Council approves $6.5 million loan and construction contract for new energy services purchasing and IT warehouse

Monroe City Council on Feb. 11 approved a capital project to build a new purchasing and IT warehouse for Energy Services and renovate existing Energy Services facilities, authorizing a $6.5 million loan from the electric fund to the general fund and awarding a construction contract.

The project, presented by Rob Miller, general manager of energy and water, together with Purchasing Manager Karen Pinniger and IT Director Josh Hite, includes a new warehouse at 2125 Walkup Avenue, site improvements required by the Department of Transportation, and renovations to the existing Energy Services building. Miller said the new building will improve material storage and operations, and include stormwater best-management practices and an on-site spoil area to reduce haul-off costs.

Project scope and costs: Miller said the construction contract price presented to council is approximately $20.97 million, and that the project's site costs and infrastructure improvements are material components of that sum. "The total construction cost is $20,971,944," Miller said during the presentation; later documents presented for approval referenced a contract amount in the same range. Miller said the electric fund's balance is strong and that the requested $6.5 million promissory note would be a 20-year, low-interest loan at 2 percent; city staff estimated debt service to be just under $400,000 per year.

Intended operational changes: Karen Pinniger said the new warehouse will provide roughly 18,000 square feet of space to inventory components used in construction and maintenance; the current warehouse is about 10,000 square feet and holds inventory valued at over $11 million. Josh Hite said the shared facility includes a data center built to resiliency specifications, redundancy and a generator, and workspace for IT operations that will reduce current logistics of receiving equipment at other city facilities.

Council questions and approvals: Council asked about traffic impacts and DOT-required turn-lane work at the Walkup Avenue/Richardson Street intersection; Miller said required DOT improvements are included in the project budget and staff will follow up on potential signalization if council wishes to pursue it with DOT. Council also asked about bunk rooms, furniture and racking costs; Miller said furnishings and racks are not included in the construction contract and will be returned to council for separate approvals.

Action taken: Council voted to adopt the capital project budget ordinance, approve the promissory note for the $6.5 million interfund loan, approve the construction services contract with the construction manager at risk (Vannoy Construction identified as project manager at risk), and authorize the city manager to execute contract documents. The motion passed on the council vote.

Financial and implementation context: Miller said the electric fund had a balance of approximately $98.5 million, well above the stated minimum policy requirement, and that the city structured the loan to favor a lower internal rate to avoid higher market borrowing costs. Council directed staff to return with details on furniture, racking and any additional equipment purchases required for the new warehouse and data center.

Contract and procurement notes: The council authorization included direction to execute contract documents with the construction firm; staff noted project contingency and construction manager risk fees were included in the project budget. Miller said erosion control permitting is approved and stormwater permitting is pending at the time of the presentation. Council also asked staff to work with DOT on possible signalization or additional traffic mitigations at the intersection, and staff agreed to follow up with DOT.