Memorandum

City of Lawrence

City Manager’s Office

 

TO:

Mayor and Commissioners

FROM:

David L. Corliss, City Manager

DATE:

February 14, 2013

RE:

Rock Chalk Park and City Indoor Recreation Center

 

Background:

There have been extensive discussions and meetings involving the City Commission and the community regarding the Rock Chalk Park and proposed city indoor recreation center.  Discussions regarding an indoor recreation facility date back several years, but began in earnest in late 2011, as shown on the project chronology.  The need for more indoor recreation space has been well documented by the Park and Recreation Advisory Board.  The following items are notable:

·         The last new recreation center, Holcom Park Recreation Center, was built in 1988, nearly 25 years ago.

·         The City’s population has increased 32 percent, 29,000 since 1988.

·         The construction of an indoor field house is the last remaining unmet recommendation of the 2006 PLAY study.  Since the PLAY Study was completed, gym space has been further reduced.

·         Indoor gym space remains a top recreational need as identified through citizen surveys and public meetings.

·         Indoor community recreation space is needed in the northwest area of Lawrence.

·         A new recreation center could position the City for future tournament opportunities that are currently going to other communities. 

 

The process leading up to this point has changed over time, including extensive discussion regarding a former possible site on the northwest corner of the 6th and K-10 intersection, which was not pursued due to a request from KU Endowment to the City to join its Rock Chalk Park project to build KU Athletic facilities on a site north of 6th Street, off of George Williams Way near the northeast corner of the 6th Street and K-10 intersection.  Additionally, the unique structure of the project, as a result of involvement from a private entity (Bliss) and KU Endowment, has resulted in a changing structure over time.  The purpose of this memorandum is to bring the City Commission and public up to date regarding the project, the current structure and next steps.

 

Impact of KU Athletics and the proposed Rock Chalk Park Project:

KU Endowment has announced that KU Athletics will proceed with its project on the Rock Chalk Park site, to include a new seated competition track and field stadium for KU Track & Field, new competition outdoor soccer facilities for KU Women’s Soccer, and a softball facility for KU Softball.  KU has also invited the city to consider locating its new recreation facility on the site, to create unique synergies with the KU Athletics and create shared infrastructure opportunities. 

The economic impact of KU sports was documented several years ago in an article written by Tom Kern, former CEO of the Lawrence Chamber of Commerce.  This project will further enable KU to expand its athletic program.  This past summer, the City engaged Convention Sports & Leisure (CSL), a national consulting firm specializing in sports venues, to complete an economic and fiscal impact analysis for the proposed project.  Overall, the study estimates potential net new direct spending as a result of a city project in conjunction with KU at $289 M over a 30-year period, or approximately $6-11 million annually.  The analysis was completed prior to KU choosing to proceed with the site on George Williams Way, which accommodates a softball facility, and thus the analysis does not include the impact of the softball facility. 

 

Rock Chalk Park Site:

The Rock Chalk Park site, located off of George Williams Way, consists of a total of approximately 89 acres, adjacent to 46 acres which is already owned by the City and includes the area along Baldwin Creek.  The site was recently rezoned by the City.  The portion of the property proposed to be transferred to the City for the recreation center and associated amenities includes 26 acres, 5 of which would be a pad-ready site for the recreation center. All this property will eventually be transferred to the City in fee-simple title.  The site includes ample space for the proposed facilities as well as additional unique amenities, such as shared use paths, as shown on the site plan. 

 

As part of the Development Agreement, the City will gain title to approximately 26.135 acres of property which is set out in the plat as Lot 2 of Rock Chalk Addition No. 1.  The Kansas University Endowment Association retained the appraisal services of Aul Appraisals, L.C. to appraise the property in October 2012.  This appraisal supported a value of approximately $35,156 per acre value of the entire Rock Chalk Addition No. 1 of approximately 89 acres.   The transaction between RCP, a subsidiary of Kansas University Endowment, and Fairway L.C. was closed on the 89 acre tract plus an approximate 19 acre tract at the option price of $30,000 per acre.  This transaction cost does not include closing fees, attorney fees, etc.   After the appraisal and closing, the property has been annexed, zoned, and platted.   Prior to the infrastructure improvements, it appears appropriate for the City to value the 26.135 acres which it will receive as part of the Development Agreement, between the late 2012 transaction cost (26.135 X 30,000 per acre = $784,050) and the appraisal amount (26.135 X $35,156 =  $918,802).  Obviously, with the property receiving land use entitlements and improved with streets, waterline, sanitary sewer, storm water improvements, the property should soon be more valuable from the date of the appraisal or closing.   The City is financially participating in the cost of these improvements. As part of the development agreement, the City is purchasing the property at the RCP cost of $30,000 per acre, for a total of $784,050. 

 

Development Agreement Summary

A development agreement development agreement (updated 02/19/13) has been drafted between the City of Lawrence, RCP, LLC (a KU Endowment-related entity), Bliss Sports, and Bliss Sports II, setting forth the terms of agreement amongst the entities for the construction of the City’s recreation center and associated amenities, the transfer of property to the City, and the construction of infrastructure that will jointly serve the KU Athletic facilities and the City’s facilities.  Below is an outline summary of the agreement: 

 

o   Land Purchase Price: 

§  The City will purchase 26 acres of property from RCP for the recreation center.  This price includes the land costs and a 5 acre “pad ready” area for the construction of the recreation center building.  The total purchase price at $30,000 per acre is $784,050 (26.135 X $30,000 per acre = $784,050)

 

o   Shared Infrastructure Construction: 

§  RCP will engage Bliss Sports II to develop and manage the construction of 800 paved parking spaces and drives, 8 lighted tennis courts, landscaping, and irrigation on the City’s recreation site.  On the stadium site and the existing city-owned park property, Bliss Sports II will construct 700 paved parking spaces and drives, and 5 linear miles of walking trails.  On both the City’s recreation site and the stadium site, Bliss II will construct sanitary sewer, water, storm sewer, water detention facilities, public and private streets, sidewalks and related improvements.

§  Upon completion of the infrastructure, the City will pay RCP for the infrastructure.  The payment for the infrastructure will be based upon the actual costs incurred by Bliss Sports II to develop and construct the infrastructure, plus a construction management fee of 10%.  However, this infrastructure cost expense will be capped at the difference between $25 million and the total sum of the actual cost of the recreation center construction (including necessary change orders), the architects’ fees, and the land purchase price.

 

o   Recreation Center & associated amenities:

§  The City will bid the recreation center construction in accordance with its normal procedures.  The City will select the lowest responsible bid and will award a construction contract unless the bid is greater than $25 million. 

§  The recreation center will consist of 181,000 square feet, 8 full size basketball courts with striping for 16 half size basketball courts and 16 full size volleyball courts, indoor turf area to accommodate regulation indoor soccer and other sports, 1/8 mile 4-lane indoor walking/jogging track, gymnastics area, aerobic/fitness area, cardio/weights area, meeting rooms, administration offices and support areas, future wellness area. Attached are exterior and interior renderings of the building. 

 

o   If the City does not proceed with recreation center: 

§  If city doesn’t proceed with recreation center, then the city would agree to reimburse RCP for its actual costs to prepare the pad-ready recreation center site and would negotiate its participation in the necessary infrastructure supporting the KU facilities.

 

 

The following provides a graphical representation of the development agreement: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Note:  The CPSports/KBS Contractors costs and the equipment (balls, bleachers, and fitness equipment, etc. –anything that is not a fixture to the building) is not subject to the $25 million cap. 

 

Shared Infrastructure Components and Costs:

Staff has prepared an estimate of the infrastructure improvements required to support the Rock Chalk Park project, including the City’s recreation center.  Below is an itemized listing of these estimates.  As discussed previously in this memorandum, it is important to note that the infrastructure costs will be capped at the lesser of the actual infrastructure expenses plus a 10% management fee or the difference between $25 million and the cumulative total of the recreation center contract and relevant change orders, the land purchase and the architecture fees.

 

The estimates below are updated itemized estimates for the infrastructure and recreation center.  The estimated total value of the project is approximately $31 million:

 

 

City Cost Estimates

 

 

(updated 2/13/2013)

Incl in $25 M

CONSTRUCTION EXPENSES

Rec Center Construction

Current Arch est $110/ sf for 181,000 sf

$19,910,000

Site Preparation

Clearing and grubbing

$400,000

Architecture Fees

 

$925,000

Tennis Courts

8 lighted Tennis Courts

$640,000

Land

Land value 26.135 ac @ $30,000/ac

$784,050

Sub-total: Construction

 

$22,659,050

INFRASTRUCTURE EXPENSES

Streets: On-Site                      (Based on current bid for Iowa project)

George Williams Way

$368,700

Rock Chalk Drive

$854,640

Rock Pkwy and Access roads

$1,140,000

Storm Sewer

On-site system and detention Pond

$200,000

Additional storm sewer

$120,000

Waterline

 

$831,400

Sanitary Sewer

 

$251,200

Parking

Approx 1500 spaces

$2,906,060

(includes landscaping, curbs, bus turnouts, 9" concrete bus lanes, 6" concrete parking)

Landscaping

Additional landscaping 

undetermined

Paths

5 mile multi-use path @ $40/SY

$1,173,333

Engineering

$500,000

Sub-total: Infrastructure

 

$8,345,333

 

 

 

Total Project Costs

 

$31,004,383

Cost to the City:

Not to exceed $25 M

 

Rebate of Fees for the KU portion of the project:

KU Endowment, in its earlier letter, requested the rebate of various city fees related to the project.  These fees include utility fees (assessments for pump station 48 and the West Baldwin Creek Interceptor), system development charges, and meter installation fees), and building permit fees.  Below is a chart outlining the estimated fees associated with the KU portion of the Rock Chalk Park project, which are requested to be rebated.  The Ordinance adopting the development agreement includes authorization of the rebate of these fees. 

