Costs are cut for new Hillsboro aquatic center
Council discusses financing options
Staff reporter
In an effort to determine the best use of funds, Hillsboro City Council discussed bid reductions Sept. 20 for the family aquatic center.
City administrator Steve Garrett recommended eight items that could be eliminated or adjusted to reduce the cost of the project.
The council approved the recommendations with two exceptions.
The base bid for the center is $2,279,000. Approximately $126,000 must be shaved from the cost to come in as budgeted.
The items Garrett proposed were the deletion of furnishing and installing all site furnishings as specified in the bid document.
Instead the city would seek and install necessary furnishings.
A total of $26,747 was estimated for 12 standard tables, two handicap accessible tables, 80 chaise lounges, a bike rack, and six trash receptacles with lids.
Four site lights at the pool area will be installed but seven site light poles with related concrete bases, conduit and wiring, estimated at $14,808, were eliminated.
By changing a wooden shelter with a fabric covered metal shade shelter, the city could save money. The wooden shelter is estimated at $8,200.
Masonry yard hydrant columns would be replaced with columns constructed of treated wood, and automatic valves at lavatory sinks, water closets, and urinals also were eliminated.
The council requested more information be obtained regarding the reduction of deck drain material. It wanted to be assured the reduction would not cost the city additional funds in the future.
The council also did not want plastic PVC pipe for the yard hydrant instead of copper.
Jerry Rayl, bond counsel for the city, presented amortization schedules for bonds.
He said he processed a schedule based on market interest rates at $2,685,000 for a 15 and 20-year pay back.
The annual payment for 15 years would be $244,000; for 20 would be $205,000.
A half-cent sales tax recently implemented by the city will provide an estimated revenue of $175,000 per year. The city's budget would cover the payment that exceeds that revenue.
Rayl said he tried to work it out so sales tax revenue would cover the entire bond payments. To accomplish that, Rayl said the project would need to be reduced so the bond amount would be $2,300,000.
The city would need to reduce the project by $375,000 or come up with additional financing.
Garrett said provisions had been made in the 2006 budget to subsidize costs for bond payments. Rayl said budget funds could be used to reduce the bond amount but that would leave the city without a "cushion" to cover unexpected expenses.
Rayl added that it was not unusual for cities to consider a 20-year period for the bond. However, it was noted a 15-year bond would cost $500,000 less than a 20-year.
Mayor Delores Dalke reminded the council when this project was first discussed, the consensus was to transfer funds from the capital improvement fund for the first several years and to stimulate the local economy to increase sales tax revenue.
She told Rayl there were other suggestions and discussion to reduce some amenities but it was decided to retain them to attract patrons.
Councilman Shelby Dierks asked if refinancing in a few years was another option. Rayl said refinancing would be considered every five years.
An average interest rate for a 20-year schedule was 4.5 percent. Rayl said he would be prepared to lock in the interest rate at the council's next meeting.
A pre-construction meeting was planned between the city and the contractor when costs will be established.
