besc relocation feasibility study update...

BESC RELOCATION FEASIBILITY STUDY

UPDATE REPORT

Prepared For:

THE PORTLAND DEVELOPMENT COMMISSION

and

PORTLAND PUBLIC SCHOOLS SCHOOL DISTRICT NO. 1J

MULTNOMAH COUNTY, OREGON

Prepared By:

Shiels Obletz Johnsen, Inc. GBD Architects Incorporated

The Kalberer Company First Real Estate Consulting, Inc.

July 29, 2011

BESC Relocation Feasibility Study Update Report Page a Date of Report: July 29, 2011

Table of Contents Page EXECUTIVE SUMMARY ........................................................................................ i I. SUMMARY ................................................................................................................ 1 II. RECOMMENDATIONS .......................................................................................... 3 III. UPDATE THE NEEDS ANALYSIS FOR PPS RELATING TO THE

POSSIBLE RELOCATION OF THE PRIMARY BESC FUNCTIONS ............. 6

A. Updated Valuation of the Blanchard Education Service Center .............. 6

B. Summary of the Needs Analyses .................................................................. 9 IV. PREPARE CONCEPTUAL COSTS ASSOCIATED WITH THE

POSSIBLE RELOCATION OF THE PRIMARY BESC FUNCTIONS TO GENERIC SITES WITHIN THE PPS GEOGRAPHIC BOUNDARIES .. 11

A. Assumptions Regarding the Conceptual Cost Estimates ........................ 11

B. Scenario A – Central Administration........................................................ 12

C. Scenario B – Nutrition Services ................................................................. 13

D. Scenario C – Central Warehouse .............................................................. 13

E. Scenario D – Combined Central Warehouse & Nutrition Services ....... 14

F. Scenario E – Maintenance Services ........................................................... 15

G. Scenario F – Relocation of Nutrition Services, Warehouse and

Maintenance Functions, Remodel of 1st and 2nd Floors of the BESC ..... 16 V. NUTRITIONAL SERVICES DEPARTMENT ANALYSIS ............................... 17 ADDENDUMS TO THE FEASIBILITY STUDY ADDENDUM NUMBER 1 – Additional Details Regarding the BESC Facility Scope of Work Summary ..................................................................................................... A

BESC Relocation Feasibility Study Update Report Page b Date of Report: July 29, 2011

BESC Square Footage ........................................................................................................... B Employees and Parking Section .......................................................................................... C PPS – BESC Properties and Related Property Information ............................................ D Urban Renewal Districts ....................................................................................................... E Summary of the Needs Analysis Section – Additional Information ................................ G Assumptions Regarding Construction, Remodeling and Relocation Costs .................... G Scenario A – Central Administration – Option One – Generic Facility Cost Estimate .................................................................................................................................. J Scenario A – Central Administration – Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions .................................................... L Scenario A – Central Administration – Option Three – Remodel of a Generic Facility on a Generic Site ..................................................................................................... N Scenario B – Nutrition Services – Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions ........................................................................ P Scenario C – Central Warehouse – Option One – Generic Facility Cost Estimate ....... R Scenario C – Central Warehouse – Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions ........................................................................ T Scenario C – Central Warehouse – Option Three – Remodel of a Generic Facility On a Generic Site .................................................................................................................. V Scenario D – Combined Central Warehouse & Nutrition Services – Option One – Generic Facility Cost Estimate ............................................................................................ X Scenario D – Combined Central Warehouse & Nutrition Services – Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions................ Z Scenario D – Combined Central Warehouse & Nutrition Services – Option Three Remodel of a Generic Building on a Generic Site ........................................................... BB Scenario E – Maintenance Services – Option One – Generic Facility Cost Estimate .. DD Scenario E – Maintenance Services – Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions ..................................................................... FF

BESC Relocation Feasibility Study Update Report Page c Date of Report: July 29, 2011

Scenario E – Maintenance Services – Option Three – Remodel of a Generic Building on a Generic Site ................................................................................................ HH Scenario F – Relocation of Nutrition Services, Warehouse & Maintenance Functions, Remodel 1st & 2nd Floors of the BESC ............................................................ JJ ADDENDUM NUMBER 2 –Planning & Zoning Code as It Pertains to the BESC ... MM TABLES Table 1 – Summary of BESC Value and Lease Buy-out Cost .......................................... iii Table 2 – BESC Gross Square Footage Summary by Floor and General Use ................ 2 Table 3 – Summary of Space Needs & Moving Costs for Nutrition Services & Deli .... 19 Table 4 – Selected Growth Rates (Square Footage) within the BESC ............................ G Table 5 –Central Administration Replacement Cost Concept Estimate of a Generic Building ............................................................................................................................... J Table 6 –Central Administration Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions .................................................................. L Table 7 –Central Administration Remodel Cost Estimate of a Generic Building Built on a Generic Site .......................................................................................... N Table 8 – Nutrition Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions .................................................................. P Table 9 – Central Warehouse Replacement Cost Concept Estimate of a Generic Building .............................................................................................................................. R Table 10 – Central Warehouse Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions .................................................................. T Table 11 – Central Warehouse Remodel Cost Concept Estimate of a Generic Building Built on a Generic Site .......................................................................................... V Table 12 – Combined Central Warehouse and Nutrition Services Replacement Cost Concept Estimate of a Generic Building ............................................................................ X

BESC Relocation Feasibility Study Update Report Page d Date of Report: July 29, 2011

Table 13 – Combined Central Warehouse and Nutrition Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions ............. Z Table 14 – Combined Central Warehouse and Nutrition Services Remodel Cost Concept Estimate of a Generic Building on a Generic Site ............................................ BB Table 15 – Maintenance Services Replacement Cost Concept Estimate of a Generic Building ............................................................................................................................ DD Table 16 – Maintenance Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions ............................................................... FF Table 17 – Maintenance Services Remodel Cost Concept Estimate of a Generic Building on a Generic Site ................................................................................................ HH Table 18 – BESC Upgrade Option Remodel Cost Concept Estimate ............................. JJ EXHIBITS TO THE UPDATED REPORT EXHIBIT 1 – Summary of BESC Employees and Parking Breakout ............................. D EXHIBIT 2 – PPS – BESC Properties and Related Property Information ..................... E ATTACHMENTS TO THE UPDATED REPORT ATTACHMENT 1 – Food Research and Action Center (FRAC) School Breakfast Program ................................................................................................................................... I ATTACHMENT 2 – 10 Reasons to Try Breakfast in the Classroom .............................. II ATTACHMENT 3 – Exhibit 3 – PPS-BESC Properties Based on 3.9.11 Site Plan And PortlandMaps .............................................................................................................. III ATTACHMENT 4 – BESC Site Plan with Tax Lots ....................................................... IV ATTACHMENT 5 – Valuation Consultation Portland Public Schools Blanchard Educational Service Center ................................................................................................. V ATTACHMENT 6 – Central Administration Generic Facility Cost Estimate ............. VI ATTACHMENT 7 – Central Administration Generic Facility Cost Estimate – Based on Future Square Foot Assumptions .................................................................... VII

BESC Relocation Feasibility Study Update Report Page e Date of Report: July 29, 2011

