (for project
management). At the time of the Phase I development, Innosphere envisioned eventually developing the
adjacent property to the west as an office and wet lab space (Innosphere Phase 2) and thus included this
parcel in their overall site development plans.
Innosphere Phase 2
In late 2017, Innosphere, or RMI2, began pursuing Phase 2 of the development, with a proposal to construct a
single-story wet lab space to meet the growing industry demand in Northern Colorado. RMI2 contracted with
the design and construction contractors utilized in Phase I. By utilizing the same general contractor and design
team that constructed the existing building, RMI2 was able to leverage their experience and insights for up-to-
date costs on systems and materials as well as current construction practices.
City of Fort Collins Lab Master Planning
In early 2018, the City’s Labs Master Planning process was nearing completion and indicated that significant
renovation or replacement of the City’s laboratory facilities was needed. A wide range of alternatives for
meeting the City’s lab needs was evaluated, and it was determined that the construction of a new combined
laboratory at the Drake Water Reclamation Facility (DWRF) provided the highest cost-benefit to the City based
on the considered alternatives.
City-RMI2 Lab Alternative Evaluation
In April 2018, these two previously separate planning efforts by the City and RMI2 intersected through
conversation with the City’s Office of Economic Health. Early discussions between the City and RMI2 identified
a shared goal of meeting the need for wet lab space, and a feasibility study determined that the site would
support the critical needs of both parties.
Conceptual-level cost estimates for the proposed three-story building were developed by RMI2’s general
contractor and were used by the City in a final benefit-cost comparison of the Innosphere Lab with the
alternative originally selected in the Master Plan, a combined Lab at DWRF. It was determined that
constructing a Lab at Innosphere offered a similarly high level of benefit at a significant relative cost savings to
the City.
Cost-Refinement & Agreement Terms
The City and RMI2 worked with Dohn Construction in September 2018 to review conceptual building plans and
update costs associated with meeting the City design standards. The City also developed separate cost
estimates for “exclusive costs” that only apply to the design and finish of the City’s two units and
decommissioning of the existing facilities. The two parties then negotiated the terms of agreement for this
partnership, which have been incorporated into the C&P and Option to Purchase Agreements.
Council Input: Finance Committee / Work Session
City staff presented the proposed project to Council Finance Committee on January 28, 2019 (Attachment 3)
and at a Council Work Session on February 26, 2019. Staff provided additional information in two follow-up
memos (Attachments 1 and 2) to address specific questions about the lab master plan and the proposed
Agreement with RMI2.
Competitive Bid Process
As indicated above, RMI2 contracted with their design and construction team to construct their new lab
building prior to engaging in discussions of a partnership with the City.
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Because the opportunity for the City to partner with RMI2 materialized after RMI2 was already engaged in the
development process, the construction of a new shared facility would utilize the currently contracted team for
construction and design. The City will have significant representation throughout the design and construction
process to ensure the finished building meets the City’s design standards as well as space and operational
needs.
Under this proposed structure, all subcontracted work and materials will be competitively bid. This
arrangement allows the City to realize the cost-efficiencies of utilizing RMI2’s experienced design-build lead
team while assuring a transparent and cost-competitive process.
Risk Analysis
Financial as well as non-monetary risks were considered throughout the project development and fall into three
main categories: 1) Master Plan / Alternatives Evaluation, 2) City-RMI2 Partnership, and 3) Facility (design,
construction, and maintenance).
Master Plan - Condition Assessment
The facility condition assessments identified risks to operations and worker safety that are related to current
facility condition, compliance with building codes, outdated electrical/mechanical systems, hazardous building
materials, and water intrusion issues. Findings indicated that to serve as compliance labs for the next 30 years,
each facility would require significant upgrades or replacement to meet minimum requirements.
Master Plan Alternatives Evaluation
In the Alternatives Evaluation process, risks were defined as factors that limit the City’s ability to meet best in
class standards for laboratories. The alternatives were compared by using benefit criteria that minimize the
associated risk. Applying the benefit criteria results in an alternative with the highest benefit and the lowest
risk. The criteria were weighted based on importance or impact and then applied to each alternative a relative
comparison of the different alternatives.
Type of Risk Operational Considerations
Facility location Does the building location or sample route jeopardize compliance with sample
holding times, create excessive travel requirements, create contamination issues,
or present worker safety concerns?
State Laboratory
Certification
Does the site or building limit the ability to maintain critical functions necessary for
State Certification, such as providing safe and adequate chemical storage,
electrical/technology infrastructure to support instrumentation and software
upgrades and a controlled, temperature-stable work environment?
Customer Service Does the lab alternative limit critical compliance or process optimization support
for the Water Treatment Facility or Water Reclamation Facilities? And does lab
configuration (satellite or consolidated) limit organizational efficiencies that impact
the overall level of service provided to customers?
Site Constraints Does the building site limit the configuration of the building in a way that limits
efficient workflows or prevents future expansion? Are there site considerations
(floodplain, sensitive species, existing utilities) that would restrict ability to
construct on the site?
The monetary risk of losing our State Certifications can be estimated as the added cost of fully outsourcing
analytical services. This alternative is further detailed in the 2017 Labs Master Plan and estimated to cost
$3.4M, which is approximately $440,000 more than current $2.9M Annual Operating budget.
City-RMI2 Partnership and Facility
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Staff identified risks inherent to the partnership with RMI2, including the design, construction, and ongoing
management of a shared facility. Those risks and the ways in which those identified risks are mitigated or
minimized are as follows:
• Competitive Bid Process. C&P Agreement terms require that all subcontracted work is competitively bid
with City representation in the subcontractor selection process.
• Compliance with City Design Standards. City will have representation on the design and construction
teams to ensure that design standards for City buildings are met.
• Budget and Cost Control
o The C&P Agreement includes an Approval Period, during which the City will approve the total project
costs prior to beginning construction. The City may terminate the Agreement during the Approval
Period under certain conditions.
o Agreement terms require that the City approves all change orders.
