Posted 4/15/15 (Wed)
By Amy Robinson
Farmer Staff Writer
With lower revenue generated from the Gross Production Tax (GPT) and the unanticipated higher cost of the Law Enforcement Center project, the McKenzie County Board of Commissioners was facing a $61.8 million shortage in the projected overall General and Road & Bridge budgets over the next two years.
“After a long day and a lot of discussion at the commissioner’s meeting on April 7, the commissioners passed several resolutions,” said Linda Svihovec, McKenzie County auditor and acting treasurer. “They approved applying for a loan with the Bank of North Dakota for a maximum $60 million line of credit for the law enforcement center. They approved options 2-11, as presented by ICON Architects for reductions for the Law Enforcement Center project, and the board awarded Route 53 Phase II to Border States at $9,357,049.06.”
The good news for McKenzie County is that the Board of Commissioners went from looking at a $61.8 million shortfall in the budgets over the next two-year time period to having a projected $6.2 million estimated revenue over expenditures. That’s a $68 million difference for the county. The loan option provides some flexibility in the budget, and allows the commissioners to fund some badly- needed road projects.
“The commissioners decided to finance a $60 million loan for the Law Enforcement Center project,” said Svihovec. “With a 1.75 percent interest rate over 10 years, the revenue commitment will be from the GPT money. The board directed Auditor Svihovec to begin the application process with the Bank of North Dakota and apply for up to a $60 million line of credit, which means that whatever the amount of the project ends up being in the end - up to $60 million - will be the amount financed over 10 years.”
According to Svihovec, because the board decided to finance the Law Enforcement Center project, the new numbers in the revised 2015 budgets and the projected 2016 budgets will allow for the Northern Bypass projects (Phase I and II) to be completed as recently planned.
With the construction cost savings options presented by ICON Architects, the only option the Board of Commissioners decided not to approve was a reduction of a jail housing pod, which would have eliminated close to a third of the inmate beds.
“The board agreed that we needed 129 beds in the Law Enforcement Center,” stated Svihovec. “Between options 2 through 11, there is about a $3 million savings.”
Those cuts include deleting the fitness/locker/shower spaces, deleting the fitness equipment budget, reducing the width of the vehicle sallyport to being one lane only, reducing the public and staff parking, moving the generators outdoors, deleting site perimeter fencing, reducing the landscaping allowance, reducing the FF&E Budget for moveable office walls - to be Gyp Construction, reducing the detention furnishings budget, and finding savings through design and production selections.
“There were several advantages to the loan program the board saw with this option,” said Svihovec. “It looks like we’ll be able to do almost everything that we had planned over the next two years by utilizing the Bank of North Dakota loan program to finance the Law Enforcement Center construction project over a 10-year period.”
The even better news, according to Svihovec, is that the bids opened on April 9, for the Northern Bypass Phase I and Route 30 projects were 25 percent below the engineer’s estimates. The low bid for the North Bypass Phase I was $29.4 million from Central Specialties. And the low bid for Route 30 was $10.2 million from Knife River for a total of $39.6 million for both projects.
“Our budget estimates were $40,180,000 and $13,357,000, respectively,” said Svihovec. “Both of these projects will be on the April 21 agenda for consideration for bid award.”
With both low bids for the two projects equalling $39.6 million together, that amount is less than the budget estimate for just Phase I of the Northern Bypass. According to Svihovec, it’s very likely that Route 30 will get to finish with the money left in the revised budget, and the county will get its law enforcement center.