ATTACHMENT 8 – Central Administration Cost Estimate – Remodel of a Generic Building on a Generic Site ................................................................................. VIII ATTACHMENT 9 – Nutrition Services Generic Facility Cost Estimate ....................... IX ATTACHMENT 10 – Central Warehouse Generic Facility Cost Estimate ................... X ATTACHMENT 11 – Central Warehouse Generic Facility Cost Estimate – Based On Future Square Foot Assumptions ................................................................................ XI ATTACHMENT 12 – Central Warehouse Cost Estimate – Remodel of a Generic Facility on a Generic Site .................................................................................................. XII ATTACHMENT 13 – Combined Central Warehouse and Nutrition Services Generic Facility Cost Estimate ........................................................................................ XIII ATTACHMENT 14 – Combined Central Warehouse and Nutrition Services Generic Facility Cost Estimate – Based on Future Square Foot Assumptions........... XIV ATTACHMENT 15 – Combined Central Warehouse and Nutrition Services – Remodel of a Generic Building on a Generic Site ........................................................... XV ATTACHMENT 16 – Maintenance Services Generic Facility Cost Estimate ........... XVI ATTACHMENT 17 – Maintenance Services Generic Facility Cost Estimate – Based on Future Square Foot Assumptions ................................................................. XVII ATTACHMENT 18 – Maintenance Services Cost Estimate – Remodel of a Generic Building on a Generic Site .............................................................................. XVIII ATTACHMENT 19 – Relocation of Warehouse & Maintenance Functions, Remodel 1st & 2nd Floor of the BESC for an Updated Central Administration (BESC Upgrades Option) ................................................................................................ XIX ATTACHMENT 20 – Additional Backup Information in Support of the GBD Architects Cost Estimates .................................................................................................. XX ATTACHMENT 21 – Copy of the Final Draft Report from The Kalberer Company Regarding the Nutrition Services Department .............................................................. XXI ATTACHMENT 22 – Bargreen-Ellingson Cost Information .................................... XXII

BESC RELOCATION FEASIBILITY STUDY UPDATE

BESC Relocation Feasibility Study Update Report Page i Date of Report: July 29, 2011

EXECUTIVE SUMMARY Shiels Obletz Johnsen led a Project Team that included GBD Architects, The Kalberer Company and First Real Estate Consulting to undertake an update of the February 14, 2005 Feasibility Study for the Relocation of Central Support Services Study (Original Study) from the Blanchard Education Service Center (BESC) site. The resulting work, the BESC Relocation Feasibility Study Update (Updated Report) follows. Assignment. The purpose of the Updated Report is to re-examine the feasibility of relocating some or all of the central support services currently located in the BESC to a generic site within the Portland Public Schools (PPS) service area. Along with these options, and with direction from the District, the scope of work was expanded to include the possibility of upgrades to the existing BESC facility with the administrative functions remaining at the current BESC location, but with the central kitchen and food services, the warehouse and distribution functions, and the maintenance services functions possibly being relocated elsewhere; the updated space would include new professional development and training space as well. The first task for the Updated Report was to conduct an updated needs analysis in conjunction with PPS senior staff; the second task was to provide PPS with a conceptual cost estimate associated with the possible relocation of the primary BESC functions to generic locations within the PPS geographic boundaries. A summary of the tasks follows. • To determine what Central Administration Services functions and services should be

included in an updated and possibly relocated administrative headquarters facility or facilities;

• To determine which functions and services need to be co-located and should be considered for co-location in any update and possible relocation scenario;

• Working with senior PPS staff and Nutrition Services Department staff to determine what Nutrition Services Department functions and services should be included in an updated and possibly relocated Nutrition Services Department facility;

• Working with senior PPS staff and Central Warehouse Department staff to determine what Central Warehouse Department functions and services should be included in an updated and possibly relocated Central Warehouse Department facility; and

• Working with senior PPS staff and Maintenance Services Department staff to determine what Maintenance Services Department functions and services should be included in an updated and possibly relocated Maintenance Services Department facility.

• Working with senior PPS staff and departmental staff explore whether the Nutrition Services Department and the Central Warehouse Department could be combined into an updated and possibly relocated central facility.

• The work will also include an updated estimate of the current value of the BESC. Key Conclusions. The Project Team’s key conclusions for the four central service functions of the BESC – central administration, central kitchen and food services, warehouse and distribution services, and maintenance services are as follows:


BESC Relocation Feasibility Study Update Report Page ii Date of Report: July 29, 2011

The BESC facility contains approximately 369,000 gross square feet and encompasses more space than the District currently needs for its central services. However, further sub-leasing could prove difficult without relocation of some central functions to a new site. All the current functions in the BESC do not need to be co-located to meet District needs. The combined area currently occupied by the Warehouse, Shop and Kitchen (197,500 square feet) could be partitioned, and subleased or sold if those functions could be relocated. The financial viability of such a deal would hinge on the PPS relocation costs and Lease termination costs for the Multnomah County space, and required improvements to the BESC facility (such as seismic upgrades), being covered by lease/sale of those portions of the facility. General Findings: • At this time, it is highly unlikely the District could sell the BESC for enough money to fund

the relocation of current services to another site. Specific Findings. The following are our specific findings: BESC Valuation: • The District should not make any substantial capital investments in the BESC that would

increase the cost of an eventual move to a different facility/location. • Working with the City of Portland on possible rezoning of the BESC site, or the creation of a

special overlay zone, would allow for an increase in the value of the BESC site. • The current land value based on the current industrial zoning is $20.00/SF or $8,809,000, as

concluded in the June 2007 Integra appraisal. The current use of the property as a business center with 35.8% office is $24,000,000 to $30,470,000 based on two 2007 appraisals.

The following Table 1 – Summary of BESC Value and Lease Buy-out Cost shows in Scenario One the Net Estimated Differential (Loss) based on the current value of the bare property less the cost of constructing: 1) a new generic six story Central Administration Services facility on a generic site taking into account reasonable, additional square footage needs including professional development space, 2) a new combined Central Warehouse and Nutrition Services facility on a generic site taking into account reduced future square footage needs, and 3) a new Maintenance Services facility on a generic site taking into account reduced future square footage needs, and less the estimated cost to buy-out the remainder of the long-term Multnomah County BESC lease. Scenario Two shows the Net Estimated Differential (Loss) based on the lower of the two values of the facility and site based on the current use of the property as a business center ($24,000,000) less the cost of constructing the same three facilities, and less the estimated cost to buy-out the remainder of the long-term Multnomah County BESC lease. Based on the Table 1 calculations for the current estimated value of the BESC land only, the estimated cost to relocate and replace the current Central Support Services in new generic buildings on generic sites, and the estimated cost to “buy-out” the remaining portion of the Multnomah County long-term lease, it would cost PPS about $67.6 million to relocate all of its


BESC Relocation Feasibility Study Update Report Page iii Date of Report: July 29, 2011

current Central Support Services to new generic buildings on generic sites; (this calculation assumes Nutrition Services and the Central Warehouse Department share a facility). It would cost about $52.5 million to relocate all of PPS’s current Central Support Services to remodeled generic buildings on generic sites(this calculation assumes Nutrition Services and the Central Warehouse Department share a facility) if the BESC site were to be sold for the lower of the two values as a business center.

