Building Needs Assessment Work Group Minutes
June 3, 2021 10:00 a.m. – 12:00 p.m.
Virtual Meeting Via BlueJeans
Meeting Documents: https://www.scls.info/committees/building-needs-assessment-work-group
Present:
Corey Baumann SCLS Delivery Services Coordinator
Nan Brien SCLS Board Trustee
Kerrie Goeden SCLS HR & Finance Coordinator
Mark Ibach SCLS Consulting Services Coordinator
Jesse Stewart SCLS Fleet Manager
Vicki Teal SCLS Technology Services Coordinator
Kristi Williams SCLS Board Trustee
Martha Van Pelt SCLS Director -
late
Guests:
Devin Flanigan Keller Inc. Project Manager
David Haug Lighthouse Commercial Real Estate
Roger Lindstrom Keller Inc. Architect
Call to Order at 10:02 by K. Goeden
Approval of previous meeting minutes: May 13, 2021
a. Motion by M. Ibach to approve the minutes
b. Second by J. Stewart
c. Approved
Reports:
· Legal consult with A. Clarkowski regarding ground lease to own – M. Van Pelt
o Phone call on 5/24/21. He said that we want to own the land, better off to own. There is no equity in a lease.
o Don’t sign until Axley reviews, they have a real estate pro, Ed Laughton
o Questions to ask: what happens if we miss a payment? Lease to own is not a common structure but doable.
· BCPL Financing update as it pertains to ground lease to own option – K. Goeden
o Response: No issues; BCPL does not take a security interest in the real estate.
· Maps of staff residences and libraries in relation to sites being considered – M. Ibach
o J. Hoesly created a map of staff residences in relation to each site. Libraries are included in this map as a toggle in the upper right hand corner.
o https://public.tableau.com/app/profile/scls/viz/Addresses_15517247257790/Addresses
Discussion: (Keller)
Site Updates from D. Haug/D. Flanigan/R. Lindstrum:
· Shopko: Updates on ground lease to own purchase option?
o Report: the ownership group has said they need “something that will blow the doors off”. They believe that the property will increase in value and they have “patient” money. Roger said to put our best offer forward and he will take it to the board. There may be no back and forth. A lease to purchase offer is beneficial to them financially. They are trying to understand the credit status of SCLS, so this should be demonstrated in a proposal. Ideas: letter from current landlord; description of systems from DPI; letter from lender. Our purchase price for this lot would have to be $750,000 to $800,000.
o Is it worth considering if we shrink the size of the building, will it provide us with more money for the land?
o The cost of lumber and steel are up 400% to 500%, so building costs will not go down right now.
o Advice from D. Haug and D. Flanigan: we do not want to overextend ourselves at this point in the process.
o D. Flanigan: the spread on the price-point of all properties is $300,000 so there is wiggle room (i.e. the spread is not that great).
o N. Brien: concerned about a lease and also that there are no riders, etc. that will change the situation during the lease period. Clarification: this is a seller financed purchase and the SCLS attorney will review all offers.
o N. Brien and K. Williams both stressed that this be resolved by the next meeting in July.
o We would meet the PUD zoning requirements for this property.
o Consensus: we will present our best offer so that we can either move forward with this property or move on to something else. The offer will be $800,000, seller financed purchase, at 4% interest over 20 years. This will allow Roger’s group to make more on this parcel than in an outright sale, and it won’t cost SCLS any more than financing through BCPL. This is our best offer in order to meet our budget.
· Graham Place: Any updates on lot boundaries? Discuss level of interest, and if we’re going to pursue then R. Lindstrum will draw a rough site plan.
· CIC: Any updates on MUFN cost? Zoning? Ability to divide lots? Suitability for building?
o D. Flanigan and D. Haug had a good meeting with city of Madison people who are responsible for both the Graham Place and CIC properties. They are very excited to work with SCLS. CIC is zoned light industrial and it is a perfect match. The southeast business park (Graham Place) is zoned SE (suburban employment) and we would fit. D. Haug said that it is generally best to align with current zoning rather than requesting rezoning. There is an existing regional pond for storm water retention at CIC, but there may be some additional need. Any property now needs to accommodate a 100 year flood event. There is an owner’s association at CIC that manages drain water. They would consider dividing lots as long as a sellable lot results. There is an 8 acre, 6.3 and 4.83 acre lot. There is a 9 acre lot that may be available later. It makes sense for Keller to look at the lots. There would be a zoning process to divide the lot and then there is a building permit process. These can run concurrently. There is also architectural review and covenants review. These are normal steps and the city reps did not see red flags. The main difference between the two is whether or not a two-story building is required (Graham Place). If lot 1 of Graham Place is selected, then we would only pay for the “developable” land and not the hill. There is no developer’s agreement, other than the MUFN line and we would discuss that with MUFN. Infrastructure is “plug and play” at both locations. The city will provide a sample letter of intent. The first step would be for us to send a letter of intent and we would have a back and forth process. We would then go to council resolution and we would have meetings with each alder as they can shepherd us through the process. (Both are relatively new). Next is negotiation of actual seller agreement (which is covered in the letter of intent). Then common council to approve process; agreement is executed; earnest money is put down (applied toward sale). They were very engaged and enthusiastic.
