Funding options to consider if the City builds a new community center

As Merriam staff enters the 2018 budget planning season, a preliminary analysis of how the City would fund a new community center with indoor / outdoor aquatics amenities will begin. There are many options to consider when developing a funding strategy for a project of this scale. However, residents will ultimately decide how the City proceeds, as a public vote will be required to build a new recreation facility.

City sales tax collections fund more than half of the general fund operating expenses and capital improvement projects. City sales tax collections increased from $7.6 million in 2013 to $9.9 million in 2016 thanks to new retail and the state of our current economy. According to statistics from the Kansas Department of Revenue, the non-resident contribution to sales tax, also known as the pull factor, is at a rate of more than 4.67. This means that for every $1 a Merriam resident pays in sales tax here, a non-resident pays $4.67.

Residents seem to recognize the significance of Merriam’s sales tax revenue picture as it relates to providing high-quality City services and amenities. A citizen survey completed as part of the Recreational Facilities Master Plan in 2016, indicated that a ¼-cent sales tax would be residents’ most desired funding source if new facilities were built. A new ¼ cent sales tax could generate an estimated $2.05 million per year to pay for the new facility.

Building a new facility is estimated to cost $30 million, and Merriam City staff anticipates issuing bonds to fund up to $25 million of this amount. Annual debt service costs for 10-year or 20-year bonds, based on today’s rates, would be approximately $2.8 million for a 10-year bond, and $1.67 million for a 20-year bond. The 20-year bond would cost $5 million more in debt service over the life of the bond, but offers more affordable annual payments.

Revenue generated through a ¼-cent sales tax would cover the cost of 20-year debt service payments, but would be significantly short of the 10-year debt service payment by approximately $770,000 per year. However, funds from the City’s capital improvement program could be reprogrammed to support the debt service payments.

Lastly, the information used to study potential funding strategies is based on current retail figures, and does not take into consideration potential for new sales tax opportunities down the road, or other factors. Based on available information and these considerations, the City has the capacity to fund a new community center that includes indoor and outdoor aquatic features. Now the question is “should we pursue this endeavor?”

Maintenance challenges grow as new issues are discovered

The results of citizen satisfaction surveys consistently state that residents place a high priority on maintaining Merriam’s Parks & Rec facilities. In the 2012 survey, a question asked which Parks and Rec items should receive the most attention from City leaders in the coming years? The top five responses included:

1.  Maintenance of parks
2.  Trails
3.  Marketplace
4.  Park Amenities
5.  Fitness Center

This information provided direction for evaluating budget priorities, and during the past 4 ½ years various projects were completed to meet these needs. Staff implemented practices that improved mowing, landscaping and parks maintenance equipment, gutters and downspouts, playground equipment and monument signs, as well as renovations to the Fitness Center.

The current priorities — from an operations and services standpoint — are the Irene B. French Community Center and the Merriam Aquatic Center. When addressing the many structural and systems issues at these facilities, a review of various codes and regulations must be considered. Usually this involves additional costs to remove walls where a series of new problems are exposed. Some of the repairs for these new discoveries cost hundreds of thousands of dollars the City was not planning to spend on facilities maintenance. Yet, this is a reoccurring situation we face when working to keep facilities open and running.

The Fitness Center renovation project at the IBFCC is a fairly recent example of how planned maintenance projects can be restricted due to the age of the building and an inability to comply with building codes. The original plan was to update the space to an open floorplan, but due to fire code restrictions — including no sprinkler system — all doors and walls had to remain.

The same thing happened with updates to the Art Gallery. Circulation is difficult with small rooms and doorways, yet removing walls or widening doorways is not permitted. The hardwood floors are beautiful, but at the end of their useful life which is evident by thinning and breaking boards.

Staff does its best to maintain facilities with available resources, but structural limitations, unknown issues below the surface, cost of repairs, and the inability to meet current building codes prevent us from doing all that needs to be done. Since facility studies were completed in 2014 and 2015 additional issues have arisen. Due to all the needed repairs we know about, unknown problems we frequently encounter, and those recently discovered, there’s a major concern that renovating existing facilities might cost much more than the anticipated $10–$12 million.

