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Trustees Hold Off on New Public Works Building

Trustees will revisit the proposal to build a $4.1 million building during its long-term planning discussions in early 2013.

While the idea of owning instead of renting a Public Works building appealed to members of the Whitefish Bay Village Board, the village's trustees decided to hold off on any decisions until the scope of upcoming sewer projects is better understood.

After six months of working on a facility needs analysis with design firm MSI General, Village Manager Patrick DeGrave shared with trustees his analysis of building a new Public Works building at a Village Board meeting Monday night.

Since 1994, the village's Public Works Department has operated out of a horse barn in an 80- to 100-year-old building formerly occupied by Oster, DeGrave said.

The village has budgeted $276,300 to rent the space in Glendale this year, which includes $51,921 in property taxes to Glendale and $91,918 in utilities. Roughly half of the utility costs are likely wasted due to the lack of insulation in the barn, DeGrave said.

Pros and cons of a new building

Working with village employees, MSI General drafted plans to build a new 41,000-square-foot building at a former incinerator site at the southwest corner of Lydell and Fairmount Avenues, which is within the village's boundaries.

The estimated cost of the new building is $4.1 million, which could be financed by borrowing $4.4 million in general obligation bonds over the course of 20 years.

If the village were to build a new facility, it would reduce its ongoing costs of rent, insurance and property taxes, freeing up $203,000 of its annual $267,000 rental payment that could then be used for debt payments, DeGrave said.

"When I see $200,000-plus that is wasted in rent that could be diverted to debt, and there is a small contribution in addition to it to get you into ownership and out from somebody else's control, I find that advantageous," DeGrave said.

DeGrave said the time is right for the project, due to low interest rates. Plus, the investment will eventually free the village from paying rent and allow the village to control its own destiny.

"In your personal life, depending on your circumstances, there may be a time when renting a condo is far better than ownership...But we will always be here, and at some point I think ownership makes sense – 20 years from now when it's paid off, or 50 or 60 years from now when it's been paid off," he said.

Board hesitant to take on another project

Trustees generally agreed a new building would be worth pursuing, but several trustees said they had concerns about taking on new expenses with a sewer project on the horizon .

"Even if it's $10 or $40 for a $400,000 house, I'm uncomfortable advocating for this at the present time," said Village President Julie Siegel.

Trustee Lauri Rollings said she agreed the timing might not be right, but said she would be in favor of advancing the discussion sooner rather than later.

"I feel like we can't wait forever to make a decision on this, and the economic picture is not going to look any better six months to a year from now in terms of the sewer work that is going to have to be done," Rollings said.

At the suggestion of Trustee Brenda Szumski, the board decided to include the building proposal in a broader capital improvement plan discussion. The board will discuss its CIP again next month, but will not consider the inclusion of a new DPW building until early 2013.

"It's one pot of money, so we ought to think if this is more important than something else in the (capital improvement plan) and how do we weigh these options and choices," Szumski said.

The board was hesitant to push the project too far down the road, though. The village will soon have to renew its five-year lease on the DPW barn, which expired at the end of June. In the past, DeGrave said the lease has included provisions that would allow the village to bow out in the first two years.

StaynConnected July 03, 2012 at 06:20 PM
I'm delighted that the Village Board has held off the decision, pending further review of financial impacts and priorities. It would be helpful if a more thorough analysis was completed. The statement from the Village Manager that, "When I see $200,000-plus that is wasted in rent that could be diverted to debt," isn't very comforting. It was such thinking that caused many folks to over commit in the real estate market. A lease (or renting) can often be more affordable than ownership. And, at least in over a 20 year period, that seems to be the case with this proposed building. If this was a decision being made in the corporate world, a discounted cash flow analysis would be performed. Given that any new facility will hopefully serve the Village for many years, it would seem appropriate for a long-term analysis to be run - perhaps extending out 40 years. If it doesn't produce savings over such a period, the Village should seek other options.
Melissa Ugland July 07, 2012 at 11:54 PM
The school referendum was successful in part due to the fact that borrowing is cheaper when the economy is not doing great. It saved the schools (really us!) hundreds of thousands to be able to take advantage of lower interest rates. Just one more thing to think about as they move on this. It might also be a good idea to get a building that is partially winterized to minimize heating and cooling costs. Office or other spaces need to be fully weatherized, but spaces for storing equipment can probably get by with a more garage-like construction.

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