HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/07/2011 - ITEMS RELATING TO THE FORT COLLINS MUSEUM/DISCOVER ITEM HAS BEEN WITHDRAWN AND MOVED TO JULY 55 2011
DATE : June 7 , 2011 AGENDA ITEM SUMMARY
STAFF : Mike Freeman _
T COLLINS CITY COUNCIL
Marty Heffernan
Items Relating to the Fort Collins Museum/Discovery Science Center Project.
A. First Reading of Ordinance No . 072 , 2011 , Appropriating Prior Year Reserves in the General Fund for Transfer
to the Capital Projects Fund for the Fort Collins Museum/Discovery Science Center Project.
B . First Reading of Ordinance No . 073 , 2011 , Appropriating Prior Year Reserves in the General Fund for Transfer
to the Capital Projects Fund for Exhibits for the Fort Collins Museum/Discovery Science Center Project.
EXECUTIVE SUMMARY
$3 , 975 , 000 in funding for the new Fort Collins Museum of Discovery is needed now to complete the building .
Completion is scheduled for November 2011 . The Downtown Development Authority ( DDA) has committed $3 million
for the building , but the funds are not currently available . The DDA is exploring funding options but will not have the
funding in 2011 . The Non- Profit Corporation ( NPC ) has committed $4 , 561 , 916 to the museum building , with $975 , 000
of that amount in the form of pledges to be paid between 2011 and 2014 . The NPC is working to obtain a private loan
for the $975 , 000 but has not yet secured the financing . Adoption of Ordinance No . 072 , 2011 , will appropriate
$3 , 975 , 000 from General Fund reserves for the museum project to complete the building . The DDA plans to reimburse
the City for $3 million of this amount and the NPC intends to reimburse the remaining $975 , 000 through private
financing obtained by the DDA and NPC , or through financing provided by the City, as approved by Council .
The NPC has raised $2 . 975 million for museum exhibits , with $ 1 . 2 million in the form of pledges to be paid in future
years (2011 -2017) . The new museum will open with a nice , but somewhat limited exhibit experience without a bridge
loan for the $ 1 . 2 million in exhibit pledges . Some exhibits will be postponed , and other exhibits will be more static,
without the depth of knowledge or interactive technology that will be possible once the future year pledge money
becomes available . Adoption of Ordinance No . 073 , 2011 , will appropriate $ 1 . 2 million from General Fund reserves
for museum exhibits . The NPC intends to reimburse the City as the future year pledge funds are received .
BACKGROUND / DISCUSSION
PROJECT FUNDING
Through Council ' s support, the Fort Collins Museum and the Discovery Science Center ( DSC) joined together to create
an exceptional new museum experience and facility . In 2005 , Council included the new museum in the Building on
Basics ( BOB ) capital program , which received strong voter support. BOB provided approximately $6 . 183 million for
the project and required DSC to provide at least $3 . 6 million in matching funds . BOB also provides $200 , 000 annually
for seven years for operation and maintenance of the new facility. The DSC (which has transitioned into the Museum
Non-Profit Corporation ( NPC ) ) has raised approximately $8 . 036 million to date , far exceeding its original $3 . 6 million
commitment.
June 7, 2011 -2- ITEM 21
In addition to BOB funding, approximately$6.328 million has been provided from other public sources as follows:
• City Natural Resources: $ 1,000,000
(building $265,113/exhibits$734,887)
• Art in Public Places (Utility Project): $ 435,000
• City land donation: $1,730,000
• Department of Local Affairs: $ 200,000
• Colorado Department of Public Health and Environment: $ 75,000
• Downtown Development Authority: $3,000,000
• Estate Gift to the Fort Collins Museum $ 89,000
Other Public Funding $6,529,000
Building on Basics $6,183,000
NPC $8,036,000
Together, public and private contributions to the project total: $20,748,000.
