City Hall Consolidation Study

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City Hall Consolidation Study
City of Tulsa

• June , 2007

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Team Composition - Introductions
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Goals of Study
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• Evaluate Citys existing occupancy strategy,
  costs, and efficiency
• If viable, Reduce the cost of real estate to
  enable funding of other programs
• Determine alternative methods of improving the
  delivery of city services via realignment and
  consolidation into single facility.
• Prepare cost/benefit analysis of different
  scenarios
• Stay put in multiple locations (Status Quo)
• Build to suit
• Market Alternatives (for sale, or lease)
• Capture the development potential and revenue
  of surplus real estate of the city including
  river front and current city hall location next
  to renovated convention center.
• City negotiated option to purchase One Technology
  Center, parking garage, Furniture fixtures and
  equipment contingent upon Citys findings during
  due diligence period

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Anticipated Ancillary Benefits
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• Avoid costly capital expenditures in
  aging/obsolete buildings (24 million) Only 12
  million funded to date
• Reduce the long term energy needs of the City
  (30)
• Enhance constituent experience by creation of
  One Stop for City services in one convenient
  location.
• Improve downtown real estate market will reduce
  vacancy by absorbing OTC and replacing city hall
  with hotel.
• Facilitate sale of City Hall and other sites for
  higher and better use (convention hotel) and
  placed on tax roles
• Generate revenue through limited 3rd party
  leasing of space until complimentary City
  Government agencies need space downstream.
• Improve productivity, communications and
  efficiency through consolidation
• Enhance image that fosters new business/economic
  development

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Desired Operating Outcomes
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• Reduce City Operating Expenses Improve Citizen
  Experience
• More efficient use of space ( 20 reduction)
• Increased use of technology (consolidate 8 data
  centers)
• Financial Benefits (reduced annual operating
  costs)
• Green building Consume 30 less energy
• Eliminate environmental / air quality concerns of
  existing buildings
• Upgraded Working Environment (improved morale and
  employee recruitment opportunities)
• Unlock potential of underperforming City owned
  real estate assets

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Results of Study Demand Analysis
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• Interviewed 14 City departments, 103 business
  units
• Reduced Net Useable Square Feet
• Existing 275,000 USF
• Consolidated 227,000 USF
• Opportunity to reduce space by 20
• Consolidate 7 different locations into one
• To accommodate future growth of 78 workstations
  and additional conference room space, the City
  will occupy 276,854 usable square feet, 331,724
  rentable square feet. The 3rd party tenants,
  Level 3 and Deloitte will occupy 187,000 rentable
  square feet. The 8th floor is vacant at 40,726
  usable square feet and 48,156 rentable square
  feet. The remaining space is occupied by WHBC in
  26,954 usable square feet and 29,660 rentable
  square feet. The 10th floor is shared conference
  room space at 13,898 usable square feet and
  16,483 rentable square feet. Total usable square
  feet in the building is 536,677 and rentable
  square feet is 626,802.

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Total Project Cost Acquisition OTC
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Summary of Acquisition Costs Includes Purchase
Price of Building Due Diligence
Support Relocation Costs Physical Relocation
New Construction and Furniture
Reconfiguration Mothball Existing Buildings
(City Hall, Center Office Building, Francis
Campbell) Control Equipment - Parking
Garage Information / Technology Security
3rd Party Tenants (Cost of Leasing) Other
Capitalized Costs Duplicate Occupancy Costs
During Transition Financing Legal Fees
Green Building Initiative Total
67.1 Million
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Important Considerations/Assumptions
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• Initially, 187,000 rentable square feet of
  existing tenants will renew and extend current
  leases
• New tenant(s) will be identified for 8th floor
• (Numerous complimentary prospective government
  tenants have been identified, contacted and
  expressed interest)
• There is no benefit given to this analysis due to
  the sale of vacated properties or tax revenue
  generated by economic development as a result of
  this transaction
• (sales tax, hotel tax, etc.)
• Result No tax increase required to facilitate
  transaction

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Occupancy Cost Over 10 years
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Present Value Savings 10 Year Horizon
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Difference between 26.0 million and 41.2
million (15.2 million) is savings to City over
first 10 years
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Due Diligence Review - Technical
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• Building and Parking Garage are in good to
  very good condition
• Mechanical System is State of the Art
• Systems redundancy (Electrical, water, etc.)
  should assure continued
• City operations in emergency
• Significant building technology
  infrastructure will enhance City
• operations
• Recent Structural Issues
• Roof New replaced to high standard
• Curtain wall Failure Repaired to new design
  criteria
• Purchase Price includes
• High quality systems furniture
• Significant data and audio visual equipment
• Telephone system and instruments

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Due Diligence Review - Green Building /
Sustainability
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• One Technology Center is highly efficient
  building (perhaps most efficient in City of
  Tulsa)
• State of the art mechanical system reduces
  energy demands at peak consumption hours
• Utility costs should be 30 less than
  existing costs on per square foot basis
• Benefits
• Demonstrates that City of Tulsa is leading the
  way in environmental responsibility.
• Global energy costs will continue to rise.
  Efficiency of new building will produce long term
  savings for taxpayers and mitigate financial
  exposure/risk on rising energy costs in future.

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Due Diligence Review - Parking Study
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• Parking Required
• Employees 973
• Visitors 478
• Total 1,451
• Available in OTC Garage 1,012
• Contractually Obligated 475
• Available for City Use 537
• Deficit 900
• Available within 2-3 minute walk 2,000 spaces

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Due Diligence Review Estimated Tax Impacts
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The projected tax revenues are not part of the
financial calculation to determine the savings
from consolidation. Any contribution from sales
or other taxes would be in addition to the 15.2
10 year present value savings.
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Risks/Issues
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Next Steps / Recommendation
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• Formal presentation to Council 6/12
• Council votes on project
• If approved, Contract is fully executed
• Contract is assigned to Tulsa Public Facility
  Authority
• City enters into Lease with Tulsa Public Facility
  Authority
• Legal Due diligence is completed between now and
  closing
• Closing occurs late summer 2007
• Architectural work is initiated after closing
• Construction/modification work commences in the
  fall
• Move in begins fall 2007, planned completion Q2
  2008

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Questions Answers
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