Source: Sherman Publications

Mgr. estimates $750K to $1.1M needed to construct new village facilities

by CJ Carnacchio

September 04, 2013

If Oxford Village were to construct a brand new municipal office and police station, it could cost anywhere from $750,000 to $1.125 million.

That’s based on estimates calculated by village Manager Joe Young, who presented his findings last week as council once again discussed the possibility of selling the existing municipal complex property (18-22 W. Burdick St.) and the 2 acres it’s situated on to a private developer looking to build townhouses.

Council voted 4-0 to continue the dialogue with Burton-Katzman, a real estate developer based in Bingham Farms. If a deal is reached, the plan is to use the sale proceeds to either construct new municipal facilities elsewhere or move into an existing building.

“I think that we need to keep the dialogue open,” said Councilwoman Sue Bossardet. “I don’t think that we need to just turn (them) away.”

Back in late June, Burton Katzman submitted a proposal to purchase the village property and build an estimated 30 to 35 townhouses on the site.

The developer offered to pay market value as established by a mutually agreed upon appraisal process.

The proposal included the caveat that no matter what the market value was determined to be, the purchase price would not be less than $7,000 per approved residential unit.

For example, if the estimated maximum of 35 townhouses was ultimately approved for the site, the village would be paid no less than $245,000, even if the market value was determined to be lower.

Young estimated it would cost between $250,000 and $375,000 to construct a new 2,500-square-foot village office that included space for administrative staff, council chambers, conference room and a records storage area.

He also estimated it would cost between $500,000 and $750,000 to build a 5,000-square-foot police station that included space for administrative staff, officers, records storage, a dispatch center, locker rooms, holding cell, radio antennae and generator.

Young’s estimates were based on a construction rate of $100 to $150 per square foot.

Based on Burton-Katzman’s current offer of a $7,000 minimum for each approved townhouse, Young said it didn’t make “financial sense” because the whole reason for selling the municipal complex property was to get it back on the tax rolls and generate additional revenue so the village can maintain its level of services.

Having to spend more money on constructing a new village office/police station than the property was sold for would defeat that purpose.

Based on Young’s estimates to build a new municipal office and police station, he determined the village would need to be paid at least $21,000 to $32,000 per unit, based on 35 townhouses being approved, to cover construction costs.

“Based on that, I do agree with Joe that this makes zero sense to continue,” said Councilwoman Maureen Helmuth.

Charles M. DiMaggio, senior vice president of project development for Burton-Katzman, told council this proposal was his company’s opening offer.

“We just took the field in this football game,” he said. “I’d hate to throw in the towel before we really even started the game.”

DiMaggio indicated he’s more than willing to continue discussing ways to craft a deal that works for both his company and the village. “There’s different ways that we can try to achieve the numbers that we need to achieve, so let’s start looking at them,” he said. “And if we can find a way to make it work, that’s all to the betterment of all of us.

“I think we can work with Joe to come up with ways to try and close this gap and see what works for everybody. Give us some time to try and work through the issues.”

Burton-Katzman estimated that it’s proposed townhouse development would have a value of $4 million to $5 million and generate between $80,000 and $100,000 in property taxes.