Table 1 – Summary Table of BESC Value and Lease Buy-out Cost Scenario One – Value of BESC Bare Property: $8,809,000 Less:

Cost to Relocate All Central Support Services to a Generic Site with Future Needs Taken into Account:

$73,548,541

Multnomah County Buy-out1 $2,918,229 : NET ESTIMATED DIFFERENTIAL (LOSS): $(67,657,770) Scenario Two – Value of BESC Facility and Property as a Business Center: $24,000,000 Less:

Cost to Relocate All Central Support Services to a Generic Site with Future Needs Taken into Account:

$73,548,541

Multnomah County Buy-out: $2,918,229 NET ESTIMATED DIFFERENTIAL (LOSS): ($52,466,770 Assumptions Regarding the Conceptual Cost Estimates: The Project Team developed conceptual cost estimates associated with the possible relocation of the current BESC services utilizing three options. The first option was to locate the service in a new facility on generic site utilizing the same square footage and services the service currently provides. The second option incorporates work GBD did with PPS staff in looking at future services and facility needs in a new facility on generic site; this is the option the Project Team used to develop its primary cost estimates for purposes of the Updated Report. The third option is based on the provision of existing services in a generic remodeled building on a generic site. Central Administration Services: • The District’s central administrative services could be “unbundled” from the other central

services currently located within the BESC. • The current BESC configuration is not as efficient as it could be for administrative office

use. • The Project Team’s observations during site visits lead it to believe that some of the spaces

may not be adequate for the needs of the users. GBD’s observations during its site visits lead it to believe that some of the office spaces may not be adequate for the needs of the users.

1 Portland Public Schools entered into a long-term lease agreement with Multnomah County in 2000 regarding the lease of approximately 46,300 square feet; PPS subsequently “repurchased” about 8,000 square feet of the space in 2008. Based on the terms of the original and amended lease document I estimated the buyback to be $2,918,229.


BESC Relocation Feasibility Study Update Report Page iv Date of Report: July 29, 2011

The Project Team believes the results of years of reshuffling departments and the variety of workstation types have created some areas of density, but not efficiency, a situation that can contribute to inefficient operations and an environment that looks and feels inefficient. Currently about 57% of the total amount of overall administrative space is being used for direct office functions, i.e., work space. This results in approximately 180 square feet per person space allocation, a figure that is at the low end of industry standards. The other 43% is being used for large group meeting spaces, storage and other ancillary functions. This suggests that it may be possible to re-assess the critical office functions that need to happen within the building, re-purpose some of the ancillary space to relieve the workplace congestion, and provide the necessary floor area that appears to be needed for office space.

• Cost estimates for new generic facilities and a remodeled generic Central Administration Services facility on generic sites: o Option One – Generic Facility Cost Estimate: $49,770,862 o Option Two – Generic Facility Cost Estimate – Based on Future Square Foot

Assumptions: $53,975,527 o Option Three- Remodel of a Generic Building on a Generic Site: $57,259,102

Nutrition Services: • The central kitchen and food services functions do not need to be part of a central

administrative services facility. • The Project Team recommends Nutrition Services study replacing and upgrading some of the

existing shelving assuming labor savings result. • The Project Team believes relocating to a reconfigured and downsized facility (of

approximately 50,000 square feet) may be a viable option. • The only cost estimate prepared for Nutrition Services was for new generic facility on a

generic site: o Option Two – Generic Facility Cost Estimate – Based on Future Square Foot

Assumptions: $8,584,063 Central Warehouse and Distribution Services: • The warehouse and distribution service functions do not need to be part of a central

administrative services facility; they could potentially be co-located as part of a new central kitchen facility.

• The District should pursue ways to reduce warehouse space. New storage rack systems and inventory management systems could provide space savings and efficiency improvements.

• Cost estimates for new generic facilities and a remodeled generic facility on generic sites: o Option One – Generic Facility Cost Estimate: $6,583,314 o Option Two – Generic Facility Cost Estimate – Based on Future Square Foot


Combined Central Warehouse and Nutrition \ Services: • Cost estimates for new generic facilities and a remodeled generic facility on generic sites:

o Option One – Generic Facility Cost Estimate: $14,575,947


BESC Relocation Feasibility Study Update Report Page v Date of Report: July 29, 2011

o Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: $13,778,579

o Option Three- Remodel of a Generic Building on a Generic Site: $17,416,058 Maintenance Services: • The Maintenance Services functions do not need to be part of a Central Administration

Services facility. • Cost estimates for new generic facilities and a remodeled generic facility on generic sites:

o Option One – Generic Facility Cost Estimate: $7,233,362 o Option Two – Generic Facility Cost Estimate – Based on Future Square Foot


Relocation of Nutrition Services, Warehouse and Maintenance Functions, Remodel of 1st and 2nd Floors of the BESC: • Cost estimate for the major remodel of part of the existing BESC facility: $15,282,975


BESC Relocation Feasibility Study Update Report Page 1 Date of Report: July 29, 2011

I. SUMMARY Shiels Obletz Johnsen, Inc. (SOJ) was retained by the Portland Development Commission (PDC) and Portland Public Schools (PPS) to undertake an update of the February 14, 2005 Feasibility Study for the Relocation of Central Support Services Study (Original Study) from the Blanchard Education Service Center (BESC) site for the purpose of re-examining the feasibility of relocating some or all of the central support services currently located within the BESC. The Project Team for the BESC Relocation Feasibility Study Update (Updated Report) was led by SOJ and included Phil Beyl and Richard Dobrot of GBD Architects, Phil Kalberer of The Kalberer Company, and David Pietka of First Real Estate Consulting. In addition the Project Team was greatly assisted in its work by C. J. Sylvester, Chief Operating Office, Gretchen Hollands of the Facilities and Asset Management Department, Gitta Grether-Sweeney, Director of Nutrition Services, and by other PPS staff including Tom Adams, Facility Services, Dave Fajer, Director of Procurement, Distribution and IRC, Glen Harrison, Warehousing, and Nick Jwayad Chief Information Officer and Deputy Chief Operating Officer. The Project Team also received assistance from Sara King, N/NE Neighborhood Manager, Portland Development Commission. The purpose of the Original Study was to examine the practicality of relocating the central support services located within the BESC, and potentially other de-centralized support services, such as those located in other Portland Public Schools (PPS) facilities, into another location or locations. The purpose of the Updated Report is to update the information contained in the Original Report taking into account the progress the District has made on many of the original recommendations, and to specifically update the cost estimates. (More information on the Updated Report’s Scope of Work can be found in Addendum Number 1 – Additional Details Regarding the BESC Facility beginning on Page A.) Current BESC Facility Services. The BESC currently houses a diverse collection of central support services, including: • Administrative functions • Information technology services • The central kitchen and food services • Warehouse and distribution functions • Maintenance services • Fleet storage and employee parking • Various other District programs Note: Multnomah County occupies approximately 8.4% of the BESC facility. In June of 2000 Multnomah County entered into a 99-year lease/real property agreement for about 38,900 square feet of space within the BESC, and approximately 7,400 square feet of space in the fleet area of the facility; (PPS has since re-acquired approximately 8,057 square feet from Multnomah County reducing the County’s space to about 30,850 square feet). The District received $3.5 million from the original transaction; the cost to reacquire part of the Multnomah County space in December 2008 was $800,000.



Employees and Parking: As of November 29, 2010, the BESC housed approximately 610 employees according to the employee position list provided by PPS, (please refer to Exhibit 1 – Summary of BESC Employees and Parking Breakout on Page D of Addendum Number 1 – Additional Details Regarding the BESC Facility). (There were about 540 employees at the time of the February 14, 2005 Original Study.) The current total includes approximately 148 employees who do not currently have or need office space at the BESC. These are primarily personnel in maintenance services who are dispatched to schools on daily basis, or nutrition services employees that work in the school kitchens or delivery jobs. The BESC site has a total of 558 parking spots (according to the previous feasibility report), 235 of which are actually available for general BESC parking. Of the total parking spaces at the BESC 163 spaces are on the fleet deck and not available for general parking. 180 spaces are on nearby lots and available for employee parking and 160 are for employee parking by numbered permit; 55 are reserved for visitors. No changes in the parking plan have occurred since the last report to our knowledge. Parking still presents a challenge to employees and visitors alike with many employees and visitors parking on local streets. The current location is difficult to reach without a car as nearby bus and light rail stops require difficult pedestrian crossings on NE Broadway. Transit options for employees, contractors and visitors will be greatly enhanced when the Portland Streetcar begins scheduled service in September 2012; the Streetcar will provide an easy link to light rail and bus options. PPS has an opportunity to take advantage of the opening of the Portland Streetcar on Broadway Street in September 2012 to encourage its employees to use transit to help PPS become more compliant with City of Portland goals regarding reduction in single occupancy car trips. BESC Facility Summary. The BESC facility has approximately 369,156 square feet of space located on four floors, not including the fleet service building located on the first floor service lot (approximately 7,400 square feet). Of the total space, PPS currently occupies about 338,306 square feet with Multnomah County occupying approximately 30,850 square feet, not including the fleet service building. The primary divisions of use are Office, Shop/Warehouse, and Nutrition Services. The table below indicates how the space is currently used on each floor.

Table 2 – BESC Gross Square Footage Summary by Floor and General Use

Shop ¹ Nutrition 2011 Study 2005 Study Difference Floor Office (sf) Warehouse (sf) Services (sf) GSF GSF ² %

Floor 2 49,214 0 0 49,214 50,778 3.1% Floor 1 21,587 100,499 0 122,086 125,479 2.7% Floor L1 29,261 1,224 2,214 32,699 32.386 -1.0% Floor L2 29,093 76,502 51,568 157,163 161,702 2.8%

Totals 129,155 178,225 53,782 361,162 370,345 2.5% 35.8% 49.3% 14.9% Mech/Elect Vaults 7,994 369,156 370,345 0.3% Source: GBD Architects 2011 and 2005



1. Shop/Warehouse area includes 30,850 square feet of Multnomah County Lease Space 2. Floor 1 GSF for 2005 has been adjusted to include Mezzanine Storage area (4,910)

square feet) Zoning. The property is located within the Central City Plan District in the Lower Albina Industrial Sanctuary. Most of the PPS property currently is zoned IG1, General Industrial 1 (approximately 9.24 acres or 91.03%); the balance of the site is zoned EGI, General Employment 1 (approximately 0.91 acres or 8.97%). (Please refer to Addendum –2 Planning & Zoning Code as it pertains to the BESC for more site and zoning details beginning on Page LL.) The PPS property lies in two urban renewal districts managed by the Portland Development Commission; the Oregon Convention Center Urban Renewal District (8.04 acres or 79.21% of the BESC site) and the Interstate Urban Renewal District (2.11 acres or 20.79% of the BESC site). The property to the east of North Dixon Street and to the north of North Wheeler Street is in the Oregon Convention Center Urban Renewal District; the property to the west of Dixon is in the Interstate Urban Renewal District. (Please refer to Exhibit 2 – PPS – BESC Properties and Related Property Information on Page E of Addendum Number 1 – Additional Details Regarding the BESC Facility for a complete summary the various properties owned by PPS in the immediate area including the actual BESC facility; additional information on the two urban renewal districts can be found on Pages E-G. Attachment 3 – Exhibit 3 – PPS-BESC Properties Based on 3.9.11 Site Plan and PortlandMaps found on Page III also provides information regarding the urban renewal districts and other detail on the twenty one PPS BESC individual parcels of property.) II. RECOMMENDATIONS The Project Team recommends the District remain in the BESC until such time as a firm, reasonable and suitable offer is made for all or part of the existing property. The Project Team believes the BESC is not well suited for the services it currently provides; the layout is inefficient and its design precludes an affordable and effective use/reuse of the facility. Given the age and current state of the BESC, the building will likely require major investment in the future. Putting any significant dollars into the building’s infrastructure or mechanical systems would not be a good long-term investment for PPS, but some short-term repairs and maintenance will be required. However, given the likelihood of remaining in place for some time, interim improvements should be considered to the office configurations to implement standardized workstation sizes, to enhance workspaces, and to improve communications within and between departments. Upgrades to provide a better interface between the school administration and visitors to the BESC should also be considered. Improved building security should go hand-in-hand with this “open door/front door” concept. The following are the Project Team’s recommendations regarding the BESC based on its Original Scope of Work.



A. Recommendations: What follows are the observations and recommendations made by the Project Team with respect to the valuation of the BESC in its current condition, and with respect to the central services currently contained in the BESC.

1. BESC Valuation: PPS should continue to monitor the value of the BESC property over

time, and it should take steps to maintain as many options as possible regarding the property and its possible valuation. a. Rezoning: PPS should begin work with the City of Portland to begin a process to

rezone the BESC site to better reflect what the City would like to see occur on the property and that would allow for an increase in property value. This may require a new zone, or a special overlay zone, for the site to better reflect its long-term-potential.

b. Capital Expenditures: PPS should not make any substantial capital expenditures that would increase the cost of an eventual move to a different location/facility.

c. Wait on Relocation Options: PPS should not seek out relocation options until zoning/value/price issues are more favorable.

2. Unbundling: The current functions in the BESC do not require co-location. The central office, kitchen, central warehouse and maintenance functions could be relocated, either together or separately, to a new site if vacating their current spaces provided some financial benefit to the District.

3. Central Administration Services: The District should conduct a detailed evaluation of PPS administrative office space requirements to facilitate any efforts to reconfigure or relocate existing office spaces for maximum efficiency and functionality. GBD’s observations during its site visits lead it to believe that some of the office spaces may not be adequate for the needs of the users. The Project Team believes the results of years of reshuffling departments and the variety of workstation types have created some areas of density, but not efficiency, a situation that can contribute to inefficient operations and an environment that looks and feels inefficient. Currently about 57% of the total amount of overall administrative space is being used for direct office functions, i.e., work space. This results in approximately 180 square feet per person space allocation, a figure that is at the low end of industry standards even for completely open plan environments. The other 43% is being used for large group meeting spaces, storage and other ancillary functions. This suggests that it may be possible to re-assess the critical office functions that need to happen within the building, re-purpose some of the ancillary space to relieve the workplace congestion, and provide the necessary floor area that appears to be needed for office space. a. Standardized Workstation Sizes: The District should evaluate the implementation of

standardized workstation sizes as part of an effort to minimize space needs and maximize organizational efficiency.

b. Existing Modular Systems Furniture: The District should conduct a thorough survey of existing modular systems furniture in use and in storage to determine if the current stock is sufficient to implement workspace standardization goals.

c. Records Storage Requirements: The District should conduct a detailed survey of its records storage requirements to determine if a central file area located in conjunction with the administration space and overseen by Records Management staff would reduce the area needed within work spaces. Currently, a multitude of files, such as



contracts, archives and grant applications, are kept in workstations and corridors, and in the warehouse, leading to inefficient workstation layout and inflexible office space.

