It isn’t a question about whether the City of Lathrop needs a new police station, but a matter of where.
And while no formal decision has been made, the Lathrop City Council learned on Monday that allowing River Islands to build the City of Lathrop a new police station is the most cost-effective approach currently available.
At the request of the council, city staff prepared a brief informational item that detailed the costs associated with a variety of approaches ranging from taking out 15, 20 or 25-year bonds to letting River Islands cover the costs and paying back the cost of the building over a much shorter window.
According to the numbers provided by Finance Director Cari James, a 15-year bond at market rates – with interest rates at 3.41 percent – would cost the city $750,188 just to issue the bond. The city would be responsible for $3,080,800 worth of interest on the $7 million bond by the time that it is completely paid off.
If the city was looking to reduce its annual payments by stretching out the bond to 25 years, if they were able to secure a bond at market rates with an interest rate of 3.93 percent, the city would end up paying $795,734 in issuance costs and end up paying $5,404,400 in interest on a $7 million principal to bring the total cost of the new building up to nearly double its cost at $13.2 million.
By allowing River Islands, which assumes 300 building permits a year, to build the facility for the City of Lathrop – which would undoubtedly mean it would be constructed somewhere within the new development – the cost of issuance would go away and the time frame for repayment could be shrunk down to just over 7 years.
The current proposal that has been provided by River Islands calls for a prime-plus-three-percent interest rate – estimated to be somewhere around 7.5 percent – which would bring the total cost of construction down to $9.45 million after repayment. By nixing the issuance cost and cutting the payments down to 7 years – even with the higher interest rate – the city would save nearly $1.5 million in costs.
At the direction of the council, staff will continue to research options that can be brought back for approval at a future board meeting.
The current home of Lathrop Police Services – 15597 Seventh Street, which has been in operation since 2002 – is operating on a month-to-month lease with the building owner after the current lease expired on Aug. 6.
How much the city would save on the costs associated with the design of the new building – which would be picked up by River Islands as part of the overall cost – was not included in the proposal that was submitted to the council.
Preliminary ideas discussed by the council included purchasing a lot across from the current city hall complex – located at 390 Towne Centre Drive – since it was available, but that move would tack more than $1.5 million on the overall cost of the construction because of the land acquisition component.
The current building is not large enough to accommodate the growing department, and Lathrop Police Chief James Hood has informed the council that if it weren’t for shift meetings he wouldn’t be able to have all of his staff inside of the complex at the same time.
To contact reporter Jason Campbell email email@example.com or call 209.249.3544.