Rehoboth city complex plans to be presented to commissioners

A $15 million project to rebuild Rehoboth Beach City Hall is expected to be presented to the city commissioners Friday, May 17, to determine if the long-discussed project will continue.

Mayor Sam Cooper, chairman of the City Hall Complex Master Plan Task Force, said  “It’s now time to go to the commissioners, make this presentation in full, to see where we’re at and then hopefully get a blessing to move forward with the next phase."

The 2013-14 city budget includes $100,000 for engineering and architectural work on revamping City Hall.

At its April 18 meeting, the task force put off phasing and construction details of the project to focus on financing.

Beginning that process, Cooper provided an overview of the city’s major debt obligations. He said his preference is for a 25-year loan at 4 percent interest. He estimated under this arrangement, the city would have a yearly payment of just under $1 million.

Cooper said the city could significantly lower its annual payments by refinancing its existing debt with WSFS Bank, borrowing an additional $2.5 million from WSFS and extending the debt to 25 years. That would cut the annual payment down to $385,000, he said.

City Manager Greg Ferrese said, “This project is doable.”

Cooper said the city’s focus on a new City Hall should be secondary to funding the ocean outfall project. The city has been court-mandated to stop dumping its treated effluent into the Lewes-Rehoboth Canal by December 2014.

“I don’t want for City Hall to get out in front of the wastewater and then we have trouble with the wastewater,” he said.

Cooper said the city charter mandates any new bonds being issued must be approved at a public referendum.

Under the proposal submitted by engineers EDiS Co. and architects Davis, Bowen and Friedel, City Hall would be demolished; a new building would house the city administrative offices and the police station. The plan has included moving the building and licensing and information technology departments into the new City Hall and selling the 306 Rehoboth Ave. property.

While the plans have included some upgrades to the convention center, there are no plans to close it. In addition, the parking lots would be reversed so the police department parking is on the west side of the building and public parking is on the east side, behind the fire hall.

EDiS had initially estimated building costs at $20 million, but later revised the plans to bring the cost down to an estimated $13 million. Cooper said he put the cost at $15 million to give the city some cushion. Scaling down the building plans, selling the 306 Rehoboth Ave. property, opened in 2009, and not seeking state funding – which would have required higher wage rates – helped reduce costs. EDiS has estimated a sale of the property could net $2 million, but no official appraisal has been done.

Architect Mike Wigley said the next phase for him is to further develop the plans into schematic designs, look at alternative concepts and further nail down cost estimates.

Cooper said, “I’m happy with the process we’re on.”

The city is paying off three major loans, with a fourth, for the wastewater ocean outfall project still to come. Cooper said the current major outstanding loans are:

• A $6 million loan used to finish the Rehoboth Avenue Streetscape project, the Lake Gerar Bridge and part of the Boardwalk reconstruction. Cooper said the city has more than $2 million left to repay at 3.1 percent interest. He said the loan would be repaid by 2018, with an annual payment of $734,000. This loan was originally through Citizens Bank, but was later refinanced with WSFS Bank.
• The Lynch Well project, which had an original loan of $5 million from the Delaware Clan Water Revolving Fund, has a remaining balance of $4 million. Cooper said the city’s annual repayment is $346,000 at 2.7 percent interest. He said this 20-year loan would be retired in 2028.
• Another outstanding loan is a $450,000 loan from the state for sewer upgrades in the Schoolvue neighborhood. Cooper said the project has not started yet, but the loan will be repaid in 2023 with a $52,000 annual payment at 3 percent interest.
• The city has not yet borrowed the money, nailed down the exact costs or funding arrangement for the ocean outfall project, but Cooper said he anticipates a $22 million loan at 3 percent from the Clean Water Revolving Fund with an annual repayment of $1.5 million. He said this loan would likely be retired in 2035.