At the Feb. 27, 2017 Merriam City Council meeting, Parks and Recreation Director Anna Slocum made a presentation that featured photos of many of the newest problem areas at the IBFCC and the MAC, as well as new photos of some of the known issues. View the presentation below:

Facilities Maintenance Issues (2/27/17 presentation)

Council eliminates short-term fix option for addressing issues at the Irene B. French Community Center

The heart of the Irene B. French Community Center (IBFCC) is more than 100 years old. The original stone building was Johnson County’s first K-12 school, then home to a variety of other public institutions. Over the years the original building was either added onto or modified on multiple occasions. In the late 1980s the city purchased the vacant building and made further additions and modifications to create the current community center. Now, 25 years later, the multiple additions and modifications, as well as floods and systems failures, have taken their toll and become very expensive to maintain. The IBFCC’s roof leaks and its basement floods creating hidden mold issues; the temperature is either too hot or too cold; each shift in wind direction is accompanied by a different sewer odor; original ceiling tiles intermittently fall through the existing ceiling tiles; and concrete and mortar crumbles. The city has done everything it can to keep the building in service. However, the facility is at the end of its useful life.

Similarly, the Merriam Aquatic Center (MAC) also faces serious age-related issues. The filter house and pool basins are more than 30 years old and the bathhouse older than 55 years old. Neither the IBFCC or MAC provide adequate access to people with disabilities and neither is fully compliant with modern life-safety or building codes. In short, the IBFCC and MAC require prompt attention and the city cannot continue the current practice of making expensive, unplanned repairs as they arise.

To that end, beginning in 2014 the city began engaging professional consultants to provide comprehensive assessments to determine what it would require to continue operating these facilities, specifically in the areas of mechanical, electrical, plumbing, accessibility, safety, and engineering. Findings of these studies provided detailed scenarios for addressing these issues and clearly determined that extensive, costly repairs are necessary.

Due to the high cost of those solutions, a resident steering committee was formed in late 2015 to investigate the future of recreation facilities in Merriam. As part of that year-long process there were multiple opportunities to solicit public feedback and design a concept around what residents said they want, including amenities residents indicate they would value most in a new facility. At the conclusion of that process the professional consultants presented a facility concept and business plan consistent with information gathered during extensive public engagement activities.

Now, after several years of comprehensive studies, gathering public input, and thoughtful deliberation, the city is confronted with three possible solutions: an option that addresses minimal issues and repairs, an extensive remodel option, and a build-new option. However, as staff considers these solutions and long-term budget implications, it becomes clear the first option is no longer viable and staff would like to eliminate it from future consideration.

Over the past year, as city staff worked with the public to determine an appropriate path forward, it has become very clear that our existing facilities do not meet the community’s current needs. Pursuing an option that only addresses the bare minimum issues, for an estimated combined cost of $4 – $6 million, is not forward-thinking, and does not move the needle toward meeting the community’s needs. By simply addressing our failing systems, the city would not resolve the deficiencies in our ability to offer meaningful programs or the inefficiencies of operating a community center in a 100-year-old school. Simply stated, after spending millions of dollars the current needs of Merriam residents would not be addressed as there would be few noticeable improvements.  Not to mention we would continue to operate within building spaces that are still between 30 – 100 years old and remain vulnerable to further age-related failures down the road.

Staff remains committed to facilitating a public discussion about the future of city recreation facilities. Eliminating an option from consideration that is simply a short-term fix clarifies a commitment to ensuring that current and future residents will continue to enjoy the safe, inclusive, high-quality experiences they expect and deserve from Merriam’s recreation facilities.

Final Parks Facilities Master Plan to go before Merriam City Council at tonight’s meeting

the_merriam-cc_2015_web

After all the studies and focus groups, surveys, tours and public meetings, the Parks Facilities Master Plan will go before the Merriam City Council at tonight’s meeting. No formal action is required by council at this time — following a presentation of the plan, members will formally acknowledge completion of the work. Discussions about facilities options are expected to continue in the following months, and anticipated to be part of upcoming budget and CIP planning discussions.

Additional information and updates about the process will be posted on this blog when available.

And remember, the public is always invited to attend City Council meetings. If you require any accommodation (i.e. qualified interpreter, large print, reader, hearing assistance) to attend, please notify the Administrative Office at 913-322-5500 prior to the beginning of the meeting (offices close at 4:30 p.m.).

Jan. 9, 2017 Merriam City Council agenda