• Ownership Model. The original Lease-to-Purchase option was replaced with a direct purchase option
through a condominium structure to ensure ownership at the time of the City’s investment.
• Condominium Association. The Association will be managed by a third party and the City will have 2/3
representation on the Association Board. City will negotiate a management agreement prior to closing of
the Approval Period.
• Parking. As discussed above, if RMI2 is unable to negotiate an arrangement for additional parking, the
City’s initial $400,000 payment will be refunded and the City may terminate the agreement.
Development Review
The Phase 2 building was approved during the first Planned Development Process. At that time, RMI2 was
required to add a natural features buffer zone, a natural area fence and improve a lot across Vine Drive for
stormwater purposes, which has since been sold to the City. No further reductions or impacts will occur in the
Poudre River buffer zone with Phase 2 development.
Although not required, RMI2 participated in the City’s Conceptual Review process in August 2018. It was
determined that the existing approval will need a minor amendment for the new building, but no obstacles are
foreseen.
For development of additional paved parking in what is now the adjacent overflow lot, a major amendment
would be required. It would be a separate review with Planning/ Zoning, but the process is not expected to
cause any delay in the permitting of the building.
Examples of Similar Lab Public-Private Partnerships
Colorado Spring Utilities Lab
The Colorado Springs Utilities constructed a LEED certified combined water-wastewater laboratory which
included additional space beyond their needs for the purpose of housing future potential partners. This “build it
and they will come” speculative approach did not meet expectations and has resulted in underutilized space
within their facility today.
Denver Water / Colorado State University Lab
Currently, Denver Water is working in partnership with Colorado State University (CSU) to design and
construct a shared laboratory facility. This partnership is similar in many ways to the City-RMI2 partnership
including the need for separate and secure compliance testing laboratory spaces, while also being co-located
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in the same building as research-oriented tenants. Benefits to CSU include leveraging access to water quality-
related data and expertise, and Denver Water expects to benefit from having access to cutting-edge water
quality research.
Water & Energy Sustainable Technology (WEST) Center, Tucson, Arizona
The WEST Center is a partnership between Pima County Wastewater Reclamation, University of Arizona and
private sector members who collaborate to foster advances in technology that advance water and energy
sustainability through private/public partnerships. Goals of the WEST Center include advancing water/energy
technologies and transferring technologies between University, public entities and the private sector, and
promoting jobs and economic stimulus within the community.
CITY FINANCIAL IMPACTS
The current cost estimate for the City Units in the New Building (in partnership with RMI2) is $11.45 million.
The cost breakdown is as follows:
1. City Initial Payment - $400,000
2. City 2/3 share of construction costs - $9.0 million
3. City Exclusive Costs associated with New Building - $2.05 million
The City will also incur exclusive costs not associated with the new building (e.g. moving expenses,
decommissioning of current lab buildings, etc.). This cost is currently estimated at $2.05 million, for a total
estimated project cost of $13.5 million.
This is compared to an estimated cost of $19.9 million for the next preferred alternative of a new laboratory
building at DWRF.
Estimated costs are in today’s dollars and based on a conceptual design. During the project approval period,
the City will be provided with the total project costs which will drive the dollar amount requested from City
Council by appropriation.
Capital Improvement Plan (“CIP”)
Construction of a new facility is currently included in the Utilities CIP at a cost of $20 million. Preliminary design
of the facility is included in the 2019/2020 City Council adopted budget. In addition, there are currently $3
million of available funds from past appropriations that may be reallocated to this project to reduce the
necessary amount of future appropriations in the Water Fund down to $4.25 million and $6.25 million from the
Wastewater Fund.
At the significantly lower cost of $13.5M compared to the $20M in the current CIP, the RMI2 Partnership will
allow for consideration of funding the lab with cash reserves rather than issuing debt for this capital investment
ahead of other anticipated debt being issued in the Water Enterprise over the next few years.
Rate Impacts
Because the renewal of both laboratories was included in the current CIP, the rate impact of these
appropriations is already considered in the rate forecasts.
BOARD / COMMISSION RECOMMENDATION
Water Board will consider the Lab Partnership with RMI2 at its March 21, 2019 regular meeting. An update will
be provided to City Council in a Read Before memo prior to the March 26 City Council meeting.
PUBLIC OUTREACH
Staff provided an overview of the proposed project to the following:
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• Council Finance Committee (1/28/19)
• Council Work Session (2/26/19)
• Water Board (3/21/19)
ATTACHMENTS
1. Council Finance Committee Summary - February 13, 2019 (PDF)
2. Council Work Session Summary - March 14, 2019 (PDF)
3. Council Finance Committee Minutes - January 28, 2019 (PDF)
4. PowerPoint (PDF)
Utilities
electric · stormwater · wastewater · water
700 Wood Street
PO Box 580
Fort Collins, CO 80522
970.221.6700
970.221.6619 – fax
970.224.6003 – TDD
utilities@fcgov.com
fcgov.com/utilities
M E M O R A N D U M
DATE: February 13, 2019
TO: City Council Finance Committee
THROUGH: Darin Atteberry, City Manager
Mike Beckstead, Chief Financial Officer
FROM: Carol Webb, Deputy Director, Utilities
Jill Oropeza, Director, Sciences
RE: January 28, 2019 City Council Finance Committee Discussion Summary and
Follow Up Responses: City of Fort Collins/Innosphere Laboratory Project
At the January 28, 2019 City Council Finance Committee meeting, Utilities staff presented a
proposed partnership with the Innosphere to construct a new 3-story laboratory facility on a
property adjacent to the Innosphere at 320 E. Vine. The presentation provided background
information on the proposed project and the associated benefits and costs.
Council Finance Committee was supportive of the proposed project, however, did ask some
questions that require a staff response. The questions posed and staff responses are summarized
below.
