Ferndale Council to Consider Additional “dot” Mixed Use Parking Deck Design Costs

Ferndale Council to Consider Additional “dot” Mixed Use Parking Deck Design Costs

(Crystal A. Proxmire, Feb. 9, 2020)

Ferndale, MI – Ferndale City Council will vote Monday on whether to allocate up to $2 million dollars, partially from the parking fund and the rest as a loan from the general fund, to cover the cost of change orders and incomplete design costs for the Development on Troy (“The dot”) mixed use parking deck.  About half of the funds would later be reimbursed back to the city by the development partner.

While most of “the dot” is a City of Ferndale project, the fourth floor includes office space and is being built in partnership with Versa Wanda LLC.  Through the process, fourth floor decisions have been made separately because of this relationship. Costs for the fourth floor are split between Versa Wanda LLC and the city. To proceed, the City would approve the funds and be reimbursed by Versa Wanda for their portion.   A memo by the city manager explains that City costs will cover the portion of the project that supports the facade, while the developer’s costs will consider the floor and foundation.

According to City Manager Joe Gacioch, “Last winter, a bid package that included all of the materials and trade work for the construction of The dot was issued by Colasanti Construction.  Our design team (WGI and FS&P) had also requested what is called an add/alternate for half of level 4. They separated it from the dot bid package because this portion of the 4th floor included substantial costs for the future office space that was being pursued with Versa Wanda LLC.

“The reason that we would separate this scope of work is to obtain an idea of pricing that we could incorporate into our concurrent negotiations with Versa and the MEDC on their financial participation with the project.”

When asked what happened, Gacioch said “The add/alternate was never bid. This was unclear to me when I accepted the bid recommendations. Because it was never bid, we never understood the pricing impacts, and so, the cost of this portion of the floor was not contemplated as part of our negotiations with Versa or as part of the financial package that would ultimately be approved by the State of Michigan (Michigan Economic Development Corporation).”

The funds requested Monday will cover a change order to keep the crane on site and to finish the 4th floor and facade, the other half of the costs will be applied to design changes as a result of the office space. The majority of These changes are reimbursable based on the development agreement.

“The engineering behind the design of The dot ties the weight of the façade materials to the beam systems in the 4th floor.  Without the 4th floor, the façade cannot be installed and secured,” Gacioch said.  “As a reminder, the façade includes a significant amount of glazing and metal paneling designed to improve the aesthetic of the building beyond a traditional open air concrete parking deck.”

The City Manager said the facade materials were already purchased.  If council were to deny the funding request, “the front of the dot facing W. Troy Street and the 4th floor would remain unfinished and the substantial amount of materials that have been procured via bid contracts would be wasted.”

Gacioch added that the agreement with Versa Wanda “requires a minimum investment of $750,000 and a 50/50 split of costs related to the interface between the office and parking development beyond that minimum amount.  Many costs, including a minimum of 50% of the cost of the 4th floor will be reimbursed by the developer.”

The overall cost of The dot is around $20 million, financed with bond money that will be repaid through parking system revenue, which includes parking fees and tickets, as well as revenue brought in by the addition of offices and potential future apartments.  Groundbreaking happened about a year ago, and the project is expected to be complete by June.

According to the memo, “From the beginning, the City Manager’s Office contemplated that the success of this project would rely on the use of cash reserves that has been accrued for the Parking Fund. The Auto Parking Fund’s balance was about $1.2 million as noted in the 2019 year-end financial audit. The entirety of those cash reserves will be applied toward changes in the project. As the project is completed over the next few months, if final project costs exceed available Parking Fund reserves, Council can consider approval of an inter-fund loan between the General Fund and the Parking Fund. The loan would be treated as an investment in a city project. Terms would include a short-term payback period and interest rate.”

Mayor Melanie Piana told Oakland County Times that she and members of council will be looking at how this part of the planning was overlooked, and how best to hold responsible parties accountable.

“It’s unclear why the design costs weren’t included in the beginning,” she said.  “However, having a facade is important to this type of project, and the auto parking fund enables us to do that.”

Piana explained that cities the size of Ferndale hire outside firms to manage projects such as the DOT.  “We contracted with experts, and now we will be talking with them and taking a look at how this fell through,” she said.  She also reiterated that the costs would be shared with the developer.

City Manager Gacioch is looking for answers as well.  “I am equally unhappy about the current circumstances, it is extremely unfortunate and not desirable. Much progress has been made in the first year of construction. There is no doubt that this is a major obstacle, but obstacles can be overcome. I remain confident in the vision of this project, and its merits as a long term investment for the community and the downtown.”

Ferndale City Council meets Monday at 7pm at City Hall to further discuss this issue.

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