 

 

City Financing for the Project- Capital and Operations:

A countywide sales tax was passed by the community in 1994.  The City uses its share to fund, in part, parks and recreation facilities and programming.  City staff is projecting net operating costs of the facility at $350,000.  This figure is the difference between projected operating revenues and costs, and is detailed in the attached spreadsheet.  The City would bond the project to fund the capital costs of the construction of the recreation facility and the infrastructure.  The capital costs could be financially accomplished within existing resources (sales tax and City capital budget), assuming projected natural growth in sales taxes over time.  The attached spreadsheet details these projections for sales tax collections and the City’s capital budget includes $3 million in 2013 and $1 million in 2014 for the project.  Additionally, the funding for the capital and operational expenses for the recreation center will still allow the City to complete routine maintenance project that it currently completes, within existing resources.  A listing of these types of maintenance projects for 2012 is also attached.  Start-up equipment and furnishings costs (basketballs, bleachers, security system, concession equipment, etc. – anything that is not a fixture) for the facility, will be solely the responsibility of the City, funded from various recreation accounts. This amount is in addition to the $25 million cap.

 

Quality control manager agreement:

It is important for the recreation center to be constructed in accordance with the plans and specifications developed by the architects and approved by the City.   Due to the size and scope of the project, city staff believes it is appropriate for the city to engage the services of an architect to serve as the City’s quality control manager to review the development of the plans and specifications, as well as assist during the construction.  City staff requests the authorization to enter into an agreement with Craig Penzler, architect with CPSports/KBS Contractors in an amount not to exceed $182,350.  Craig Penzler’s firm was selected through a qualitative selection process in accordance with the City’s purchasing procedures.  The agreement with CPSports is not subject to the $25 million cap specified in the development agreement.

 

Architect agreement summary:

It is important for the city to own the recreation center plans.  Gould Evans and Paul Werner Architects have been engaged to complete these plans in conjunction with the plans for the KU Athletic facilities.  The total cost of the plans is $925,000.  The City will need to enter into an agreement with the architects to pay these costs and purchase the plans.  If for some reason the City does not proceed with the recreation center construction, it will own the plans for the project.  Staff requests authorization to negotiate an agreement with the architects to enable the payment of the architects’ fees and the purchase of the plans.  The costs also will construction administration services during the construction of the project. 

 

Bicycle Advisory Committee(BAC)  comments:

The Bicycle Advisory Committee (BAC) has submitted a memorandum relaying comments and suggestions regarding the Rock Chalk Park project.  Staff has prepared a memorandum in response to the BAC memo for the City Commissions information. 

 

Lighted Tennis Courts:

The City Commission has had a number of recent discussions related to the need for lighted tennis courts in Lawrence.  Most recently, staff prepared an analysis of possible locations for lighted tennis courts.  It is recommended to proceed with lighted tennis courts at Rock Chalk Park. 

 

Staff Recommendation: 

Staff believes that the recreation center project at Rock Chalk Park is an extraordinary opportunity for the community.  Not only does it address our much-needed indoor gym space needs, the project provides the opportunity to host sports tournaments in our city, capturing sales tax revenue from retail sales to out-of-town visitors and recapturing revenues currently lost to other communities.  Additionally, the project provides a synergy with the KU Athletic facilities, a synergy that would be unique for the State of Kansas and the entire region.  The collaboration allows for the maximization of shared infrastructure.  Also, the City’s past fiscal restraint has placed it in a position to take advantage of this opportunity to leverage the future growth of existing tax dollars.  Now is a unique opportunity to add this recreational amenity that will benefit the community for many years to come. 

 

Requested Action:

·         Adopt on first reading Ordinance No. 8842, authorizing the development agreement and authorizing the reimbursement of city fees for the project;

·         Authorize the City Manager to Execute an Agreement with CPSports/KBS Contractors, for quality control services for the City’s recreation center project;

·         Authorize the City Manager to Execute an Agreement to acquire plans and specifications and construction administration services from Gould Evans and Paul Werner Architects;

·         Adopt Resolution No. 7008, authorizing the financing of the recreation center;

·         Adopt on first reading Ordinance No. 8844, a Main Trafficway Ordinance designating streets to be improved/constructed as main trafficways as part of the project;

·         Adopt Resolution No. 7009, authorizing main trafficway improvements for streets to be improved as part of the project;

·         Adopt Resolution No. 7010, authorizing water and sewer mains.