Based on these funding commitments, the City sought and secured Council's approval to appropriate $15,109,666
for the exhibit master plan, and design and construction of the new museum, as follows:
$6,183,750 from BOB
$3,275,000 ($3 million DDA; $200,000 DOLA; $75,000 grant, Ordinance No.130, 2009)
$4,561,916 from the NPC (Ordinance No. 117, 2010)
$ 89,000 from Estate Gift(Ordinance No. 101, 2009)
$1,000,000 from City Natural Areas Program
Allocation of Appropriated Funds
$13,218,105 Building
$ 1,891,561 Exhibit Master Plan and Natural.Areas Exhibits
BUILDING FUNDS
On January 27, 2010, after completion of the Request for Proposal process, the City entered into a design/build
contract with Oz Architecture and Hensel Phelps for$11,400,000. On December 28, 2010, Change Order#1 was
issued for$577,347 that increased the building square footage from 39,905 to 46,928. Additionally, Change Order
#2 was issued May 4,2011,for$159,824 for various additional items incorporated into the contract. This brought the
contract total to$12,137,171. Remaining appropriated building funds were used for soft costs (fees, environmental
tests/services, project management etc.).
Building construction began in earnest on August 16, 2010 after completion of the development review process and
resolution of a land title issue with railroad right-of-way that required a re-design of a storm water quality pond.
Completion of the building is expected in November 2011.
As of May 31, 2011, the City has paid $7,892,611 to the contractor for work performed. Additional payments of
$4,244,560 are anticipated to complete the building as follows:
June 30 $862,000
July 31 $786,000
August 31 $672,560
September 30 $603,500
October 31 $493,500
November 30 $440,000
December 31 $387,000
Funding of$514,941 is currently available for the building. Consequently,available funds will be expended by June
30, 2011, leaving the design/build contract short by$3,729,618.
June 7, 2011 -3- ITEM 21
DDA FUNDING:
The$3 million anticipated funding from the DDA is not currently available. The history of the DDA commitment of the
funding is as follows:
• April 2004: DDA Board approves $1 million for the museum project.
• May 2009: DDA Board approves an additional$2 million for the project,with construction anticipated to begin
in 2010.
• June 2010: DDA and City Finance begin negotiations of terms with Great Western Bank for a 2010 bond
issuance and determine capacity is not available to fund the museum commitment in the 2010 bond series.
• July 2010: DDA inquires of City staff as to when the $3 million is required, indicating DDA had to limit the
bond principal amount in 2010 and need to include the museum commitment in its 2012 bond issuance, and
suggests working together on some temporary solutions. Staff responds that DDA funds are needed in 2011,
but fails to identify solutions.
• March 2011: DDA is notified by City that project has a funding deficit and needs DDA funds. DDA begins
investigating options to fund the$3 million commitment but confirms that funds will not be available in 2011.
NPC BUILDING FUNDS
The NPC has committed $4,561,916 to the building, with $975,000 of that amount in the form of pledges that will be
paid over the next few years. The$975,000 is needed in 2011 to complete the building. The NPC has been working
to secure a bridge loan from private lenders for the $975,000, but the tight credit market has made this very
challenging and expensive. Annual interest payments in excess of$50,000 are expected. The NPC is committed to
bridging the $975,000 in 2011 so the building can be completed. However, if the City provides the funding it would
save the project considerable expense and assure timely completion (contingent on resolving the DDA funding
problem). The outstanding building pledges are from very reliable organizations, as follows:
The Griffin Foundation: $400,000 ($100,000 annually 2011-2014)
Woodward: $250,000 in 2012
The Gates Family Foundation: $250,000 in 2013
The Boettcher Foundation: $ 75,000 in 2013
Staff has investigated options for reducing the building expense. Unfortunately, the building project is too far along
to afford any significant savings. Staff has already made$300,000 worth of reductions to keep the project within the
original budget. Additional reductions would require portions of the building to be unfinished.
APPROPRIATION FOR BUILDING
Adoption of Ordinance No. 072, 2011, appropriates$3,975,000 from General Fund reserves for the museum project
to complete the building. The DDA will reimburse$3 million of this amount after obtaining private financing or through
financing provided by the City, as approved by Council. The NPC will reimburse the remaining $975,000 after
obtaining private financing or through financing provided by the City, as approved by Council.
CONTRACT IMPLICATIONS
If the City fails to make a payment, the contractor may attempt to claim certain contract remedies. If the contractor
were successful in claiming damages,the expenses could possibly be in the range of the cost to complete the project.