1. Please provide more information regarding the option to outsource analytical services.
The option of outsourcing laboratory analytical services was evaluated as part of the Labs
Master Plan. Under this alternative, Water Quality Services staffing would be reduced from
19 to 6 employees, which was determined to be the necessary level of program support for
sample collection, transport, contract lab data validation, compliance tracking and to
coordinate with treatment process operations. Outsourcing of the analytical work was
estimated to cost approximately 15% more than the current Water Quality Services combined
Operations & Maintenance (O&M) budget.
The primary cost-savings associated with outsourcing comes from reduction in facility costs,
which is more than offset by the substantially increased cost of contracted analytical services.
Outsourced analytical services were calculated based on the average number of tests run at
the laboratories each year. Current City lab operations are very cost competitive with private
Current - Annual O&M Budget + Capital $2,971,147
Outsourced - Annual O&M Budget + Capital $3,411,778
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ATTACHMENT 1
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sector and the quality of service (e.g. responsiveness, flexibility, reliability) is considered
inherently higher when provided by City Staff. Given these factors, the outsourcing option
scored lower than other evaluated alternatives.
2. Both preferred locations (the Innosphere and the Drake Water Reclamation Facility -
DWRF) are in the river corridor. Will standards for development in the riparian zone
be applied?
The Innosphere location does not encroach on the established buffer zone and would
continue to comply with the protection standards in section 3.4.1 of the Land Use Code. The
DWRF location would require submittal of an Ecological Characterization Study (ECS) and
standards would be applied including setbacks. Conversations with planning indicated that
this location may be a raptor nesting area and would need to be evaluated.
3. Will the project be subject to a special development review process given it is a City
Project?
No. Innosphere is the project applicant and will follow the standard development review
process.
4. Does it make sense for the City to purchase the building and lease back to Innosphere?
No. This model was explored early in partnership discussions and was eliminated due to
Innosphere’s interest in retaining ownership in 1/3 of both the proposed building and the
associated land. The proposed purchase and sales agreement does provide the City with the
opportunity to purchase Innosphere’s 1/3 interest in 8 years, which Innosphere has articulated
as adequate time to assess their facility needs.
5. Can Innosphere lease and/or sell some of their space to other tenants?
Innosphere will lease, but will not sell, lab space on the top floor of the facility to tenants
who require wet lab space.
6. Is the proposed condominium association model the best arrangement for the City?
The City Attorney’s Office has indicated that the proposed condominium association model
is the best arrangement for independent ownership of a portion of a single structure (or
multiple structures) when compared to ownership of such a structure as joint tenants with
another party. Condominium ownership provides more of the control, predictability and
attributes of exclusive real property ownership than a lease or lease option (providing only a
right to use for specified purposes) and fewer potential complications than other forms of
common ownership (such as tenants in common). Of course, exclusive fee ownership of a
single structure avoids the need for common ownership all together, but this level of ultimate
control and exclusive use also appears to come at a higher price than sharing the construction
costs of a larger structure to accommodate both the City’s and Innosphere’s needs.
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Additional details will be provided at the City Council work session for this item, currently
scheduled for March 26.
7. Would it be a benefit to the City to provide the property management for the new
facility?
No. The Innosphere currently contracts with a 3
rd
party to provide property management
services for common elements related to their current facility. The City will leverage this
arrangement for common elements associated with the proposed facility. The City’s
Operations Services Department will provide facility maintenance for the City’s individual
elements of the building.
8. Would the City have majority representation on the Condo Board of Directors?
Yes. It is our understanding that the Board of Directors would reflect the City’s 2/3
ownership interest in the building and associated property.
9. Are there specific collaborative partnerships associated with co-locating with the
Innosphere that benefit the City?
Yes. Some examples of existing and potential future collaborative partnerships include:
Coalition for the Poudre River Watershed
The City is a founding member and major funder of the Coalition for the Poudre River
Watershed (CPRW), a current tenant at the Innosphere. Not only would the proximity
facilitate easier day-to-day collaboration, it would also foster greater awareness of the shared
resources to be leveraged in work around common objectives. The co-location of the
Utilities Watershed Program, laboratories and CPRW located next to the downtown
whitewater park could create an effective hub for river and watershed protection activity.
Water Research Foundation
The Water Research Foundation frequently solicits proposals for water utility research. The
City-Innosphere partnership may offer opportunities for collaboration with water-focused
start-up companies on important research opportunities around emerging water-related
issues. Such partnerships offer benefit to the City in terms of accessing new technologies to
solve emerging water quality issues, but also provides a means for companies to effectively
compete for grant funding.
Open Water Foundation
The Open Water Foundation is a nonprofit organization focused on providing an open source
software platform to help organizations make better decisions about water. As a major
generator of water quality data, there may be opportunities for Water Quality Services to
collaborate on projects related to public data dissemination and communication.
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10. Was the non-monetary benefit criterion of collaboration evaluated for all identified
alternatives? And specifically, how does the option of replacing the existing labs
(Alternative 3b) compare to the option of constructing a combined Lab at DWRF and a
combined lab at Innosphere?
Lab replacement alternatives were evaluated in two distinct phases: the initial 2017 Lab
Master Planning process and the subsequent feasibility assessment of the Innosphere Lab
Partnership, completed in June 2018.
The methodology used for alternatives comparison in each phase was the same; however, the
benefit criteria differed. During the second assessment phase, new benefit criteria including
“Collaboration” were selected to reflect the different potential benefits introduced by the
Innosphere Lab concept and to enable an “apples to apples” comparison between the
Combined lab at DWRF and Combined Lab at Innosphere alternatives.
Because neither of the two analyses included a relative comparison of all the original eight
alternatives plus the Combined Lab at Innosphere, and different benefit criteria were used in
the two analyses, it is not possible to do a direct relative comparison of WQL & PCL
Replacement Alternative, the DWRF Combined Lab and the Innosphere Combined Lab
using available data.