4. Reduce Kitchen, Shop and Warehouse Space Needed: As a part of any effort to relocate the central services, the District should explore how the kitchen, shop and warehouse functions can be significantly reduced in size to minimize relocation costs.

5. Nutrition Services: In any move to a new facility central to the department’s service area within the Portland area, availability of parcels over one square block is problematic. (However if a 40,000 square foot “typical Portland block” were available, it could work since the proposed facility could use a full or partial second story for office and other related space rather than utilizing a 50,000 square foot, single story building.) Using an existing PPS school site could help alleviate this concern. (More specific information regarding the recommendations can be found in the Nutrition Services Department Analysis beginning on Page 16; the final draft report from The Kalberer Company can be found in Attachment 21 on Page XXI, and the Bargreen-Ellingson Cost Information can be found in Attachment 22 on Page XXXII.) a. Building costs follow total square footage and Nutrition Services should continue to

look for ways to reduce the size of its overall footprint. The footprint could be lessened by building a structure in which the offices are tiered over the production space as the facility is currently configured at the BESC.

b. Because of the high cube need of the warehouse and holding freezer, the height of a new building should be sufficient to easily allow double stacking.

c. Using proper shelving units would lower the amount of shelving square footage and staging space needed and possibly reduce labor costs. (Up to 6,000 square feet could be eliminated.)

d. Sizing the main freezer to accommodate Nutrition Services’ actual needs could provide more freezer capacity within a smaller footprint by reducing the total square footage needed for the main freezer.

e. Using more shelving in the Nutrition Services warehouse area dedicated for supplies and surplus items could decrease the overall need for shelving units in the general warehouse area.

f. Reconfiguring the existing production line in a new facility could potentially eliminate an additional 3,000 – 4,000 square feet of space.

g. Decreasing the size of the walk-in cooler and freezer for the test kitchen could decrease space needs by reducing the total square footage needed.

h. Spacing between the current warehouse shelving and the Nutrition Services kitchen is overabundant, and is the result of changes over time when the space was used for flour storage and other production items. If the Nutrition Services shelving were more tightly spaced less square footage might be needed.

i. Because of the high cost of constructing new space, PPS and Nutrition Services should undertake an exercise to develop a model floor plan for a new kitchen facility to better determine the actual square footage that would be needed. The Project Team recommends looking at two scenarios; the first would assume a total need of from 45,000 square feet to 55,000 square feet, and the second would utilize a “typical” Portland block at 40,000 square feet.



6. Warehouse and Distribution Services: The Project Team has the following recommendations for PPS regarding Warehouse and Distribution Services. a. The District should conduct a detailed storage analysis to develop a “shelf life”

concept for items that are no longer used, such as music instruments, in conjunction with the Maintenance Services storage areas. Disposition of these items might produce some revenue for PPS or benefit to other school districts.

b. As part of this storage analysis, the District should evaluate the space usage of the warehouse storage racks, and possible space efficiencies of a new industry standard size rack system. Additionally, bar code technology to help maximize rack space usage, and streamline storage and retrieval processes, should be evaluated.

c. The District should further explore new computer technology (EdBox, an electronic gradebook being implemented by PPS or the Google Chrome experiment in Astoria), that could reduce or eliminate traditional textbook storage needs, reduce printing costs, etc.

7. Maintenance Services: The Project Team has the following for PPS regarding Maintenance Services. a. If the District decides to relocate the Maintenance Services Department it should

explore other options that might include outsourcing more maintenance work to provide the service needs without the extensive shop equipment space requirements.

PPS may want to further explore some of the suggestions and recommendations outlined above to see if operating savings could be realized. III. UPDATE THE NEEDS ANALYSIS FOR PPS RELATING TO THE POSSIBLE

RELOCATION OF THE PRIMARY BESC FUNCTIONS The Project Team focused on conducting a needs analysis for PPS relating to the possible relocation of the primary BESC functions and then developing cost estimates for the potential relocation opportunities. Essentially the Project Team was tasked with re-examining the feasibility of relocating some or all of the central support services currently located within the BESC. Below is a summary of the Updated Report’s Scope of Work. (Please refer to Addendum Number 1 – Additional Details Regarding the BESC, “Scope of Work Summary” beginning on Page A for additional details.) A. Updated Valuation for the Blanchard Education Service Center: Based on First Real

Estate Consulting’s “Valuation Consultation Portland Public Schools Blanchard Education Service Center” report (2011 Valuation Report) there are five findings.

1. There is no current market evidence that the BESC’s value has changed significantly

since the two appraisals were conducted in 2007. 2. The cost to relocate all PPS operations presently exceeds the value of the property. 3. For a move to be cost effective for PPS, an entity would have to pay PPS a price in

excess of the current value. 4. The gap between value and the required price to relocate PPS services contained in the

BESC at this time is large.



5. A rezoning of the property, or the creation of a special overlay zone, thereby increasing its development potential, could narrow the gap between the value of the property and the cost to PPS of relocating its Central Administration Services functions elsewhere.

The Property: The 2011 Valuation Report goes on to say the property for which the valuation was completed contains the PPS headquarters building that contains approximately 369,156 square feet of space of which about 35.8% is office space, about 49.3% is warehouse and shop space and the remaining 14.9% is occupied by the kitchen. It is located near the Rose Quarter and Memorial Coliseum, and to a lesser degree the Lloyd District that contains a regional mall and employment centers. Highest and Best Use: The Highest and Best Use of the property which is controlled by legal, physical, financial, and market constraints, is unknown at this time. While many uses are possible, there are few users in Portland capable of absorbing the amount of space that could be potentially sited on the property as currently improved, or as the property could be redeveloped. Financially very few uses are feasible in the current market. Ultimately the zoning of the property will guide redevelopment when market and financial conditions are more favorable. Of all the Highest and Best Use issues, zoning is the most significant. According to the 2011 Valuation Report when zoning and density are determined, alternatives for the property could include: • Demolition and redevelopment; • Continued use as is; • Renovation to better serve the current or similar user; • Conversion to an alternative use; or • Expansion of the improvements (vertically or horizontally). Control of Zoning/Use Decision: According to David Pietka’s valuation report the value of the property today is the present value of all future benefits. The future benefits of rezoning the property are difficult to discern as no one knows if or when the property will be rezoned. The City of Portland land use process and politicians have control over the ultimate value of the property, as use, density, and community goals will dictate value or price. Mr. Pietka suggests that the Highest and Best Use of properties is governed by legal, physical, financial and market constraints. The most powerful of these is the government’s legal power of zoning. Updated Valuation: The following are excerpts from the 2011 Valuation Report regarding considerations that should be taken into account when determining an updated value of the BESC property. No Available Comparables: The few comparables available are dated, do not reflect the current market, and can not be adjusted to reflect changes in market conditions for size, for density or for other differences with a reasonable degree of accuracy. Value Based on Current Use until Zone Change: The current land value based on the current industrial zoning is $20.00/SF or $8,809,000, as concluded in the June 2007 Integra appraisal.