June 7, 2011 -4- ITEM 21
NPC EXHIBIT FUNDS
$2.975 million for exhibits has been raised by the NPC. These funds have been restricted by the donors for exhibits
and cannot be used for the building. $1.2 million in exhibit donations will be paid in future years as follows:
The Bohemian Foundation: $250,000 in late 2011
The Schatz Foundation: $250,000 in 2012
Woodward: . $200,000 in 2014
Anonymous Donor: $500,000 ($100,000 annually 2013-2017)
The new museum will open with a nice, but somewhat limited exhibit experience absent a bridge loan for the future
year exhibit pledges. For example,the early childhood area would not be in place;the live animal exhibit would include
only the City's modest current collection; the bike exhibit would have to wait; and the Flood Theater exhibit would be
postponed. Additionally, many exhibits will be more static, without the depth of information or interactive technology
that will be possible once the future pledge funds become available. In contrast, three areas(Natural Areas, Science
Experience, and Music and Sound) will be fully executed on opening day because they are funded by donations
specifically designated for these exhibits.
APPROPRIATION FOR EXHIBITS
Adoption of Ordinance No. 073, 2011, appropriates $1.2 million from General Fund reserves for museum exhibits.
The NPC will reimburse the City as exhibit pledges are received, as noted above.
THE DIGITAL DOME
The Digital Dome Theater is the capstone element of the Museum of Discovery. It provides a 360 degree immersive
experience forthe exploration of astronomy, music,earth and climate science,art,cultural history, presentations,and
events. A$2 million campaign is underway to fund the dome and$350,000 in future year pledges have been secured.
The NPC is working to secure a private bridge loan for the $350,000 so the infrastructure for the dome can be
completed by the on-site building contractor. Completing this work in the future would be much more ($125,000 to
$200,000) expensive.
No Council action is being requested regarding the Digital Dome.
FINANCIAL/ ECONOMIC IMPACTS
Adoption of Ordinance No. 072, 2011, reduces General Fund reserves by$3,975,000. The General Fund reserve
balance after the appropriation would be $36,949,107.
Adoption of Ordinance No. 073, 2011, reduces General Fund reserves by$1.2 million. The General Fund reserve
balance after the appropriation would be$35,749,107.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on First Reading.
ATTACHMENTS
1. Powerpoint presentation
New Museum Funding Issues
o"rt Collins
1
Building on Basics
• In 2005 Council included the new museum in the
Building on Basics ( BOB ) capital program
• BOB provided $ 6 . 183 million and required the
Discovery Science Center ( DSC ) to provide at
least $ 3 . 6 million
2
I
Public Funding to Date
$ 12 . 7 million total public funding :
• $6 , 183 , 750 from BOB
• $3 million from Downtown Development Authority
( DDA)
• $ 1 million from Natural Resources
• $ 1 . 73 million from the City for the value of the
land
otY ol
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.:rt
Private Funding to Date
• DSC original commitment through BOB was $3 . 6
million
• DSC has raised ~$8 . 036 million to date
4
� of
Pu 4
is/ Private Funding to Da
• Public Funds : $ 12 . 7 million
• Private Funds : $ 8 . 036 million
• Total Funds raised : $20 . 748 million
• Appropriated $ 15 , 109 , 666 in 2009 and 2010 for
the building and exhibits
• The remaining $5 . 638 million represents the value
of the land , art in public places and additional
exhibit funding
C o
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5
Design/Build Contract
• Original Contract: $ 11 .4 million (January 10 , 2010)
• Contract increased to $ 12 , 137 , 171 through designated
private donation to increase square footage from 39 , 905 to
46 , 928 sq . ft.