Despite these limitations, staff attempted to provide a side-by-side comparison of the three
alternatives (see graph below), which indicates that the Innosphere option remains the
preferred alternative with the highest cost-benefit score. The key drivers for the higher score
are schedule and cost advantage and the desired work location. Additional details regarding
the methodology used for the side by side comparison are including in Attachment 1.
Next Steps
City staff is collaborating with Innosphere to develop a variety of agreements associated with the
partnership, including the purchase and sales agreement, the condominium declaration, the
property management agreement, and a parking agreement. Staff is scheduled to present the
proposal and draft agreements to City Council at the March 26 City Council Work Session.
cc: Jeff Mihelich, Deputy City Manager
Kevin R. Gertig, Utilities Executive Director
Judy Schmidt, Senior Assistant City Attorney
Tracy Ochsner, Senior Manager, Facilities and Fleet
Ashley MacDonald, Senior Coordinator
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ATTACHMENT 1
Evaluation of Non-Monetary Benefit Scores
The non-monetary benefit scores were estimated for the WQL & PCL Replacement alternative
based on relative comparison and professional judgement and then compared to the actual scores
for the DWRF Combined Lab and the Innosphere Combined Lab (Table 1). The rationale for
assigning the criteria scores is provided in Table 2.
Comparison of WQL & PCL Replacement, DWRF Combined Lab and Innosphere Combined Lab.
1 WQL & PCL Replacement benefit scores were estimated relative to DWRF & Innosphere scores. See
Rationale, Table 2.
2 DWRF & Innosphere benefit scores are actual scores from alternative comparison (Innosphere
Alternative Tech Memo, June 2018). The $15.3M preliminary estimate shown here is higher than the
subsequent revised estimate of $13.5M from Dohn Construction, provided on September 18, 2018.
*Note that this is a corrected statement from the AIS that all estimates are in 2018 dollars. The $22.2.M
number for the DWRF alternative that was presented in the AIS is the $19.9M adjusted for 3 years of
inflation for 2021 build year.
2.60 2.91
3.62
$22.8
$19.9
$15.3
$0
$5
$10
$15
$20
$25
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
WQL & PCL Replacement
(Alt 2b)
DWRF Combined Innosphere Combined
Cost in Millions
Benefit Score
Facility Flexibility Desired Work Location
Proximity to Customers Collaborative Opportunities
Site layout Schedule or Finance Advantage
Benefit-Cost Score Estimated Cost
DocuSign Envelope ID: 4732EF2B-157B-40F1-880E-5B5ED2CB74DB
6
Table 1. Non-monetary benefit criteria scores for lab alternatives.
Benefit Criteria
WQL & PCL
Replacement
1
DWRF
Combined
2
Innosphere
Combined
2
Facility Flexibility 0.79 0.79 0.47
Proximity to Customers 0.83 0.79 0.58
Site layout 0.83 0.83 0.54
Desired Work Location 0.6 0.46 0.6
Collaborative Opportunities 0.15 0.21 0.36
Schedule or Finance
Advantage 0.18 0.23 0.6
Benefit 3.38 3.31 3.15
Table 2. Rationale for WQL & PCL Replacement Alternative relative ranking.
Criteria
Relative Ranking of
WQL & PCL
Replacement (Alt 3B)
vs. DWRF &
Innosphere
Rationale for relative rank assigned to individual
criteria
Facility
Flexibility
= / +
Buildings designed for new site locations will have
same flexibility as DWRF combined lab
Proximity to
Customers
+
Plant sites offer the closest proximity to primary
customers (treatment plants)
Site layout
= / +
New building sites would offer options for
reconfiguration and/or expansion.
Desired
Work
Location
+ / =
Ranked similarly to Innosphere, with a small
majority of employees preferring to stay at Plant
sites and others desiring to be at more central
location. Score also reflects preference for
remaining separate versus in a consolidated facility.
Collaborative
Opportunities
- / -
Collaborative benefit is gained by centralized
facility co-located with Innosphere. Separate labs
provide somewhat less opportunity as DWRF
combined due to the loss of collaboration between
lab groups.
ATTACHMENT 2
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Finance Committee Meeting Minutes
1/28/19
10 am - noon
CIC Room - City Hall
Council Attendees: Mayor Wade Troxell, Ross Cunniff (via phone), Ken Summers
Staff: Darin Atteberry, Kelly DiMartino, Jeff Mihelich, Mike Beckstead, Jill Oropeza, Kevin
Gertig, Carol Webb, Lance Smith, Ken Mannon, Stu Reeve, Chief Swoboda, Greg Yeager,
Erik Martin, Jerrod Kinsman, Travis Storin, Jennifer Poznanovic, Andres Gavaldon, Tyler
Marr, Joe Wimmer, Ashley Macdonald, John Duval, Zach Mozer, Jo Cech, Katie Ricketts,
Laurie Kadrich, Noelle Currell, Clay Frickey, Carolyn Koontz
Others: Dale Adamy, R1ST.org, Kevin Jones, Chamber of Commerce, Ben Walker, Innosphere
____________________________________________________________________________________
Meeting called to order at 10:07 am.
Approval of Minutes from the December 17th Council Finance Committee Meeting. Ken Summers moved for
approval. Ross Cunniff seconded the motion. Minutes were approved unanimously.
NOTE: Agenda was modified due to time limitations. The Child Care Incentive / Fee Waiver agenda item was moved
to the February 25th Council Finance Committee meeting.
A. Utility Lab Building Partnership
Jill Oropeza, Director, Sciences
Carol Webb, Deputy Director, Utilities
Lance Smith, Director, FP&A
Design and Construction of City Laboratory Facilities in Partnership with Innosphere
EXECUTIVE SUMMARY
The City proposes to construct a new facility that will house the Utilities Water Quality Laboratory, Pollution
Control Laboratory, and the Watershed Program (collectively the Water Quality Services Division). Utilities
currently operates two separate laboratories which are in separate buildings and which have not been
significantly renovated since the 1980s. Costs associated with construction of the new facility would be split
evenly between the Water Fund and the Wastewater Fund.
