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Regular City Council Meeting Monday, May 19, 2008 Page 18 levy limits yet. While financing may be feasible through bonding or borrowing, Councilmember Ihlan opined that she needed more of a sense of other capital needs, and a clear picture of the overall budget for 2009, prior to making a deci- sion. Councilmember Ihlan noted the need for payment of the debt service under potentially severe inflationary circumstances; and expressed concern in being able to afford replacement at either a conventional or geothermal level. Councilmember Pust reviewed the options outlined in the staff report and costs for the conventional system estimated to be $1.5 million; geothermal option at $2,217,400 for the base bid and alternates; or close the facility, since the items needed repaired, and didn't represent an optional project, but a necessary mainte- nance issue. Councilmember Pust recognized that the cost was much higher than anticipated; however, opined that the City didn't have many options, and needed to determine how the repairs were going to be financed. Mr. Brokke concurred with Councilmember Pust's observations, noting that in 2006, a major component was delayed for a number of years, and had gone well beyond its life expectancy for this equipment. Mr. Brokke further noted that steel prices had severely escalated during that time period, in addition to the difficulty in obtaining the steel, and noted the cost estimate of $700,000 just for replacing the steel floor. Further discussion ensued on the various components of the system and facility; cost and future illegal use of R-22 Freon (2010) for the current refrigeration sys- tem; sensitivity of the project timetable versus financing approaches and deci- sions; borrowing rates based on the current market conditions; interest rate risks if delaying a decision beyond year-end; and staff's intent to return on June 9~' for additional budget discussions, at which time details of the recent legislation should be available to assist the City Council in making a decision on funding for this project. Councilmember Ihlan noted that she needed to see the larger picture of other po- tential borrowing needs to balance this project against those and competing areas in the City's 2009 and future budgets. Further discussion ensued on the timing of the project and a decision on funding; work on the contract agreement; mobilization of the contractor; with Mr. Christianson, at the request of Councilmember Roe, estimating contract docu- ments prepared by the end of May, and construction start in early June, with few negotiations required due to the nature of the best value process. Additional discussion included terminology in the contract addressing owner can- cellation provisions, and estimated cost ramifications between $5 - 10,000, based on steel order status.