The current use of the property as a business center with 35.8% office is $24,000,000 to $30,470,000 based on two 2007 appraisals. Until a zone change occurs, value decisions will be based on the current use. Zone Change is Speculative: Any person studying the current City of Portland planning process and politics would logically conclude that there is no way to predict the eventual zoning of the property. For this reason, no logical buyer would pay a guaranteed value premium over the value indicated by the current use. One 2007 appraisal suggests a potential value (assuming an appropriate zone change), of $33,000,000, a premium of from $3,000,000 to $9,000,000. Once the planning is completed, the value will reflect the new zoning. Price Versus Value Concept as Potentially Applied to Subject Property: In markets with multiple sellers and buyers (such as houses, apartments, offices, etc.), value is discernable from the comparable sales because there is competition in the market. Multiple buyers conduct analysis of what they can pay for property based on perceived benefits to be derived. In these markets there is a clear understanding of property types and values, which can be discerned. The value of special purpose properties (like the subject) is more difficult to assess as the market is thinner, and continued utility is not guaranteed. In land analysis, it is common to have values skewed, especially in today’s weak market. Where there is limited demand, transactions often occur at a price that one user can pay, which is not necessarily the value. This analysis is presented to suggest that there are specific factors related to the subject property that result in “price analysis” being more meaningful than “value analysis.” Presently, the property is relatively unique, i.e., a large flex building in a central location, perhaps with redevelopment potential. It is probable that a transaction can be premised on alternative analysis reflecting the specific needs of the PPS and the City of Portland. Valuation: Based on previous appraisal analysis conducted in 2007, if the zoning creates a high density residential or commercial opportunity, and when the current market corrects, demolition is the most plausible use. If only a low density use is allowed, the value will most likely be based on continued use as is with renovation and conversion over time and as market conditions allow. The following scenarios and values were reported in the two 2007 appraisals done by Integra Realty Resources2

and PGP. Values range from $8.8 million for bare land to $33 million for land rezoned as CX.

2 Appraisal of Real Property; Blanchard Education Service Center; Prepared for Portland Public Schools; July 18, 2007; Integra Realty Resources.



Scenario Integra Report PGP Report

Vacant Industrial Land $8,809,000 N/A Continued Use As Improved $24,000,000 to $26,500,000 $25,960,000 to $30,470,000 Redevelopment Site upon Rezoning To Commercial Use with Probable FAR of 3:1 or 4:1

$33,000,000 (CX Zone)

$16,960,000 to $19,600,000 (EX Zone)

Further Valuation Analysis Alternatives: Refining a value with current comparables is not appropriate at this time because: 1) there are no new true comparables; 2) no plausible use can be ascribed to the property until the zoning is determined; and 3) by the time a decision has been made, market conditions will have changed requiring new analysis at that time. For benchmarking purposes, the 2007 appraisals are adequate. B. Summary of the Needs Analyses: Central Administration Services: The Project Team investigation was led by Phil Beyl and Richard Dobrot of GBD Architects; they were assisted by Gretchen Hollands, Surplus Coordinator, Special Projects Assistant, Tom Adams, Assistant Director Facility Operations, and Nick Jwayad, Chief Information Officer and Deputy Chief Operating Officer. GBD Architects determined that the District’s Central Administration Services could be unbundled from the other central services currently located within the BESC. GBD also found that the current BESC configuration is not particularly efficient for the District’s administrative functions. GBD Architects, working closely with PPS staff determined that if PPS were to seek development of an updated Central Administration Services facility the total office needs would increase by about 10.35% from the amount of space it currently occupies. Larger square footage increases and decreases between the current space and projected future space needs are summarized in “Table 4 – Selected Growth Rates (Square Footage) within the BESC” located in Addendum Number 1 on Page G. The increase in part comes from relocating the ESL people (15) to the BESC from Roosevelt High School. FAM notes these standards do not reflect the actual use of space in the BESC today; most office sizes today are significantly under the recommended square footage. Other changes in square footage within the new Central Administration Services facility includes adding new space to allow for in-house professional development activities, an increase of 25.7% in the Information Technology (IT) section (3,416 square feet, most of which is the result of moving paper currently stored in the Central Warehouse into the IT department); an increase of 175.7% in Records Management (8,334 square feet, most of which is the result of moving records currently stored in the Central Warehouse into Records Management); and an overall 34.5% projected growth in the Chief Academic Office, Student and Academic Space areas (7,172 square feet). Larger square footage decreases include a 34.9% reduction in the Facilities and Asset Management office space (2,524 square feet); and a decrease of 16.3% in the Human Resources space (1,390 square feet).



Nutrition Services Department and Central Warehouse Department: The Project Team investigation of the Nutrition Services Department was led by Phil Kalberer of The Kalberer Company with assistance from Matt Hastings at Bargreen-Ellingson; they were assisted by Gitta Grether-Sweeney, Director of Nutrition Services. Mr. Beyl and Mr. Dobrot from GBD Architects led the Project Team evaluation of the Central Warehouse Department; they were assisted by Dave Fajer, Director of Procurement, Distribution and IRS and Glen Harrison, Warehousing. • Nutrition Services Department: Working with The Kalberer Company, Nutrition Services

management estimated they could reduce their existing space from about 53,800 square feet to about 50,000 square feet, a decrease of 7.0% in the Nutrition Services space (3,782 square feet). (Please refer to Page 5 Nutrition Services of this Updated Report for more specifics regarding how the overall reduction in space could be accomplished.) Nutrition Services management agreed with The Kalberer Company that a future goal could be reduction in the overall space needed to 45,000 to 55,000 square feet – a size that might fit a “typical” Portland 40,000 square foot block if the building were one and one-half or two stories and utilized new racking systems as recommended by The Kalberer Company. (PPS should consider further exploration of the ideas set out in the Final Draft of The Kalberer Company Report included in Attachment 21 on Page XXI.) The 50,000 square foot facility assumes a facility dedicated to the Nutrition Services Department only; there would not be a shared dock facility with the Central Warehouse Department and it is assumed that any Deli service would be located in the Central Administration Services facility, not in the Nutrition Services facility.

• Central Warehouse: In the future the Central Warehouse feels it can reduce its overall space by an additional 11,000 square feet (about 14.2%) to approximately 66,400 square feet; (about 8,300 square feet of the space savings will in fact be added to Records Management space as they take on responsibility for in-house storage of their records). (PPS may want to consider further exploration of the ideas suggested by the GBD work. The questions regarding racking systems and possible increase in efficiency, weight bearing capacity and space usage, and other technical warehouse efficiency issues, could be further examined in detail by a warehouse expert.)

