"Intuitively, this project makes sense," City Councilman George Rapson said just moments before he made a motion for the Mesquite City Council to approve a design/build development approach for exploring the construction of a proposed Mesquite Indoor Sports Complex (MISC) at the Nov. 22 Council meeting.

The Council voted 4-1 to approve his motion after a long discussion.

Aaron Baker, Economic and Redevelopment Associate on the Mesquite City Staff, provided the Council with four options for development approaches on the project. Explaining that after the Council approved City Staff to seek bids on the MISC project at its Oct. 11 meeting, "several things have come up."

"As we proceeded down the path, we came to the realization that to get a hard price we have to spend hard cash. We came up with estimates as best we could without spending hard cash. Usually on a project you would have to spend eight to 10 percent to get engineering drawings completed. That's about $400,000 to $500,000 and Staff didn't feel comfortable spending that amount of money without seeking guidance from Council," Baker explained.

"What we are seeking tonight is direction on the development method and the funding sources for the project," he said as he began a review of the project.

Interim City Manager Kurt Sawyer added that "we estimated that this project would cost about $3.7 million. At that time I told Council and the citizens of Mesquite that if this was going to be a 'prevailing wage' project, it could be 25 to 30 percent higher. As we went through the project that's what we found."

City Staff has estimated the total cost of the MISC project at $5 million, 30 percent higher than the original projection.

The Nov. 22 agenda item background material includes a list of estimated project costs for the MISC.

Item	Cost
Grading	$400,000
Building	$2,500,000
Turf	$400,000
Floor	$500,000
Landscaping	$40,000
Interior	$300,000
Flatwork	$100,000
Parking	$280,000
Electrical	$180,000
Sprinkler System	$300,000
Total Cost	$5,000,000

Baker explained that a conventional bid approach, one that most people are familiar with, would allow Council to compare estimates on an "apple to apple basis. But you fix in the size, the site work, and the structure. Everything is dialed in ahead of time."

He added that it requires engineering drawings for the entire project, "estimated to cost $400,00 to $500,000 initially."

"The Qualified Bidder process is similar to the conventional bid method but you create a list of qualified firms that weeds out some contenders. Drawings have to be done ahead of time and it limits your flexibility," Baker explained to the Council.

The third approach Baker described is a 'construction manager at risk' method. "It's a two-step process. Construction managers submit their qualifications and after one is chosen, he actually acts as our agent on the project."

Explaining the two phases the construction manager would be responsible for, Baker said, "the first phase is the pre-construction services. Then you have to go through the process again to select a manager for the actual construction with a maximum price. This is similar to the other two where the plans have to be developed during the pre-construction phase."

He described the fourth public works approach as a design/build process. "Staff prefers this option. NRS (Nevada Revised Statutes) stipulates that the estimated cost must be at least $5 million. In the end you may spend less. If the bid comes in at $4.2 million for example, you only have to spend that."

City Councilman George Rapson clarified the NRS requirement saying, "The $5 million threshold is the engineering estimate. If we do the design/build bids and they come in at $4.2 million, we don't have to spend the $5 million. And this gives you the flexibility of taking the vision from each design/build team of what this could be. We would have the flexibility to tweak or modify the plans."

Baker went on to explain that firms would submit their qualifications with two to four firms ultimately being selected. Those companies would then submit their project proposals including the costs. "The competing firms receive a stipend for their proposal efforts. It's not free." He estimated the stipend at around $25,000 for each firm. "Then the winning firm would get the eight to 10 percent for all the engineering design work.

Sawyer commented that the design/build concept gives Council more options and more flexibility. "They may come up with a totally different design than what we're thinking about," he said.

Mayor Mark Wier asked if the design/build firm would be required to locate the project in a certain area or "would they come up with the design for where they think it would fit best within the City limits?"

"We can limit that criteria if Council would like," Sawyer replied. "The City has a lot of property that we could look at but right now it makes more sense to put it up at the MSEC." He was referring to the existing Mesquite Sports and Event Center located at the base of Flat Top Mesa.

When City Councilman Geno Withelder asked Sawyer if there were any local firms that were qualified to bid on the design/build concept, Sawyer replied that there were three construction firms in town that would meet the qualifications but they would have to find an engineer to assist them.

Councilman Al Litman asked Baker about options if the bids came in at $6 million. "We could whittle it down by taking items out. There are items in there like the floor covering that are not absolutely necessary for the construction," Baker replied.