o D. Flanigan. Agrees with David that they were excited and interested, especially about development of the back of Graham Place. They do want to leave room for development of the front of the land. They will review that. There is the possibility of needing to go two stories is up in the air (it might be visual). It’s ideal to have our building fit as closely as possible with the current proposed zoning. Graham Place is “Suburban employment” (SE) zoning, which may mean a more costly office building, brick façade, etc.
o D. Flanigan. Storm water management is required on all of the properties. At CIC, there are two lots that can be split. The regional pond will cover a certain amount, but with the increase in regulation, we will need to have additional storm water management. This is zoned light industrial which is a very good fit for our usage. This type of construction may also be a lower construction cost. They will look at the pricing and the constructability of the lots.
o Question: The CIC location may cost more for MUFN, but it is zoned light industrial. Graham Place is SE (“suburban”). Will it cost more to build in the SE location? The city is checking on the two-story aspect.
· Fen Oak: Review 2nd site tour. Any design feedback from R. Lindstrum? Concerns with ability for trucks to drive through and feasibility of loading docks. We discussed previously that the owner of Fen Oak is open to a drastic price reduction of $1.2M if it keeps their property in the running.
o D. Flanigan. There would tradeoffs. The site will be tight. Logistical items will be different. When you remodel and do things to an existing building, you are taking on more risk (which can mean more money, but can be mitigated). You are confined to the parameters of the building. He does not see this as less expensive than any other option. There are challenges with turning radiances.
o There would be a savings in costs if we are willing to make concessions on office size, etc. The delivery needs may make this location too difficult.
o Consensus: Fen Oak will be removed as the building does not really suit our needs, particularly due to the delivery requirements. There seems to be no compelling reason to keep it on the list.
· D. Flanigan: it is June and we are looking at having property by fall and building in the spring. There is an approval process with the city of Madison. It would be ideal to collaborate and make an effort to cross some options off of the list to narrow down what would be best. If we have one option by July, then the applications and meetings will take place September through March (6 months) before we get a building permit. He would be concerned if we had not made decision by August.
· Question: if we are left with Graham Place and CIC, will these still work with Delivery? C. Baumann and J. Stewart: Yes, they will make it work. Graham Place does offer more access than CIC. CIC is a little bit too far outside their desired circle, but they can make it work if need be.
· Question: does the delivery aspect fit with the PUD (Shopko) or SE (Graham Place) zoning? Answer: We would fit the zoning, and delivery just means negotiating within the zoning.
· We have three remaining sites to consider: Shopko, Graham Place and CIC.
Bubble diagram Q&A:
· R. Lindstrum review questions and answers group had sent
· Dive into the building details more
· Any additional or combined shared spaces through internal discussions?
· Notes: we did not continue this discussion as the issues can wait until we know which property we will pursue. The focus now should be on pursuing a property. This will be added to the July list.
Other:
· Updated legislation for the City of Madison storm water requirements
o D. Flanigan. The requirements are more stringent now than previously. For example, CIC has a retention pond that is utilized, but any new building projects need to make up the difference between the old requirements and new requirements. Graham Place would need to cover the full requirement.
· Project Cost and new budget
o D. Flanigan. They are trying to get a better picture, but rising costs and logistical issues make this difficult. They are at the beginning of construction season now, so things are tight on demand. R. added that they believe prices will stabilize over time, however there are still a lot of issues.
· Bringing a civil engineer on board
o D. Flanigan. This can be tabled until later.
CONSENSUS (includes newly added consensus points as of 10/28/20)
· Flexibility
· Hybrid of remote and on site - not 100% either way for most staff.
· Design for job needs and requirements not staff member.
· Collaboration and/or individual work can be done at home or onsite as appropriate.
· Set schedules so everyone is accessible no matter where they are working.
· Need to maintain in-person relationships (work and personal).
· The “team” at SCLS is 50+ people with several smaller teams; admin, delivery, tech, ILS and consultants.
· Staff will maintain their individual offices, but offices will be more equitably sized.
· Collaborative space will be added (labs, shared soft spaces) and other common spaces such as the work room, deliverables room and meeting room sizes will be reduced to accommodate the new spaces.
· Staff will be allowed to work remotely and/or in the office as their positions and duties allow with the understanding that there will be times all staff are required to report in person in order to facilitate and maintain staff working relationships.
Homework for Next Meeting:
· D. Haug will informally float the numbers past Roger for the Shopko site for $800,000 seller financed over 20 years at 4%. He will mention that we expect other contingencies, but they can be discussed. If they will consider this scenario, then a new letter of intent will be drafted.
· D. Haug and D. Flanigan will clarify whether or not we actually need a two story building or a façade to meet the SE zoning at Graham Place.
· At the next meeting on June 9, we will review the criteria for all 3 remaining sites.
· V. Teal Lovely will follow up with MUFN for CIC location.
· Discuss next steps regarding sites and whether to make an offer
· K. Goeden start BCPL loan process for land/site purchase?
Topics tabled for June/July Meetings:
· Review photos of things we like design-wise to share with Keller
· Start discussions with D. Haeffner, Rebekah, D. Flanigan, R. Lindstrum, M. Ibach regarding D. Haeffner’s level of involvement in interior design of new building
· Schedule Admin and Delivery meetings to discuss shared spaces
Next Meeting New Date: Wed 6/9/2021 at 12:30 p.m.
12:00: Adjournment
Parking Lot: