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Restroom/chamber building bids lower than expected

Bids for a public restroom/chamber of commerce building came in quite a bit lower than Nisswa City Council members expected, but discussion on the proposed project was still lengthy Thursday, April 11.

Before possibly awarding the bid, the council wanted research done on the low bidder and wanted to hold a public hearing regarding an abatement bond that would fund the building, as well as improvements to the city park and community center.

That public hearing will be at 4 p.m. Tuesday, May 7, at Nisswa City Hall.

The April 11 meeting was to review bids, which the city sought to determine more specific costs for the public restroom/chamber of commerce building before deciding whether to go forward with it.

The city received five bids. Country Pride Construction of Stanchfield submitted the lowest bid at $343,384. The city isn’t familiar with that company so wanted more research done.

Other bids were $349,950, HyTec Construction of Brainerd; $379,192, Gopher State Contracting of Rice; $393,600, Rice Lake Construction of Deerwood; and $415,000, Nor-son of Baxter.

The city had estimated the project would cost $380,000, and Mayor Brian Lehman said he expected bids to be $100,000 more than they were.

When the council first decided to pursue an abatement bond for three projects — a public restroom facility, park improvements and community center improvements — the chamber of commerce portion of the public restroom building wasn’t part of considerations.

The chamber later asked the city to include that portion, saying it wanted to return to its downtown location after having moved to Nisswa Square. The current public restroom/former chamber building wasn’t built to be a year-round facility and needs to be updated, officials have said.

The council will consider a 10- or 15-year abatement bond to pay for the three projects, and learned $615,000 would cover the cost. That includes an estimated $108,764 for community center improvements and $126,350 for park improvements, as well as the public restroom/chamber building cost.

The city budgeted about $58,000 in 2013 for a bond payment this year. Conservative estimates on a 10-year bond peg the annual debt service at $68,597; those estimates on a 15-year bond put that annual debt service at $53,723.

Interest rates could be more favorable than that conservative estimate.

“If we include the chamber building with $800 per month rent, that would be $9,600 per year applied back to the debt service payment,” Lehman said. “So we’re definitely in the ballpark, which is really, really good.”

While council member Lenny Hodgson agreed bids were lower than expected, he questioned how much of the public restroom/chamber building project the city should fund.

“I can’t imagine the city wants to bite off $260,000 of $343,000 and say that’s the cost of the restroom side,” he said.

That $260,000 is what the city previously estimated public restrooms would cost, before adding the chamber portion of the building. An idea was that the chamber would be responsible for costs beyond that $260,000.

“Why, when we get a bid we feel is low, are we going to assume that all of that good news goes to the chamber side?” Hodgson asked.

Lehman said he wasn’t saying that. But the city was willing to go forward with the project for the estimated $260,000, he said.

Hodgson asked why the $260,000 figure was referred to and reiterated that he wondered what percentage the city would pay for and what percentage the chamber would reimburse to the city through lease payments.

“I can’t see the city paying 70 percent of this deal and the chamber 30 percent just because we got good bids,” Hodgson said.

After preliminary talks with the chamber, a tentative idea has been for the chamber to pay $800 per month for 10 years and $900 per month for another 10 years. But no agreement has yet been signed.

“Ultimately the building is the city’s,” Lehman said. “We have a tenant that is the chamber of commerce.

“The bid is $100,000 less than what we thought so this is a great problem to have,” he said.

Lehman later said, “This project should be a go because it falls within the realms of money we budgeted for.”

Hodgson responded, “You don’t have to spend it just because you talked about budgeting it.”

Again, Lehman said that wasn’t what he was saying.

Hodgson said, “I want to be assured the city is not biting off $260,000 or anywhere near that for the bathroom side of that project. If we were bidding just for the bathroom, there’s no way it would have been $260,000.”

Council member Jan Pierce said at the end of the day, the city will own the building. The question is whether the city wants to assume more of the debt upfront or have the chamber pay more in rent based on some percentage that still must be determined.

Hodgson said there are limits to what the city can do with the building. It couldn’t lease to a retailer.

“I want to make sure the city has its back side covered,” he said.

Mark Ronnei of Grand View Lodge asked the council to look at the lease with the chamber as a long-term lease.

“You’re (city) a landlord and you’re (chamber) a tenant,” he said. “It’s healthier for the chamber and the city that way.”

Ronnei said the city and chamber aren’t partners. The lease should run forever, as long as the chamber occupies the building.

The council was expected to talk more about this issue at its Wednesday, April 17, council meeting. And the council will get questions answered before the May 4 public hearing regarding the proposed abatement bond.