Baker touched briefly on the 'Request for Proposal' construction bid method that would be strictly a private venture. It would not require prevailing wage payments and would give Council the greatest amount of flexibility in choosing the design of the project. "But this would take a lot of time," he added.

Baker provided an overview of potential funding sources that includes several private companies that hold Joint Development Agreements (JDA) with the City.

Source	Amount
Nevada Community Solutions (NCS)	$800,000+
MesTech	$500,000
Pride Contractors	$200,000
RDA Bond, 2009 Series	$2,500,000
RDA, Property Tax	$1,000,000
Total Funding	$5,000,000

He described the MesTech and Pride Contractor JDA agreements as similar in nature and that both companies were interested in closing them out. MesTech's JDA involves 102 acres in the Mesquite Technology and Commerce Center (MTCC) with about $500,000 available from land sale proceeds. Pride Contractor's JDA includes 8.87 acres valued at $200,000 to $300,000, also in the MTCC.

Baker reviewed the JDA between the City and Nevada Community Solutions (NCS) in which NCS is dedicating $1 million towards a recreational amenity. Currently that money is targeted at a new amphitheater slated for construction near the MSEC. He mentioned that NCS had already spent $150,000 on the amphitheater design.

"However, if both parties agree, the remainder [$850,000] could be used towards a different recreational amenity," Baker said.

"They have two pieces of property they can lease, acquire, or develop," Baker continued. "They have 531.59 acres south of Hardy Way and West of Falcon Ridge Parkway. And, NCS has the right to acquire and/or first right of refusal to purchase up to 1,000 acres in the Riverside area. The purchase prices will determined by an appraisal at fair-market value based on the intended zoning and land uses. Those appraisals are going on right now."

See accompanying MCJ story NCS Rep Defends Company

Baker described two types of RDA funding that could be used for the project, bond sale proceeds and RDA property taxes. According to Baker, approximately $2.4 million remain in the bond sale proceeds. The City has to spend $519,000 of that by June 29, 2012 in order to stay within the requirements to spend 85 percent of the total bond sale.

He said the City has about $2.9 million in RDA property tax revenue in the bank that is used to pay annual bond obligations and operating expenses. "The projected property tax revenue for the current fiscal year is about $2,150,000. The debt service on the bond is $2,300,000."

Baker said that RDA property tax collections peaked in 2009 at $4,201,114 and have since fallen 49 percent to $2.15 million. "We have $150,000 shortfall between tax collections and debt service," he commented.

"No matter what you decide tonight, these funding sources still have to come back before Council and the Mayor for approval," Sawyer added. That will take some process and time."

Rapson described all the businesses that have closed in the last few years and said, " it makes me sick. We have sports here. In February we had a huge soccer tournament here and the town was packed. I talked to all the businesses and restaurants, and they all saw it and felt it. It wasn't just the casinos that felt it."

"This is critical and we need to make a decision. Businesses are suffering. It complements what we already have and locating it near the MESC is the right location. We are creating reasons not to do something that I don't think are valid," Rapson continued.

"There have been a lot of negative comments about NCS. You may not like NCS. They are giving us a million dollars. We're not paying it back. No one else in this town has done that," Rapson remarked. "If they don’t develop up there, we're going to pay them back $3.8 million plus interest. We're selling the land to them at the highest and best use value. Who cares if they turn around and sell it two days later if we get the best price. I've got to give NCS a pat on the back for hanging in here because this has been a long, bumpy road and we don't seem to be going anywhere."

"I’m a full supporter of this thing at least to the point where we decide if we can afford it. The design/build makes the most sense and gives us the most flexibility," he concluded.

Councilman Kraig Hafen was the only dissenting voice and vote during the debate saying, "I can’t disagree with any of the comments. I want to do something to help the city. Just because this is built, there are no guarantees that business will increase and the tax base will increase. Mesquite is back to where we were three or four years ago. We supplement the RDA debt service by $150,000 now from the General Fund [Baker later refuted that]. What if we spend the $5 million and next summer the pro formas and projections don't hit their numbers. I'm trying to be realistic about this. I'd like to see us pursue the RFP proposal because maybe they have better ideas that save money. I like the concept. I see the potential. We need to consider everything. I've talked to people who a couple years ago didn’t consider everything," he said.

Baker explained that no money from the General Fund was used to service the RDA bond debt service. "We are gnawing away at our savings. That bottom line property tax balance is ticking down every year as our obligations exceed our revenues.

[Editor's note: More articles about the Nov. 22 Council meeting are forthcoming.]