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HomeMy WebLinkAboutItem 3A - PresentationCity of Palm Springs PLAZA THEATRE RESTORATION DECEMBER 14, 2023 2 City of Palm Springs Plaza Theatre Restoration Background: •The Foundation has raised over $14 million toward the restoration of the Plaza Theatre. •On June 29, 2023, the City Council approved the Project for soliciting bids for construction services with an engineer’s estimate of $16,500,000. A total of five bids were received at the time of bid closing. •Though the first and second lowest were found non-responsive and contained significant errors in their accounting/costs. The remaining three bids ranged from $26,322,000 to $26,999,757, indicating the true price to construct this Project. •With construction cost now exceeding the original budget by $10 million, adding in a contingency of $3.3 million and start up costs of $2.5 million, the Foundation is requesting an additional amount up to $20 million from the City to begin construction. 3 City of Palm Springs Plaza Theatre Restoration Funding Options: •Measure J Fund a.Divert approximately $5.85 million set aside for the new construction of Fire Station #1 with the commitment by the City to replenish these funds to their original intent in the FY26 & FY27 budgets. These funds have the potential to fall back into the Measure J Fund Balance if the City chooses to issue debt for a new Fire Station. b.Divert approximately $9.5 million in funds to be used for Community Initiated Projects. These funds have the potential to sit in the fund unused for up to two years while the City completes the current Community Initiated Projects and then opens up the application process for review of new projects. The Council could divert all or a part of these funds to the Plaza Theatre. The Council could also approve this with the commitment by the City to replenish these funds to their original intent in the FY26 & FY27 budgets. 4 City of Palm Springs Plaza Theatre Restoration Funding Options Continued: •General Fund Reserves •The Council could choose to use General Fund Reserves. In the FY24 budget, the City had total unassigned reserves of $85 million, of which $32 million is the required minimum, leaving $53 million. City Staff maintains that is good to have strong reserves over and above the minimum, especially at a time when the City is planning the construction of a new Fire Station and the renovation of the Library. Construction costs continue to substantially increase, and the City wants to ensure the City reserves remain strong in case they are needed to move these big projects forward. Therefore, City Staff recommends Council only use a maximum of $10 million of these reserves to assist the Plaza Theatre renovation. The Council could also recommend the replenishment of these reserve funds in the FY26 & FY27 budget. •Council Set-Asides approved in the FY23 budget •The City has $4 million set aside for Police future study and services and approximately $1.6 million in workforce development that has not been earmarked for a specific project. The Council could divert this $5.6 million to be used for the Plaza Theatre with the commitment by the City to replenish these funds to their original intent in the FY26 & FY27 budgets. 5 City of Palm Springs Plaza Theatre Restoration Measure J Recommendation to the City Council: •The Measure J Commission held a special meeting on December 14, 2023 at 9:30am to approve a formal recommendation to the City Council on how much funding, and where would those funds be derived, from the Measure J Fund. •The following is the recommendation: •$7.5 million in Measure J funding. $5.85 million to come from the set aside for construction of Fire Station #1 and $1.65 million to come from the set aside for Community Initiated Projects. The funds to be replenished with a combination of funds paid back by the Foundation and the remaining dollars to be replenished in the FY26 & FY27 budgets. 6 City of Palm Springs Plaza Theatre Restoration Repayment: •The proposed Funding and Repayment Agreement between the City and the Foundation provides that the Plaza Theatre Foundation will pay back to the City an amount to be determined by the City Council. This payback amount will go back into City accounts proportionately, based on where the funds were dispersed from. The Foundation has committed to continue to fundraise to meet this requirement, including the possibility of significant tax credits, which would help reduce the liability back to the City. Recommendations: •Council to consider approval of the Funding and Repayment Agreement between the Palm Springs Plaza Theatre Foundation and the City of Palm Springs for an amount up to $20 million, with direction on: •i) An overall funding amount, •ii) Funding sources to use and what amounts, and •iii) A payback amount.