Department: Management and Budget
Department Head: Daniel Ramos, Executive Director
Regular or Supplemental RCA: Supplemental RCA
Type of Request: Investment Memo
Investment Memo Type: Final Investment Memo
Project Name: 1010 Lamar Street Facilities
Project ID (if applicable): N/A
Vendor Legal Name (if applicable): N/A
MWDBE Contracted Goal (if applicable): N/A
MWDBE Current Achievement (if applicable): N/A
Justification for 0% MWDBE Participation Goal: N/A - Goal not applicable to request
Managing Entity: Harris County Engineering Department
Incremental Authorization Requested: $30,000,000
Total Estimated Project Cost: $50,000,000+
Request Summary:
title
Request by the Office of Management and Budget for approval of a Final Investment Memo for the purchase of the 1010 Lamar Street Facilities for an initial amount of $30,000,000.
end
Project Description:
On August 29, 2023, Commissioners Court authorized County departments to negotiate for the purchase of two facilities in downtown Houston: the building at 1010 Lamar and adjacent parking structure at 1111 Main. These facilities are across Fannin St from the County’s property at 1111 Fannin.
1010 Lamar is a 20-story building, located on Lamar Street between Fannin and Main. The building was built in 1981 and contains 301,713 square feet of space. It is located across Fannin Street from 1111 Fannin and is connected by underground tunnel.
1111 Main is a multi-story parking garage immediately adjacent to 1010 Lamar. It is bounded by Main, Dallas, and Fannin Streets and contains approximately 490 spaces. The structure’s exterior was built in 1951, then the interior rebuilt as a garage in 1998.
Project Scope:
The project includes purchasing both 1010 Lamar and the adjoining parking garage at 1111 Main. The current ask is for funding to complete the purchase only. After purchase and further evaluation, the Office of Management and Budget (OMB) and Engineering will return to Commissioners Court for funding approval for capital renovations as cost estimates are developed.
Justification:
The project will help consolidate currently spread-out County offices in a prime location at a relatively low cost.
Consolidation
Purchase of this facility will allow further and continued consolidation of County offices, even as the County population and County staff continue to grow. This purchase could allow the County to discontinue some costly leases in and around downtown and save the County money it would otherwise have spent on constructing new facilities.
Location
The proximity to other Harris County offices downtown can improve lines of communications and facilitate in-person meetings. Sitting at the intersection of two light rail lines and dozens of bus routes, the facilities have some of the best access to mass transit in the region. While the building is about 0.7 miles from the downtown court complexes, the trip can be made by light rail.
Cost
Purchasing an existing facility downtown will provide significant savings to the County compared to building a new facility, even much farther from downtown. Prices for construction has not significantly improved since the pandemic. Estimates from fall 2020 indicated a slightly smaller facility (274K sq ft) built new near the intersection of IH 610 and US 290 would cost at least $85 million, and we estimate construction costs have increased 25-35% since then. Even with renovations and necessary capital investments, purchasing this property will provide the County significant savings.
Alternatives and Engagement:
Commissioners Court could explore other alternatives, either downtown or further from downtown. Many downtown alternatives evaluated before the purchase were much larger in size. Other downtown facilities may also be more expensive or in a location further from other County offices, the court complex, and public transit. A new facility of similar size, whether downtown or further from downtown, could easily cost twice as much or more. A facility further from downtown would not bring the same efficiency benefits and would be less flexible in terms of which County departments could potentially move into the facility.
Commissioners Court could postpone approval or continue discussions on the purchase, which may delay the purchase and could potentially risk the purchase price or purchase altogether.
Anticipated Project Expenditures and Timeline:
|
Scope of Work |
Estimated Cost |
Estimated Completion |
|
Purchase of 1010 Lamar and 1111 Main Facilities |
$26,000,000 |
Q4 2023 |
|
Additional Fees |
1,273,000 |
Q4 2023 |
|
Contingency (10%) |
2,727,000 |
|
|
TOTAL ASK IN THIS FIM |
30,000,000 |
|
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Capital Renovations |
20,000,000+ |
|
|
Total |
50,000,000+ |
- |
The negotiated purchase price for both facilities together is $26 million. There may be additional fees and costs the County must pay as a part of the purchase, which are included in the initial ask.
The purchase of the facilities will be funded with parking fund and general fund, with the parking fund paying for a pro rata share of the purchase allocable to the parking garage, based on assessed land value. Texas statute precludes Harris County from using debt to purchase new facilities for general usage, outside of very specific exemptions, like public safety facilities.
Once purchased, capital renovations and upgrades can be paid for with debt, pending legal and auditing approval. Capital renovations, including minor renovations and upgrades to critical infrastructure like elevators and air handlers are expected to cost at least $20 million, based on experience with 1111 Fannin. Further investments will be needed in furnishings and other needs.
Alignment with Goal(s):
_ Justice and Safety
_ Economic Opportunity
_ Housing
_ Public Health
_ Transportation
_ Flooding
_ Environment
X Governance and Customer Service
Previous Court Action:
|
Date |
Agenda Item # |
Action Taken |
|
8/29/23 |
445 |
Request by the Office of Management and Budget for an Executive Session pursuant to § 551.0725, Texas Gov. Code for discussion of business and financial issues related to an agreement under negotiation for the possible purchase of a facility and adjacent parking structure in downtown Houston. |
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Address: 1010 Lamar & 1111 Main
Precinct(s): Precinct 1
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Fiscal and Personnel Summary |
|
Service Name |
|
|
|
FY 23 |
FY 24 |
Next 3 FYs |
|
Incremental Expenditures (do NOT write values in thousands or millions) |
|
Labor Expenditures |
$ |
$ |
$ |
|
Non-Labor Expenditures |
$ |
$30,000,000 |
$ |
|
Total Incremental Expenditures |
$ |
$30,000,000 |
$ |
|
Funding Sources (do NOT write values in thousands or millions) |
|
Existing Budget |
|
Choose an item. |
$ |
$ |
$ |
|
Choose an item. |
$ |
$ |
$ |
|
Choose an item. |
$ |
$ |
$ |
|
Total Current Budget |
$ |
$ |
$ |
|
Additional Budget Requested |
|
Other |
$ |
$15,000,000 |
$ |
|
1000 - General Fund |
$ |
$15,000,000 |
$ |
|
Choose an item. |
$ |
$ |
$ |
|
Total Additional Budget Requested |
$ |
$30,000,000 |
$ |
|
Total Funding Sources |
$ |
$30,000,000 |
$ |
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Personnel (Fill out section only if requesting new PCNs) |
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Current Position Count for Service |
- |
- |
- |
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Additional Positions Requested |
- |
- |
- |
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Total Personnel |
- |
- |
- |
Anticipated Court Date: 9/19/23
Anticipated Implementation Date (if different from Court date):
Department Approval by: Daniel Ramos, Executive Director, 9/14/23
OMB CIP Team Approval by: William McGuinness, Director, Capital Projects & Infrastructure, 9/14/23
Commercial Paper Request (For OMB use only):
Receiving Department: N/A
Project PeopleSoft ID: N/A
CP Series Description: N/A
HB 1869 compliance confirmed by: N/A
OMB Financial Management contact: N/A