The Chanute City Commission likely will decide in December to proceed with a project to replace the HVAC system at the depot using city funds initially and getting reimbursed by other agencies who have committed funding toward the project.
A decision is expected at the Dec. 9 meeting, possibly the last commission meeting of the year, because the bid price of $2.7 million plus add-ons is good for 60 days.
Commissioners discussed the matter on Monday. City Manager Todd Newman said two bids came in for the HVAC work and were opened on Nov. 8. Central Consolidated and Metro Air provided the bids, and Central had the low bid.
The city has an agreement with the Chanute Public Library and the Martin and Osa Johnson Safari Museum, which are housed in the depot, to use sales tax proceeds to replace the HVAC in the depot. The original amount the city was to provide was $750,000 from a quarter cent sales tax, but that was based on an estimate of $1.5 million for the work, which includes five air handling units, seven fan coils, two unit heaters, five return fans, two boilers, two air cooled chillers, four hydronic water pumps, five humidifiers and other parts.
The low base bid came in at $2.7 million, which was a shock to city staff, Newman said.
The city staff discussed committing up to $1.7 million in the sales tax, more than double its original commitment. The tax was approved by voters with the expectation the city would help fund the HVAC replacement for the depot. The library will commit $500,000 from its reserves plus conduct fundraising to get another $250,000. Other commitments would pay the balance.
Newman said the city doesn’t have the sales tax money now to meet its additional commitment as that funding comes in at intervals from the state. He said the city’s sales tax money would be available over the next four years. The cash is needed sooner, as the contractor likely would only submit a couple of vouchers for the work, which could be done within a calendar year. So the city would contribute the cash for the project.
With bonds issued for the water treatment plant project, and bonds expected to be issued after that for wastewater improvements, the city is not able to take on any more bond debt to pay for the work, Newman told commissioners.
“So we’d pretty much be subsidizing the contract with Central Consolidated, and then we’d replenish that money accordingly as it came in over the next four years,” Newman said.
“I don’t want it to look like the city doesn’t need $1.7 million. Because that’s not the See CITY, Page 3.
route I’m going. I mean, obviously, the city could spend $1.7 million. I don’t want it to look like we’re not appreciative of the sales tax and we don’t need the money. We do need the money. We could spend it on other projects,” he said.
Even with the extra sales tax commitment from the city, the city would still have $400,000 available from the sales tax to complete planned projects, including windows at the Judicial Center, the Alliance Room and restrooms at the east complex, Newman said.
Commissioners asked where the money would come from immediately to pay for the HVAC work. Newman said the electric reserve fund would be the best option. The withdrawal would drop the cash reserves below the recommended amount for the department, but the reserves already are lower than suggested by the federal standard.
He said this funding method would work as long as there is buy-in from city departments and the agencies involved.
Commissioner Tim Fairchild said he struggled with the thought of reducing the reserves for the electric department for this project. Replenishing that reserve would take four years of sales tax receipts.
“So we’re going to be running skinny,” Fairchild said.
Mayor Jacob LaRue said the city needed to step up and find the funding to replace the HVAC, which has languished through a Band-Aid approach in recent years. He also worried about a four-year payback to the electrical reserve fund.
Commissioners asked if tourism money could be used on the project as the museum is a big draw for the city.
Fairchild thinks the museum, housed in the depot building, is too important to tourism.
“It’s the best love story on the planet, one of them,” he said.
Fairchild called the project a defining moment.
“And this defines who we are. And either we’re a community or we’re not. And we all pitch in the best we can,” he said.
He also asked if the upgrade will remove the 50 drip pans in the existing HVAC system. These pans leaked and threatened an exhibit. He was told the new system would only have five drip pans and a bigger pipe that would be easier to maintain and less likely to clog.
LaRue said he would like to see better projections and a payback schedule but wants the project to move forward.
Newman said he would get back to them on Dec. 9 to answer questions and finalize details and shore up the numbers on the city’s total commitment.