Maintenance Services Department: Phil Beyl and Richard Dobrot from GBD Architects led the effort to conduct the needs analysis of the Maintenance Services Department. In the future Maintenance Services feels it can further reduce its overall space by an additional 14,100 square feet (about 21.3%) to approximately 52,175 square feet. Additional Co-location Opportunities: The Project Team recommends pursuing the co-location of Nutrition Services and the Central Warehouse in one facility if these two Central Administration Services are relocated out of the current BESC.



IV. PREPARE CONCEPTUAL COSTS ASSOCIATED WITH THE POSSIBLE RELOCATION OF THE PRIMARY BESC FUNCTIONS TO GENERIC SITES WITHIN THE PORTLAND PUBLIC SCHOOLS GEOGRAPHIC BOUNDARIES

The first option was to locate the service in a new facility on generic site utilizing the same square footage and services the service currently provides (with the exception that new space for professional development and staff training was added to the Central Administrative Services space); this will be referred to as the “Generic Facility Cost Estimate”. The second option incorporates work GBD did with PPS staff in looking at future services and needs and incorporating the information provided to the Project Team by Facilities and Asset Management relating to recommended space for staff based on the 1999 MAD Collaborative report “Master Space Analysis for the BESC” for the future Central Administration Services facility needs in a new facility on generic site (with the exception that new space for professional development and staff training was added to the Central Administrative Services space); the second option will be referred to as the “Generic Facility Cost Estimate – Based on Future Square Foot Assumptions”; the Second Option is the option the Project Team used to develop its primary cost estimates for purposes of the Updated Report. The third option is based on the provision of existing services in a generic remodeled building on a generic site (with the exception that new space for professional development and staff training was added to the Central Administrative Services space); this option will be referred to as the “Remodel of a Generic Building on a Generic Site”. To conduct this analysis the Project Team, led by GBD Architects and The Kalberer Company, broke the assignment into the following six scenarios to summarize the work. Scenario A – Central Administration – New Building/New Building with Future Services and Needs/Remodel of an existing building Scenario B – Nutrition Services – New Building Scenario C – Central Warehouse – New Building/New Building with Future Services and Needs/Remodel of an existing building Scenario D – Combined Central Warehouse & Nutrition Services – New Building/New Building with Future Services and Needs/Remodel of an Existing Building Scenario E – Maintenance Services – New Building/New Building with Future Services and Needs/Remodel of an existing building Scenario F – Relocation of Nutrition Services, Central Warehouse and Maintenance functions, remodel of 1st and 2nd floors of the BESC for Central Administration Services A. Assumptions Regarding the Conceptual Cost Estimates: The following are the assumptions developed by the Project Team as it developed the conceptual costs associated with the potential relocation of the main BESC functions to generic sites. Assumptions Regarding Construction, Remodeling and Relocation Costs: GBD Architects used a number of assumptions when developing the costs to construct new facilities on generic sites or to remodel an existing generic facility on a generic site such that the facility will be capable of handling the PPS activity or activities described. The cost estimates include a number of assumptions regarding the generic sites, hard construction costs, allowances for generic furniture, fixtures and equipment, soft costs and allowances for certain additional costs that are included in



the descriptions that follow; the assumptions for the new Central Administration Services facility also includes the addition of new space to allow the District to conduct its professional development and training within its own facility. (For more detailed information on the items included in the cost estimates please refer to Addendum Number 1 – Additional Details Regarding the BESC Facility, “Assumptions Regarding Construction, Remodeling and Relocation Costs” beginning on Page G.) Relocation Assumptions: In developing the following cost estimates, the assumptions GBD Architects used were that the existing facilities would be “replaced”, but in a different configuration. Below are the basic assumptions used to develop the cost estimates. 6 story office building for Central Administration Services 1 story shop and warehouse facility

(One facility each for the Central Warehouse and for Maintenance Services) 1 to 2 story kitchen facility for Nutrition Services Surface parking for 400 vehicles B. Scenario A – Central Administration – New Building/Remodel of an Existing Building:

Option One – Generic Facility Cost Estimate: The estimated cost for constructing a new, generic six story building on a generic site with surface parking for 400 vehicles, is $49.8 million including soft costs and moving expenses, a total cost per gross square foot of $322.02. The cost estimate includes $38.8 million in hard construction costs and $9.5 million in soft costs, including LEED Gold certification of $673,200, land costs of $3,258,200 plus a sales commission of $162,900 and estimated moving costs of $463,700. This cost estimate, the full details of which can be found in “Table 5 –Central Administration Replacement Cost Concept Estimate of a Generic Building” located in Addendum Number 1 on Page J, assumes PPS will build the new administrative complex to replace the existing BESC Central Administration Services square footage; (however this option does include the requested professional development space in the amount of approximately 14,700 square feet). The cost estimates include work to prepare the 4.99 acres assumed for the project, the core building shell, tenant improvements, and telephone and data service. Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: The estimated cost for constructing a new, generic six story building on a generic site taking into account reasonable, additional future square footage needs with surface parking for 400 vehicles, is $54.0 million including soft costs and moving expenses, a total cost per gross square foot of $320.62. The cost estimate includes $42.3 million in hard construction costs and $10.2 million in soft costs, including LEED Gold certification of $728,400, land costs of $3,520,800 plus a sales commission of $176,000 and estimated moving costs of $505,000. This cost estimate, the full details of which can be found in “Table 6 –Central Administration Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions” located in Addendum Number 1 on Page L, assumes PPS will build the new administrative complex to replace the existing BESC Central Administration Services square footage; (this option includes the requested professional development space in the amount of approximately 14,700 square feet). The cost estimates



include work to prepare the 5.39 acres assumed for the project, the core building shell, tenant improvements, and telephone and data service. Option Three – Remodel of a Generic Building on a Generic Site: The estimated cost for remodeling an existing building at a generic site with surface parking for 400 vehicles is $57.3 million including soft costs and moving expenses, a total cost per gross square foot of $370.47. The cost estimate includes $29.7 million in hard construction costs and $26.1 million in soft costs including the purchase of an existing building and land for $18,547,200 plus a sales commission of $927,400 and estimated moving costs of $463,700. This cost estimate, the full details of which can be found in “Table 7 –Central Administration Remodel Cost Concept Estimate of a Generic Building Built on a Generic Site” located in Addendum Number 1 on Page N, assumes PPS will remodel an existing building and parking lot to replace the existing BESC Central Administration Services square footage; (however this option does include the requested professional development space in the amount of approximately 14,700 square feet). The cost estimates include work to prepare the 4.99 acres assumed for the project, to remodel the building for the project, tenant improvements, and telephone and data service.

C. Scenario B - Nutrition Services – New Building: Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: The estimated cost for constructing a new Nutrition Services facility on a generic site taking into account reduced future square footage needs with surface parking is $8.6 million including soft costs and moving expenses, a total cost per gross square foot of $165.56. The cost estimate includes $6.5 million in hard construction costs and $1.93 million in soft costs including land costs of $802,200 plus a sales commission of $40,100 and estimated moving costs of $155,600. This cost estimate, the full details of which can be found in “Table 8 – Nutrition Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions” located in Addendum Number 1 on Page P, assumes PPS will build the new Nutrition Services facility with reasonable square footage enhancements to the existing Nutrition Services square footage; (the new facility represents a decrease to about 51,850 square feet from the current Nutrition Services space of approximately 53,800 square feet at the BESC). The cost estimates include work to prepare the 2.30 acres assumed for the project, the core building shell, tenant improvements, and telephone and data service. (Due to the specialized nature of this facility the Project Team will not look at the conversion of an existing building for the Nutrition Services Department.)