The proposal for a new facility stems from the completion of a laboratory master plan funded in the 2017/2018
Budgeting for Outcomes (BFO) process. Construction of a new facility is currently included in the Utilities Capital
ATTACHMENT 3
2
Improvement Plan at a cost of $20 million. Preliminary design of the facility is included in the 2019/2020 City
Council adopted budget.
The Master Plan considered several potential locations for the new facility, ultimately identifying the Drake
Water Reclamation Facility (DWRF) as the preferred location. Separately, the City received a proposal to
construct a new facility in partnership with the Rocky Mountain Innosphere (a high-tech incubator) on a parcel
adjacent to and west of the Innosphere’ s current facility, located at 320 E. Vine. A subsequent cost-benefit
evaluation of these two alternatives indicated that the partnership with Innosphere offers the highest cost-
benefit to the City, and also benefits the Innosphere.
The expected cost a laboratory in partnership with Innosphere based on conceptual design is $13.5M. Prior
appropriations reduce the necessary future appropriations to $10.5M, with $4.25M from the Water Fund and
$6.25M from the Wastewater Fund.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance Committee support pursuing a partnership with Innosphere for the construction of a new
laboratory facility?
BACKGROUND/DISCUSSION
Water Quality Services Division
The City currently operates two analytical laboratories; the Water Quality Laboratory (WQL) located at the
Water Treatment Facility (WTF), and the Pollution Control Laboratory (PCL) located at the Drake Water
Reclamation Facility (DWRF), and a Watershed Program, located in the Water Production Division main office
building. These functions operate as the Water Quality Services Division and provide critical laboratory and
watershed services for Utilities customers and the community, including:
• Compliance testing for safe drinking water in the water distribution system and in customer homes,
including bacteriological testing, lead and copper testing, and testing for taste and odor compounds
• Accurate and timely water quality data to meet the operational, planning and management needs of the
Utilities, other City Departments, and regional water services providers.
• Analytical support for compliance and process optimization at the City’s two water reclamation facilities and
associated programs.
• Surface water quality monitoring of the Poudre River and local streams and waterbodies
Discussion / Next Steps:
Mike Beckstead; this is similar to the Firehouse Alley parking garage arrangement
Darin Atteberry; in the past there has been some question about whether a facility is included in our CIP - this
series of appropriations leading to this - a logical progression - our partnership with Innosphere helps
accomplish numerous objectives with wet labs in the community and it significantly lowers our costs as opposed
to a standalone - this is something that has been thought thru and planned and is not impacting the General
Fund - it has planned in the rate structure. One question we have been asked; If we don’t use these dollars for
this purpose what are the other priorities within the utilities?
Ross Cunniff; It looks like both the Drake option and the Innosphere option are in proximity to various river
areas. Can we be assured that if the city is putting money into this it will staying well within the letter of the
code as far as buffers?
3
Carol Webb; the Innosphere option has gone through conceptual review and that issue wasn’t raised - storm water
planning and management for the Innosphere site so I don’t see that as an issue - we haven’t done that level of
analysis for the Drake site
Darin Atteberry; I will confirm and follow up with Ross and the Council via email. Laurie Kadrich and Clay Frickey
from CDNS are here.
ACTION ITEM:
Ross Cunniff; requested a follow up memo from John Duval on whether the partnership building would fall into
the city development review process or the normal development review process.
John Duval; it sounds like it will be built by Innosphere so it will probably go through the city’s normal land use
review process.
Ross Cunniff; Did you do a benefit comparison of the retro fit option? Including whatever the opportunities are
there?
Carol Webb; as far as renovations to the current facility - we took that option through a benefit / cost analysis
4
Ross Cunniff; slide 14 does not include the partnership piece and slide 18 (included above) show a slightly different
benefit comparison
Carol Webb; the collaboration was only completed on the Innosphere option because that came at a later date
after the master plan was completed – recognizing that those collaborative opportunities were part of the
analysis of the Innosphere option - It was only really included in evaluating the Innosphere option compared to
the preferred option identified in the master plan.
Ross Cunniff; I did some measurements and came up with my own estimate - Drake Water Reclamation Facility
and applied that same non-zero to alternative 3B and came up to 1 digit of significance -Innosphere is at 3.6 -
the much cheaper renovation of the existing facility came in at 3.7. To me it is not a clear slam dunk on cost and
benefits - it looks Innosphere slightly less expensive capital costs. I would like to see the same analysis done on
renovating the existing building.
Carol Webb; point out the criteria of proximity to customers - evaluates that collaboration piece because that
proximity creates the collaborative opportunities versus water quality lab - while it is not explicit, I think it was
certainly integrated into the proximity piece of that. The Innosphere option provides facility that is equal
distance between the two - the Drake option is farther away and closer to the Mulberry facility which is a key
sampling site which played a role in Innosphere being a favorable option.
Ross Cunniff; run the numbers to make sure my assumptions are correct - doing the benefit comparison on slide
18
5
ACTION ITEM:
Ross Cunniff; on the partnership terms, I would like to see more details on costs that are shared with the condo
association when it comes to grounds keeping / roof repair, etc. The city sometimes is very generous with terms
like these with partner organizations and I want to make sure that we are both paying our fair share. Before I give
my go ahead, I would like to see more detail around the condo association costs, etc. Who is paying / how does
that cost get put out?
Ken Summers; developing the condo association - are the only tenants going to be the city and Innosphere or do
we anticipate leasing space to others?
6
Carol Webb; Innosphere will lease the space on the ground floor. The city will own floors 1 and 2 and
Innosphere has title to 3rd floor to lease and the HOA has title to the grounds.
