City hall pricetag: $15.3 million

By ERICA JAHN

Staff writer

Federal Way officials are looking at a $15.3 million price tag to buy and renovate the Paragon Building and turn it into a new City Hall, police station and Municipal Court.

After a thorough check of the building revealed no glaring problems, the City Council moved forward with plans to buy the land and the building, make improvements and build a parking lot.

Assistant city manager Derek Matheson, lead city staff member on the project, and consultant Dave Clark, of Clark Architects in Kent, updated the council on the progress last Wednesday.

The due diligence period — when officials get to look the building over for flaws or other issues, like pollution or environmental damage, to ensure all the city departments would fit and to project whether renovations would be affordable — is scheduled to end next Monday. The city might need to extend its contingency as the note holder reviews the city’s financials “to make sure we’re a good creditor before they give a formal OK,” Matheson said.

It’s possible the city won’t have the go-ahead to assume the existing loan on the building by the June 30 closing date, which consequentially might push closing out a couple days.

City officials aren’t worried. “We’ve got outstanding credit,” Matheson said.

According to staff and consultant estimates, it will cost the city $8 million to purchase the building and land and cover closing costs, and just over $7 million to build 188 parking stalls and remodel the building, which is Class A office space but was formerly used to conduct research.

The $15.3 million includes about $500,000 already budgeted for upgrades to the existing City Hall’s phone and public television systems and for the installation of an emergency power generator, which would be done in the Paragon building.

The budget also includes a 10 percent contingency. Clark said projects he’s designed in the past, including the ValleyCom (emergency dispatch) facility and SeaTac and Renton’s city halls, have run between 4 and 6 percent into the contingency fund, leaving some money left over at the end.

The most expensive renovations will be found in building the police facility. Police stations typically cost more than office space because of security issues that must be addressed, like a sally port for securely transporting prisoners and a fence to secure police vehicles on the premises.

Matheson said the budget left out a few things to trim costs. He said the project includes only 118 parking stalls instead of the 213 that would fit (the additional 95 stalls would cost almost another $220,000) and the budget doesn’t include any new furniture for council chambers, conference rooms and the court. Some of the new rooms will sit empty until the city can afford to furnish them, he said.

“The budget is very, very tight and the contingency isn’t as large as we would like it to be, but we’re going to try to make it work,” Matheson said.

In addition, officials haven’t decided what to do with 11,000 square feet of extra space. They’ve discussed leasing it, but the city would have to explore design and cost issues to see if leasing is feasible, Matheson said, adding they don’t know yet if the 11,000 square feet will all be in one place or spread out throughout the building.

Now that the council has approved the due diligence work and authorized purchase, Matheson said the next steps will be negotiating a scope of work and fee with Clark and working on design.

City officials hope to have the police and court functions moved into the new facility by mid-2004, when the leases are up on their existing sites.

Staff can begin design work in earnest once the deal closes, but because USAA will remain a tenant — and pay the city its $86,000 monthly rent — until its lease runs out at the end of the year, the city won’t be able to start any major construction. USAA no longer occupies Paragon, but the company still has certain rights to the building through the duration of its lease.

While planning is still in early preliminary stages, city officials seemed optimistic at the outcome of moving into Paragon. “It’s in very good shape,” Clark said.

Staff writer Erica Jahn: 925-5565, ejahn@fedwaymirror.com

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