Building public facilities with private financing

Al Olson
Public Works Administrator
City of Ankeny, Iowa
Member, APWA Facilities and Grounds Committee

Renovating, reconstructing and building public works maintenance facilities is a tough sell to city leaders and the general public. Successful bond referendums tend to support libraries, police and fire stations or recreational venues, but rarely fund public works maintenance facilities. This dictum, however, is not universally true—at least not in Ankeny, Iowa.

The City worked out of the old maintenance shop for over 35 years.

For over 35 years, the City of Ankeny's old public works maintenance shop was a 9,978-square-foot facility, home to our street maintenance and central garage operations. The street maintenance shop consisted of three bays, a small welding shop, sign fabrication and traffic signal rooms, office and small break room. Having such a small shop required all of our equipment to be stored outside. The two bays in our central garage were so small that we were only able to work on passenger vehicles and small equipment. Dump trucks were repaired and serviced in the street maintenance bays. There was a small hoist for vehicles, and a tool crib was the size of most walk-in closets. These conditions are not unusual for a lot of public works shops; we make due with what we have, and go about our work.

In 1993, the City of Ankeny passed a major bond issue to build and reconstruct a number of facilities within the community. At the time the bond issue was passed, an agreement was made between the City of Ankeny and the Community School District to build a joint City/School Maintenance Facility within the next ten years. Ankeny was blessed to have a city manager and superintendent of schools that had a shared vision of Ankeny's potential, as well as a realization of the value of a state-of-the-art maintenance facility to support a growing community. The growth they anticipated was confirmed when 2005 Census figures revealed that Ankeny grew from 27,000 residents in 2000 to 36,000—a growth rate of 33 percent in just five years.

Life changed forever for public works employees in October 2004 with the opening of the new City Maintenance Facility.

In 1998, the process of building a joint maintenance facility began. Over the course of the next four years a planning study was conducted, a preliminary site plan was developed, and a conceptual site plan was prepared. The cost to build a joint maintenance facility was estimated at $8.5 million excluding any land acquisition costs. A City/School committee met regularly to discuss the progress of the joint project. Through this committee's discussions it was determined that, due to the cost of a joint facility and to other operational challenges, separate facilities would be built on land purchased by the City.

In 2002, the City issued $2,500,000 in general obligation bonds and purchased 26.77 acres of land, which was to include a public street right-of-way and a site for a future joint use fueling station. The remainder of the land was platted into two equal-sized lots to accommodate both maintenance facilities. The City then constructed the street and utilities with the remaining bond funds.

As the City was pondering funding options for the cost of the building, a developer brought forward a proposal for a private/public partnership for the construction of the facility. The proposal would call for the City to lease the land to the developer for the construction of a building which would be leased back to the City. City officials decided that this concept avoided the costs and red tape associated with bidding and managing a construction project as well as selling bonds. The design, construction and financing of the building were to become part of one bid package. The design reduced the City's responsibility to the management of one contract rather than many.

Requests for Proposals on the City Maintenance Facility Design/Build and Lease Agreement were submitted in June 2003. The intent of the competitive bidding process was to secure a long-term lease of a 67,000-square-foot facility containing space for the City's central garage, street maintenance activities, and the storage of bulk materials, on property currently owned by the City. Each proposal included the following:

  • Project Team consisting of the developer, architect, general contractor, and financial institution;

  • Details of the development process, design and facility construction being proposed, proposed cost of facilities and site improvement, facility design documents including site plans and floor plans, terms of proposed lease including lease amount, interest rate, amortization schedule, total lease payment, and conditions and procedures for instituting the financing. The primary lease proposal had a 20-year term, but additional lease proposals of 15- and 25-year terms could be included.

  • Each lessor was required to provide the financing required, and the proposal outlined the underlying method of financing the total cost of the project.

Facility central garage service bays have really increased operations efficiency and productivity.

The City received eight proposals, four of which were selected to be considered by City management in August 2003. The base lease amounts ranged from $3.4 to $4.5 million. The City used the following criteria to make their selection: cost, design/function, team/process, financing/legal process, and operation/maintenance costs. This process allowed the City to review eight different designs for the maintenance facility. The City subsequently selected a developer. Over the next several months, changes were made to the submitted design and City specification. As changes were made, the costs of those changes were negotiated to arrive at a final lease-purchase price. The site plan was then submitted to the Planning and Zoning Commission and City Council for approval.

A Master Lease Purchase Agreement between the City of Ankeny and the developer's financial institution was executed in November 2003. The lease amount funded was $3,958,170 for a period of 20 years at a rate of 5.32%. The City's semi-annual lease payment is $161,956.72 with the total lease payment after 20 years at $6,478,268.80. The City spent an additional $407,126 on equipment for the facility that wasn't included in the construction of the facility and the lease. Construction of the maintenance facility took place over the next 10 months.

In October 2004 our vision became reality and the public works and central garage operations moved into a brand new facility. The new 67,647-square-foot City Maintenance Facility is comprised of three buildings on an 11.3-acre site. Building A, the main maintenance building, is 30,887 square feet. The facility includes 14 drive-through bays; welding shop; parts, tool, diagnostic, mechanic work and hazardous materials rooms; bulk lubrication storage; sign fabrication shop; traffic signal maintenance shop; large wash bay; locker rooms; offices; and break/training facilities. Highlights of the central garage are the two 15,000-pound lifts and a 75,000-pound hydraulic lift. A five-ton crane maneuvers throughout the facility. Building B is a 27,000-square-foot cold storage facility, which provides space for vehicles, equipment and supplies. Building C provides 9,760 square feet of cold storage for 3,000 tons of rock salt, a salt brine mixing room, and an outside storage containment for seven 6,000-gallon tanks.

As part of the 2009 APWA North American Snow Conference that will be held in Des Moines, attendees will have the opportunity to take a technical tour of the maintenance facility. The City is excited about the opportunity to showcase the facility and share their experiences.

Shared vision, community support, public-private partnerships and creative strategies were instrumental in the success of this project. When public entities and the private sector work together, leveraging resources and talent, genuine public benefit is realized. Ankeny, historically, is a community of partnerships built on a foundation of trust between the public and private sectors. The realization of this project is a testament to that foundation.

Al Olson can be reached at (515) 963-3525 or aolson@ci.ankeny.ia.us.