Darin Atteberry; is it possible that Innosphere could lease out space to non Innosphere users?
Are there limitations that we have placed on that 3rd floor? Guessing that is for Innosphere clients - Innosphere
could partner with someone else to lease that 3rd floor space.
Ben Walker; we could but that is not our plan. The way we do our leasing today client that goes through our
onboarding process or could be in bio tech space and just lease the space and not be a client consistent with the
way the current Innosphere space works.
Darin Atteberry; Mike Freeman was leasing to non Innosphere clients - now mostly filled up by clients
Ben Walker; or clients that have gone through the program and graduated and are using the space
Ken Summers; the cost or need for the condo association - If we own and are not leasing and incurring expense
for a condo association fee - can Innosphere manage the lease? Trying to understand the need for condo
association multiple floors - owned by separate entities
Mike Beckstead; The ground would be co owed via condo association - we would have title to the 2 floors which
would be metered individually - the Condo Association would take care of the shared costs; landscaping, parking
etc. We would pay the proportional share of those kinds of costs.
Carol Webb; we are still discussing how we apportion the costs for the common elements - May make sense to
share more. Our floors would be managed through our facilities department, but the common elements would
be managed by the 3rd party that works for the Condo Association.
Darin Atteberry; Police Training Facility is a different structure- 50/50 - no Condo Association
- Governing structure set up. What I think Ken may be asking - there is a good amount of structure around
Condo Associations and HOAs - that might mean additional costs – make sure the city doesn’t bear any more
than its fair share. Ditch company governance - If we own the majority of the building - do we have the majority
of say on the Condo Association / HOA? I think those 3 things are embedded in this conversation.
Condo Association / HOA seems more expensive - why aren’t we doing it like the Police Training Facility?
Mike Beckstead; we migrated initially toward the HOA since it is not a 50/50 partnership like the Police Training
Facility - if we are 2/3 of the building, we have 2/3 of the HOA vote. Judy Schmidt is not here but she is closest
to this. The teams have worked very closely to minimize costs - the existing Innosphere organization will do that
for their floor - they are already doing that for their parking, landscaping etc. We are not anticipating having to
hire property management.
Darin Atteberry; when I hear HOA / Condo Association I think private sector model. That is fairly unusual for us
– public like the police building - 50/50 governance - Tool to helps define who is responsible for what in the
public/ private relationship.
John Duval; ownership through a condo is based on the fact you want to control your space so that you can sell
your unit easily. An HOA is established to divide up the responsibility for sharing the costs - HOA bylaws that
7
would be created for this will have to be agreed to as far as who is going to have the voting rights - making sure
that we are in control of most of the decisions - may be some that will need to be unanimous - we usually work
through those.
Ken Summers; who is running the administrative piece of the HOA / making sure things get done?
John Duval; the parking garage example - controlled by the Board of Directors - they will decide who to hire to
do the work - like the parking garage the agreement is between the HOA and the city - the city pays for work it
will do - managing - City gets it 2/3 work done - cost sharing. We could have the contract being with the city as
well - maintaining the common areas - Innosphere paying their 1/3 - it doesn’t have to be a private entity
Ken Summers; could that be arranged outside of a legal structure?
John Duval; problem is the ownership of the units - making sure the city is in control of its 2 floors and can sell
them if desired - Co-owners like the police training facility - hard to sell your share - Loveland would not want
any other partners - condo units are easier to sell - all in one building
Ken Summers: brand new, state of the art lab that will hopefully last well over the 30 years useful life.
Would we anticipate selling at some point in time? Change of use and functionality
John Duval; the city has 1st right to purchase - one option would be for the city own the whole building and lease
part back to Innosphere.
ACTION ITEM:
Mike Beckstead; we can take the action to explore other comparative options to lower costs within the next 6-8
weeks. In was our intent to have those other agreements with us when we come back in May.
Ken Summers; what are the objectives we are trying to achieve - shared maintenance of parking, common grounds
- Most cost effective, lease structure, admin, legal entanglements - achieve economies of scale and payback. What
does the outsourcing option look like?
Carol Webb; we would provide some basic minimal lab services and contracting out the rest of the services, but
this option didn’t meet our world class commitments. We can provide more follow up.
8
Ken Summers; question regarding costs on slide 21 (see above)
Lance Smith; if we paid cash for the building at Drake it would costs $22M today and
if we financed that with debt the total cost with interest would be $32M
Same with the Innosphere option above - cash is $13.5M with debt it would be $19.6M
9
Mike Beckstead; the current thinking is we pay cash - but Lance has listed a debt financing option just for
comparison purposes - some of the $13.5M has already been appropriated - some of the funds already have
money appropriated to remodel the existing labs - we would re purpose - need a little more than the $4M out of
the water fund and $6.25 out of the wastewater fund – that combined with what has already been appropriated
totals the $13.5M. $24-28M cash available in each fund respectively
Mayor Troxell; this is a great proposal- shows forward and collaborative thinking.
I would like to see some synergistic ideas - I bet there would be companies proposing sensors that could be used
As part of our active wasteshed management, by co locating, there are benefits to the program that Innosphere
Is offering that could help solve some of the challenges with higher regulatory - help meet our needs and create
opportunities for businesses - Key synergic opportunities - I know this is kind of speculative but that is one of the
benefits of being right in the Innosphere ecosystem in locating some of our city services.
Question - what is going to happen to the space that will no longer be needed? Will it be modified or absorbed?
Carol Webb; one area would be repurposed as garage space and the Drake facility there is a planned expansion
to accommodate treatment training - it would be deconstructed to make room for that
Mayor Troxell; challenges with wet lab space on different floors - the design needs to capture water events on the
3rd floor to make sure that doesn’t translate into issues on other floors
Carol Webb; our lab design architect on the team who will be specifically looking out for those types of issues.