• $7 , 892 , 611 has been paid to the contractor for work
completed
• $4 , 244 , 560 is remaining to be paid to the contractor
between July and December
6
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Cash Flow Issues
• Funding of only $514 , 941 is available , leaving the
project short by $3 , 729 , 618
• The $ 3 million commitment from the DDA is not
currently available
• The DDA was not able to include the $ 3 million in
their 2010 bond issuance
• DDA informed project staff of the problem in June
of 2010 but staff did not identify solutions
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Private Pledges
• The museum non - profit corporation ( NPC )
(formerly the DSC ) committed $4 , 561 , 916 of their
funding to the museum building
• $975 , 000 is in pledge form to be paid from 2011 -
2014
• The NPC is working to secure a bridge loan from
private lenders for the $ 975 , 000
s
Olt
Council Options
Building Construction
• Short Term Loan
• No Loan
• Stop Work
City of
CollinsFort
now :am
Short Term Loan
• Adopt Ordinance No . 072 , 2011 appropriates $3 ,975 , 000 from
General Fund reserves for the museum building
Impacts :
• Allows construction to continue and be completed
• Reduces General Fund reserve balance from $40 , 924, 107 to
$3699499107
• The remaining reserve balance may fall below the minimum 60 day
amount established by the Council reserve policy, depending on
City revenue and expenditures in 2011
10
City of
Short Term Loan
• Staff will continue working with the DDA in 2011 on options
to reimburse the $3 million , including private financing or
possible long-term financing provided by the City, if
approved by Council
• Staff will continue working with the NPC in 2011 to assist
them in obtaining private financing or possible long-term
financing provided by the City, if approved by Council
City of
.r
11
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No Loan or Work Stoppage
No Loan
- Building not completed
- City defaults on design/build contract
- Do not deliver voter approved project
Work Stoppage for 90 Days
- Allows Time for DDA/NPC to possibly secure private loans
- Liability to contractor, estimated at $600 , 000
12
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Exhibit Loan
• The NPC has raised $2 . 975 million for exhibits
• $ 1 . 2 million of this exhibit funding will be paid as follows :
$250 , 000 in 2011
$250 , 00 in 2012
$ 100 , 000 in 2013
$300 , 000 in 2014
$ 100 , 000 in 2015 , 2016 and 2017
• The NPC does not have the ability to obtain a private loan
for the $ 1 . 2 million
• The NPC would reimburse the City for the $ 1 . 2 million as
the exhibit pledges are paid
ctY or
13
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Exhibit Options
• Exhibit Bridge Loan
• No Loan
14
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Impacts of Bridge Loan for Exhibits
• The exhibit plan will be complete when the new
museum opens including : early childhood ; live
animals ; bicycles and the Flood Theater
• Other exhibits will be fully executed , including
interactive technology
• General Fund reserves will be reduced by an
additional $ 1 . 2 million to $ 35 , 749 , 107
otY or
ollins
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■
Impacts of No Exhibit Loan
• Some exhibits will be postponed and many
exhibits will not have the depth of information or
interactive technology that will be possible once
the future year pledges become available
16
try
• Approval of Ordinance No . 073 , 2011
appropriates $ 1 . 2 million from General Fund
reserves for exhibits
Gry of
Fort C
17 ��
ORDINANCE NO. 072, 2011
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL FUND FOR
TRANSFER TO THE CAPITAL PROJECTS FUND FOR
THE FORT COLLINS MUSEUM/DISCOVERY SCIENCE CENTER PROJECT
WHEREAS, on November 1, 2005, Fort Collins voters passed Ordinance No. 092, 2005,
approving the "Building on Basics" ("BOB") tax for certain capital projects;
WHEREAS, $6,000,000 was included in the BOB capital project program for
construction of a new combined—use facility for the Fort Collins Museum and the Discovery
Science Center ("Project"); and
WHEREAS, the City and Discovery Center, a Colorado non-profit corporation, d/b/a
Discovery Science Center (the"NPC"), now officially know as FCDM, Inc., entered into an
operating agreement for the construction and operation of the Project; and
WHEREAS, the Project will be jointly owned, managed, and funded by the City and the
NPC; and
WHEREAS, the City Council, through various appropriation ordinances, has previously
appropriated $14,997,992 for the construction of the Project, which appropriations include
$6,183,000 in revenue from the BOB tax; $3,000,000 in anticipated revenues from the
Downtown Development Authority ("DDA") and $4,561,916 in anticipated revenues raised by
the NPC and its predecessor; and
. WHEREAS, in January 2010, the City entered into a design — build contract for the
construction of the Project, and construction commenced in August 2010; and
WHEREAS, construction on the Project is continuing and the Project will incur
additional construction costs through December 31, 2011; and
WHEREAS, the DDA expected that its $3,000,000 commitment to the Project, which has
been approved by the DDA Board of Directors, would be funded with proceeds from its 2010
bond issuance; and
