The Old Courthouse and Sheriff’s House renovation could cost almost $5 million more than the $8.4 million estimate the city was given in July 2020 by its architect GWA Studios, Woodstock officials now project.
The latest figure of $13.25 million for the project was supplied to the city by Bulley & Andrews, a Chicago-based contractor, and part of the reason the cost is higher is because the city is now prepared to add a geothermal field underneath a parking lot across the street from the courthouse complex’s rear.
The field will serve to heat and cool the building in place of a traditional heating, ventilation and air conditioning system. The geothermal approach will cost $300,000 more upfront than the traditional heating and cooling system, but the city expects it may be able to recover some of that cost by building in slightly higher rents for the commercial tenants of the building, which will likely face significantly lower utility costs with the geothermal system.
Savings on the heating and cooling efficiency provided by the geothermal system means it would pay for itself eventually, city staff said. Plus, the city also has a chance to lower that $300,000 figure by getting some credits from ComEd, an idea that was still being negotiated last week, when officials last discussed the Old Courthouse project.
Most of the cost increase for the entire project, though, is being driven by higher market prices for building supplies, equipment and labor, and the city staff thinks the earlier estimate may have been a little low. Additionally, the scope of work for the project has grown since then, with far more upgrades slated for the Public House portion of the complex than were initially pictured.
“The previous budget did not include recently added projects, such as modifications to the Sheriff’s House to accommodate a microbrewery operation and remodeling of a majority of the Public House restaurant,” City Planner Darrell Moore said in a memo. “Also, the budget estimate includes tenant finishes, the costs for which may be rolled into leases or, otherwise, paid for directly by the tenants. Tenant leases are currently being negotiated.”
Milwaukee’s MobCraft Beer is the brewery that recently agreed to lease space within the upgraded historic building, taking the place of an ice cream shop that had been interested but later dropped out. The Public House will remain a tenant, Ethereal Confections intends to run an event and banquet space in the property’s upper floor and the Woodstock Chamber will also locate within the building.
The city is also leaning toward using space in the renovated complex for a city-run arts center that would offer both educational and entertainment-based classes and events involving a range of creative disciplines.
Assistant City Manager and Finance Director Paul Christensen said Woodstock will have to absorb the newly discovered costs by extending the term of the bond the city plans to sell to finance the construction to 20 years from 15.
After that, he expects the building will be profitable to the city with the rents charged to its tenants.
The city’s tax increment financing district, or TIF, established in 2019 will also help fund the construction, as officials intend to put the district’s resources toward covering the bond payments.
But the city may have to borrow from other areas in the city for a few years until property values in the TIF grow. A TIF is a financial instrument that lets local governments dedicate property tax revenues from new property value created within district boundaries to improvements in the area to foster economic progress and job creation.
“In the first five or six years, we may have to go the general fund and grab some money,” Christensen said.
The general fund pays for essential city services like the police department.
“But I do believe when you get farther in this TIF, 10 years out, I believe this TIF will be highly successful. It’s a very large TIF, and we will be able to pull money and repay back the general fund,” he said. “... Once the building is paid off, this will pay dividends to the taxpayers of Woodstock. It will be a profitable building.”
Woodstock is also going to apply for another $900,000 in state historic tax credits that it would sell to the bank that purchased the other $2.1 million in state and federal tax credits the city obtained.
Christensen said the city regretted not applying for the entire $3 million in tax credits to help finance the project during its initial bid for the state and federal awards, but he thinks the city will be able to get the remaining $900,000 for which it is eligible on this project and can sell them to PNC Bank, which bought the other credits, at the same price as that initial deal.
Christensen said the city thought it would not initially need all $3 million in tax credits to help with the project.
“Grab all the marbles when you can get them,” council member Tom Niermann said in response.