Darin Atteberry; thank you to Kevin and Carol - your analysis is very thorough - What I am hearing from the
Committee are questions regarding the’ how’ we are going to do it and that is where we will spend our time.
B. Police Training - LEED Options
Ken Mannon, Operation Services Director
Stu Reeve, Energy Manager
Greg Yeager, Deputy Chief
Jerrod Kinsman, Lieutenant
EXECUTIVE SUMMARY:
The purpose of this item is to request City Council Finance approve a partial waiver of LEED certification
requirements for the new Police Regional Training Campus (Training Campus). In 2006, City Council adopted
resolution 2006-096 which establishes a goal for all new construction projects of 5,000 square feet or more to
achieve LEED Gold certification, except under limited circumstances. The City of Loveland, which is an equal
partner in the Training Campus, does not have any specific LEED requirements for construction projects. City
staff is requesting a partial LEED waiver in an effort to partner with Loveland. Per Section 3 of Resolution 2006-
096, City staff is requesting approval to prioritize budget dollars for energy efficiency items and look to design,
construct and certify the Admin/Classroom building only to the highest LEED certification practical. The
remainder of the project, an indoor firing range, a driving track, and a skid/skills pad, would follow LEED
principles, and prioritize energy efficiencies but not be included in the LEED certification boundary.
BACKGROUND/DISCUSSION:
The design of the Training Campus has been underway for over a year and Fort Collins and Loveland have been
discussing LEED certification for several months. The Training Campus is expected to include an
1
Jill Oropeza and Carol Webb
March 26, 2019
City / Innosphere
Laboratory Partnership Project
ATTACHMENT 4
Staff Recommendation
Staff recommends adoption of the resolution Approving a Construction
and Purchase Agreement for the City’s Purchase of Condominium Units
Consisting of Two Floors of a New Water Laboratory Building to be
Constructed by RMI2 Properties, LLC at the RMI2 Site on East Vine
Drive.
2
Strategic Alignment
3
Environmental
Health
High
Performing
Government
Downtown
Plan
Drinking
Water Quality
Policy
Proposed Public/Private Partnership Consistent with Strategic Objectives
Project Description
• Design and construction of a Utilities Laboratory Building in
Partnership with RMI2
• Requires Council approval of a Construction & Purchase Agreement
• Future funding appropriation requests of ~$10.5M
• $4.25M – Water Fund
• $6.25M – Wastewater Fund
4
Project Location
5
Project Drivers
Laboratory Master
Plan
Synergy with
Innosphere
Alignment with
Strategic Objectives
6
Key Terms
Construction and Purchase (C&P) Agreement
Condominium Structure
Conformance to City Building Design & Construction Standards
Subcontract Work Competitively Bid
City Costs:
• $400,000 initial payment; 2/3 of shared costs; City exclusive costs
Option to Purchase RMI2 floor at 8 years
7
Key Terms - Risk Mitigation
Approval Period
• Finalize plans and costs
• City Council appropriation of funds
• Resolve Parking Agreement
• Address Title Issues
• Prepare Condominium Documents
City may terminate agreement if items not addressed
City will receive partial to full reimbursement of $400K initial payment
8
Project Benefits
Lowest Conceptual Cost Estimate
• $19.9M for next preferred alternative
• $13.5M for RMI2 Option (total City Cost)
Site already approved during
Phase I Planned Development
Process
Meets City Objectives for High
Performance Laboratory
9
Financial Considerations
• Cost = $13.5M (conceptual)
• In Capital Improvement Plan at $20M
• Rate impact already in rate forecasts
• Existing appropriations = $3M
• Future funding appropriation requests (from cash reserves)
• $4.25M – Water Fund
• $6.25M – Wastewater Fund
10
Staff Recommendation
Staff recommends adoption of the resolution Approving a Construction
and Purchase Agreement for the City’s Purchase of Condominium Units
Consisting of Two Floors of a New Water Laboratory Building to be
Constructed by RMI2 Properties, LLC at the RMI2 Site on East Vine
Drive.
11
-1-
RESOLUTION 2019-039
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING A CONSTRUCTION AND PURCHASE AGREEMENT FOR CONDOMINIUM
UNITS CONSISTING OF TWO FLOORS OF A NEW WATER LABORATORY BUILDING
TO BE CONSTRUCTED BY RMI2 PROPERTIES, LLC AT THE INNOSPHERE SITE ON
EAST VINE DRIVE
WHEREAS, RMI2 Properties, LLC (“Developer”) is the owner of certain real property
located at 320 E. Vine Drive (the “Property”), including a lot on which the “Innosphere”
building and parking facilities are located (“Lot 1”) and a lot on which it plans to construct a new
building (“Lot 2”) to house wet laboratory facilities and offices for use in connection with the
Innosphere’s operation as a startup incubator (the “New Building”); and
WHEREAS, the City Water and Wastewater Utilities currently operate two separate
laboratories in separate buildings that have not been significantly renovated since the 1980s and
require replacement to meet the City’s objectives for a high performance laboratory, including
meeting or exceeding national and international standards, controlling laboratory conditions to
prevent cross-contamination, meeting requirements for efficient lab work flows, operations and
energy efficiency for the next 20 years as well as providing opportunities for public and private
interaction and collaboration among City lab staff and Innosphere start-ups and educating
customers on the services provided by the Water Quality Division; and
WHEREAS, City Water and Wastewater Utilities staff completed an evaluation of the
alternatives to provide the needed laboratory facilities to meet these City objectives as a part of
the labs master planning process, while at the same time Developer was pursuing planning
efforts to develop similar facilities and, through a conversation with the City’s Office of
Economic Health, the City and Developer identified a shared goal of meeting the need for wet
lab space, and a feasibility study determined that the site would support the critical needs of both
parties ; and
WHEREAS, the proposal for the New Building in partnership with RMI2 stems from the
completion in 2018 of a laboratory master plan funded in the 2017/2018 Budgeting for Outcomes
(“BFO”) process, inclusion of a new facility in the Utilities Capital Improvement Plan (“CIP”)
and funding for preliminary design of the facility in the 2019/2020 City Council adopted budget;
and
WHEREAS, the Developer and City propose to collaborate to construct the New
Building on Lot 2 as a public-private project to house the City’s Utilities Water Quality Lab,
Pollution Control Lab and the Watershed Program in addition to Innosphere’s water lab and
office uses; and