WHEREAS, because of market condition and state legislation that had the effect of
lowering the DDA's tax revenue, the DDA was not able to issue bonds in an amount sufficient
to generate the funds needed to meet its obligation to the Project; and
WHEREAS, while the NPC has contributed $3,586,916 to the Project, its remaining
obligation of $975,000 for construction costs, which has been approved by the NPC Board of
Directors, is in the form of donor pledges that are to be paid between 2011 and 2014, so the
majority of these donor funds are not available at this time to be applied to the remaining
construction costs of the Project; and
WHEREAS, as a result of the inability of the DDA and the NPC to deliver a combined
amount of$3,975,000 in time to meet the Project's construction schedule, the Project's capital
project account does not have sufficient funds to cover the remaining construction costs of
approximately $4,244,560 that are likely to be incurred by the City to complete the Project; and
WHEREAS, in order to avoid delaying the opening of the Project, and to avoid the
potentially significant and additional contract expenses that may result if construction of the
Project is suspended, the City Council believes that it is in the best interest of the City to
appropriate from General Fund reserves the amount of$3,975,000 to be used for construction of
the Project; and
WHEREAS, the NPC and the DDA are continuing their efforts to obtain financing for
their respective shares of the funding shortfall so that the City can be repaid and the funds
advanced by this ordinance restored to the General Fund reserve account as soon as possible; and
WHEREAS, Article V, Section 9, of the City Charter permits the City Council to
appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be
available from reserves accumulated in prior years, notwithstanding that such reserves were not
previously appropriated.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that there is hereby appropriated for expenditure from prior year reserves in
the General Fund the total sum of THREE MILLION NINE HUNDRED SEVENTY-FIVE
THOUSAND DOLLARS ($3,975,000) to be transferred to the Capital Projects Fund for
expenditure in the Fort Collins Museum of Discovery capital project.
Introduced, considered favorably on first reading, and ordered published this 7th day of
June, A.D. 2011, and to be presented for final passage on the 5th day of July, A.D. 2011.
Mayor
ATTEST:
City Clerk
i
-2-
Passed and adopted on final reading on the 5th day of July, A.D. 2011.
Mayor
ATTEST:
City Clerk
-3-
ORDINANCE NO. 073, 2011
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL FUND FOR
TRANSFER TO THE CAPITAL PROJECTS FUND FOR EXHIBITS FOR THE
FORT COLLINS MUSEUM /DISCOVERY SCIENCE CENTER PROJECT
WHEREAS, on November 1, 2005, Fort Collins voters passed Ordinance No. 092, 2005,
approving the "Building on Basics" ("BOB") tax for certain capital projects; and
WHEREAS, $6,000,000 was included in the BOB capital project program for
construction of a new combined-use facility for the Fort Collins Museum and the Discovery
Science Center ("the Project"); and
WHEREAS, in March 2008, the City and the Discovery Center, a Colorado non-profit
corporation, d/b/a Discovery Science Center (the "NPC"), now officially known as FCDM, Inc.,
entered into an operating agreement for the construction and operation of the Project; and
WHEREAS, the Project will be jointly owned, managed, and funded by the City and the
NPC and will expand the educational experience of city residents by providing a broader array of
scientific, cultural and historical exhibits in a single location, and will also provide an exciting
new City amenity; and
WHEREAS, the NPC has raised $2.975 million for museum exhibits with $1.2 million of
that amount coming from pledges to be paid between 2011 and 2017; and
WHEREAS, the museum exhibits will be limited until the $1.2 million is available to
complete the exhibit experience; and
WHEREAS, funds are available in the General Fund prior year reserves to transfer to the
Project for exhibit costs until such time as the NPC obtains $1.2 million that can be transferred
to the Project; and
WHEREAS, the NPC has reported to City staff that it is continuing its efforts to obtain
financing for the $1.2 million for the exhibits so that the City can be repaid and the funds
advanced by this ordinance restored to the General Fund reserve account as soon as possible; and
WHEREAS, Article V, Section 9, of the City Charter permits the City Council to
appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be
available from reserves accumulated in prior years, notwithstanding that such reserves were not
previously appropriated.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that there is hereby appropriated for expenditure from prior year reserves in
the General Fund the total sum of ONE MILLION TWO HUNDRED THOUSAND DOLLARS
($1,200,000) to be transferred to the Capital Projects Fund for the Building on Basics — Fort
Collins Museum of Discovery Project .
Introduced, considered favorably on first reading, and ordered published this 7th day of
June, A.D. 2011, and to be presented for final passage on the 5th day of July, A.D. 2011.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading on the 5th day of July, A.D. 2011.
Mayor
ATTEST:
City Clerk