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Murray Journal

Murray bonds on $25 million revamp of Public Works facilities

Dec 01, 2023 11:46AM ● By Shaun Delliskave

Murray sprawling Public Works complex is set for a major revamp. (Shaun Delliskave/City Journals)

A huge building project is about to set sail for Murray, and it doesn’t involve the city’s downtown area. Murray City is set to embark on a significant journey of infrastructure development, with the council's decision to issue a $25 million bond for a new Public Works facility. This move, underscored in a May 16 Municipal Building Authority (MBA) meeting, is a pivotal step in the city's pursuit to bolster its infrastructure to meet current and future demands.

Murray’s current facilities (4646 S. 500 West) has been a growing concern for the city, and this project, initiated after an independent analysis, marks a substantial effort for future upgrades to Murray’s infrastructure.

Housing Murray’s water, roads and industrial shops, the current Public Works buildings are hampered by space constraints, a critical issue for a facility that has not kept pace with the city's growth. Designed for a smaller scale of operations, it now struggles to efficiently manage the increased workload and storage demands. This limitation significantly impacts the organization and deployment of equipment and personnel, essential for effective public services.

Additionally, the building's aging infrastructure poses safety and compliance challenges with modern building codes and environmental standards. Its outdated design lacks necessary technological integration, hindering optimal performance and responsiveness in public works operations. These shortcomings not only affect daily operations but also present long-term challenges for the city's infrastructure management and development.

Murray Finance Director Brenda Moore said, “The new administration building would be a single-story building, whereas right now it's a two-story building that is way bigger than needed. The biggest and most important thing is that the new admin building would stay up if there is an earthquake and it would be seismically sound. It's my belief, and I think everybody else would agree, that Public Works is essential and that their building should be safe so that they should be able to continue to function if we have an earthquake or a major disaster. The fleet building, the new admin building, and the other buildings will be built to not fall down. This is their most important feature, so they can continue and go out and rebuild the city as needed in a case of an emergency.”

Murray City's Public Works project, known as Option A, outlines a series of comprehensive upgrades to its existing facilities. Central to this plan is the relocation of the natural gas station near Riverside Dr. (500 West), aimed at enhancing both access and safety. Additionally, the project will significantly increase the space allocated for the fleet and sign shop operations, addressing long-standing space constraints.

Improvements in the overall site design are also a key focus of the redevelopment. The plan includes enhancing site circulation for more efficient movement within the Public Works area. To further streamline operations, segregated parking areas will be introduced, dividing spaces for staff, public, and Public Works vehicles. This division is expected to improve access and reduce congestion at the site.

The construction aspect of Option A features several new buildings and facilities. A new consolidated administration building is set to replace the current administrative structures. This comes alongside the demolition of the old ancillary administration, fleet and sign shop. Additionally, new facilities specifically for stormwater and wastewater management are planned, along with the relocation and extension of drying beds (drying beds provide sludge dewatering by allowing the liquid to both drain). 

The project's funding structure involves leasing the land to the MBA, which will issue the bonds. The MBA will oversee construction and lease the facilities back to the city. Notably, the payments for these bonds will match the bond payments, ensuring that the city will own the buildings outright once the bonds are paid off.

This bond issuance, especially in light of the city’s existing $55 million bond obligations, was deliberated by the city council. The new bonds come with a maturity of 25 years and an interest rate cap of 6.5%.

“Whoever in January you pick as your chairman is going to get a hand cramp from all of the signing that they will be doing of all of those bonds,” Moore said.

The decision to cross-collateralize these bonds with the City Hall bonds was a notable topic, intertwining the financial fates of these critical city facilities.

Council members, while acknowledging the project's importance, raised concerns about the impact of additional debt. Discussions about potential rate increases and budget adjustments were central to the decision-making process.

“I'm wondering if now is the best time to bond?” City Councilor Diane Turner asked.

“There is probably no great time to bond, but it's not the worst time either,” Moore said. “These rates are back up to the ones before the 2008 housing crisis. We were doing 5% bonds all the time then. If you look at my old coupon rates on a lot of our bonds, they're 4 and 5%. The cost of construction is going up, so I don't know which is worse: paying 5% or waiting three or four years. If you know anything about Municipal Finance, there is no way we would ever save $20 million for a building; you just can't do it. And the cost of construction is rising way more than 5% a year.” 

The roles of Stifel Public Finance and Gilmore & Bell, serving as financial advisors and bond counsel, will be employed to ensure the city navigates this complex financial landscape responsibly and in accordance with legal requirements. λ