WHEREAS, the New Building is proposed to be built as a condominium project to
include a total of approximately 26,763 gross square feet of space on three floors containing
three separate condominium units (one for each floor), including two units consisting of the first
and second floors containing approximately 17,600 total gross square feet to be owned by the
-2-
City (the “City Units”) and one unit consisting of the third floor to be owned by Developer for
Innosphere’s use (the “Developer’s Unit”); and
WHEREAS, City staff and the Developer have negotiated a “Construction and Purchase
Agreement” setting forth this proposed public-private project, a copy of which is attached as
Exhibit “A” and incorporated herein by reference (the “Agreement”); and
WHEREAS, under the Agreement, the City has the right to review and approve the final
construction plans and cost estimates for the New Building and the finish of the City Units, and
would purchase the City Units from the Developers only after the completion of the New
Building; and
WHEREAS, since the City will be purchasing approximately two-thirds of the space in
the New Building, the Agreement provides that the purchase price will be an initial payment of
$400,000 (the “Initial Payment”), plus two-thirds of the parties’ agreed-upon costs for the
construction of the New Building and one hundred percent of the approved costs of interior
tenant finish for the City Units, which amounts are currently estimated at approximately
$11,445,000 based on conceptual plans, but will be determined as design progresses and final
plans are approved by the City the within a 180-day “Approval Period” under the Agreement;
and
WHEREAS, the Initial Payment will be funded by amounts already appropriated in the
2019 budget from the Water and Wastewater Funds and the City’s obligation under the
Agreement to purchase the City Units is subject to and contingent upon the City Council’s future
appropriation of the remaining funds needed for the purchase; and
WHEREAS, based upon the agreed upon costs for construction of the New Building and
finish of the City Units, Utilities staff will present to Council a plan for funding that purchase
equally allocated between the Water and Wastewater Funds, which may include or be limited to
cash payment for such purchase from those Funds, and seek Council’s approval of an
appropriation once the total purchase price for the City Units has been determined in late 2019;
and
WHEREAS, since the New Building is being proposed as a condominium project, the
parties will also negotiate the “Condominium Declaration” that will establish the parties’
condominium association, govern how the board of the association operates and maintains the
New Building, and sets out the financial obligations of the condominium owners for the
association’s costs to operate and maintain the New Building, the terms and conditions of which
will be agreed upon within the “Approval Period” under the Agreement; and
WHEREAS, since the City will own approximately two-thirds of the New Building, it
will have in most circumstances the controlling voting interest in the condominium association
and on the association’s board; and
WHEREAS, under the Agreement, additional conditions must be agreed upon or resolved
during the Approval Period, including the termination of existing but obsolete covenants,
-3-
conditions and restrictions applicable to the Property, the acquisition of additional area for
parking spaces, and negotiation of terms and conditions on which Developer will manage the
condominium association for eight (8) years after closing, or either party may terminate the
Agreement; and
WHEREAS, under the Agreement the Initial Payment may be utilized by the Developer
to fund the City’s two-thirds of the design costs for the New Building, provided that the Initial
Payment shall be refunded to the City in full if the obsolete covenants are not terminated or
additional parking area is not obtained, and any unspent portion of the Initial Payment shall be
refunded if the Agreement is terminated for other permitted reasons; and
WHEREAS, the New Building and public-private partnership supports Strategic
Objectives 4.6 and 4.7 related to providing a reliable, high quality water supply and continually
improving environmental regulatory performance; and
WHEREAS, the New Building and public-private partnership also supports Strategic
Objectives 7.1 and 7.8 related to providing world-class municipal services to residents and
businesses and maintaining assets to reduce life cycle costs while improving reliability and
accessibility.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS, as follows:
Section 1. That the City Council hereby makes any and all determinations and
findings contained in the recitals set forth above.
Section 2. That the City Council hereby finds that:
a. The Agreement will provide facilities necessary for the safe operation of the
City’s water and wastewater utilities and will benefit the City’s water and
wastewater ratepayers;
b. The Agreement is necessary for the public’s health, safety and welfare and the
betterment of the water and wastewater utilities;
c. The New Building and the services to be provided by its operation will further the
Strategic Objectives set forth above and objectives outlined in the City’s
Downtown Plan, including redevelopment of former industrial areas into an
innovation district focused on business incubation, research and educational uses;
and
d. Entering into the Agreement will be in the best interest of the City’s water and
wastewater ratepayers and the City and its citizens.
Section 3. That the City Council hereby approves the Agreement and authorizes the
City Manager, in consultation with the City Attorney and consistent with this Resolution, to
finalize the Agreement and its exhibits and to execute it on the City’s behalf. In addition, the
City Manager is authorized, in consultation with the City Attorney, to agree to amendments to
-4-
the Agreement as the City Manager determines to be reasonably necessary and appropriate to
protect the City’s interests or to effectuate the purposes of this Resolution.
Section 4. That prior to the City finalizing its obligation to close on the purchase of
the City Units, the City Manager is directed to present to Council for its consideration a plan for
funding the purchase price and the ordinance needed to appropriate the funds for the purchase.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
26th day of March, A.D. 2019.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Schedule or
Finance
Advantage
= / -
Would be City managed capital projects, with
similar expected timeline as DWRF combined lab
option.
DocuSign Envelope ID: 4732EF2B-157B-40F1-880E-5B5ED2CB74DB