D. Scenario C – Central Warehouse – New Building/Remodel of an Existing Building:

Option One – Generic Facility Cost Estimate: The estimated cost for constructing a new, generic warehouse on a generic site with surface parking is $6.6 million including soft costs and moving expenses, a total cost per gross square foot of $85.03. The cost estimate includes $4.6 million in hard construction costs and $1.7 million in soft costs, including land costs of $921,600 plus a sales commission of $46,100, and estimated moving costs of



$232,300. This cost estimate, the full details of which can be found in “Table 9 –Central Warehouse Replacement Cost Concept Estimate of a Generic Building” located in Addendum Number 1 on Page R, assumes PPS will build the new Central Warehouse facility to replace the existing Central Warehouse square footage. The cost estimates include work to prepare the 2.64 acres assumed for the project, the core building shell and tenant improvements. Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: The estimated cost for constructing a new Central Warehouse facility on a generic site taking into account reduced future square footage needs with surface parking is $5.8 million including soft costs and moving expenses, a total cost per gross square foot of $86.89. The cost estimate includes $4.0 million in hard construction costs and $1.5 million in soft costs including land costs of $820,200 plus a sales commission of $41,000 and estimated moving costs of $199,200. This cost estimate, the full details of which can be found in “Table 10 – Central Warehouse Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions” located in Addendum Number 1 on Page T, assumes PPS will build the new Central Warehouse facility with reasonable square footage reductions to replace the existing Central Warehouse square footage; (this version of the revised Central Warehouse facility contains approximately 66,412 square feet, a reduction from the current 77,424 square feet). The cost estimates include work to prepare the 2.35 acres assumed for the project, the core building shell and tenant improvements. Option Three – Remodel of a Generic Building on a Generic Site: The estimated cost for remodeling an existing building to accommodate a Central Warehouse at a generic site with surface parking is $7.8 million including soft costs and moving expenses, a total cost per gross square foot of $100.59. The cost estimate includes $2.3 million in hard construction costs and $5.3 million in soft costs including the purchase of an existing building and land for $4,258,300 plus a sales commission of $212,900 and estimated moving costs of $232,300. This cost estimate, the full details of which can be found in “Table 11 – Central Warehouse Remodel Cost Concept Estimate of a Generic Building on a Generic Site” located in Addendum Number 1 on Page V, assumes PPS will remodel an existing building to replace the existing Central Warehouse square footage. The cost estimates include work to prepare the 2.64 acres assumed for the project, to remodel the building for the project and tenant improvements.

E. Scenario D – Combined Central Warehouse and Nutrition Services – New Building Remodel:

Option One – Generic Facility Cost Estimate: The estimated cost for constructing a new, generic combined Central Warehouse and Nutrition Services facility on a generic site with surface parking is $14.6 million including soft costs and moving expenses, a total cost per gross square foot of 112.75. The cost estimate includes $10.8 million in hard construction costs and $3.4 million in soft costs, including land costs of $1,681,000 plus a sales commission of $84,100 and estimated moving costs of $387,800. This cost estimate, the full details of which can be found in “Table 12 –Combined Central Warehouse and Nutrition Services Replacement Cost Concept Estimate of a Generic Building” located in Addendum



Number 1 on Page X, assumes PPS will build a new combined Central Warehouse and Nutrition Services facility on a generic site. The cost estimates include work to prepare the 4.82 acres assumed for the project, the core building shell and tenant improvements. Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: The estimated cost for constructing a new combined Central Warehouse and Nutrition Services facility on a generic site taking into account reduced future square footage needs with surface parking is $13.8 million including soft costs and moving expenses, a total cost per gross square foot of $116.51. The cost estimate includes $10.2 million in hard construction costs and $3.2 million in soft costs including land costs of $1,579,700 plus a sales commission of $79,000 and estimated moving costs of $354,800. This cost estimate, the full details of which can be found in “Table 13 – Combined Central Warehouse and Nutrition Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions” located in Addendum Number 1 on Page Z, assumes PPS will build the new combined Central Warehouse and Nutrition Services facility with reasonable square footage and service enhancements; (the combined Central Warehouse and Nutrition Services facility contains approximately 66,412 square feet for the Central Warehouse, a reduction from the current 77,424 square feet, and approximately 51,850 square feet, a reduction of approximately 1,950 square feet from the current Nutrition Services space). The cost estimates include work to prepare the 4.53 acres assumed for the project, the core building shell and tenant improvements. Option Three – Remodel of a Generic Building on a Generic Site: The estimated cost for remodeling an existing building to accommodate a combined Central Warehouse and Nutrition Services facility at a generic site with surface parking is $17.4 million including soft costs and moving expenses, a total cost per gross square foot of $134.72. The cost estimate includes $7.7 million in hard construction costs and $9.3 million in soft costs including the purchase of an existing building and land for $7,110,100 plus a sales commission of $355,500 and estimated moving costs of $387,800. This cost estimate, the full details of which can be found in “Table 14 – Combined Central Warehouse and Nutrition Services Remodel Cost Concept Estimate of a Generic Building on a Generic Site” located in Addendum Number 1 on Page BB, assumes PPS will remodel an existing building to create a combined Central Warehouse and Nutrition Services facility. The cost estimates include work to prepare the 4.82 acres assumed for the project, to remodel the building for the project and tenant improvements.

F. Scenario E – Maintenance Services – New Building/Remodel of an Existing Building:

Option One – Generic Facility Cost Estimate: The estimated cost for constructing a new, generic Maintenance Services facility on a generic site with surface parking is $7.2 million including soft costs and moving expenses, a total cost per gross square foot of $109.18. The cost estimate includes $5.4 million in hard construction costs and $1.7 million in soft costs, including land costs of $729,400 plus a sales commission of $36,500 and estimated moving costs of $198,800. This cost estimate, the full details of which can be found in “Table 15 –Maintenance Services Replacement Cost Concept Estimate of a Generic Building” located in Addendum Number 1 on Page DD, assumes PPS will build the new Maintenance Services



facility to replace the existing Maintenance Services square footage. The cost estimates include work to prepare the 2.09 acres assumed for the project, the core building shell and tenant improvements. Option Two – Generic Facility Cost Estimate – Based on Future Square Foot Assumptions: The estimated cost for constructing a new Maintenance Services facility on a generic site taking into account reduced future square footage needs with surface parking is $5.8 million including soft costs and moving expenses, a total cost per gross square foot of $111.06. The cost estimate includes $4.3 million in hard construction costs and $1.4 million in soft costs including land costs of $599,900 plus a sales commission of $30,000 and estimated moving costs of $156,500. This cost estimate, the full details of which can be found in “Table 16 – Maintenance Services Replacement Cost Concept Estimate of a Generic Building – Based on Square Foot Assumptions” located in Addendum Number 1 on Page FF, assumes PPS will build the new Maintenance Services facility with reasonable square footage enhancements to replace the existing Maintenance Services square footage; (this version of the revised Maintenance Services facility contains approximately 52,175 square feet, a reduction from the current 66,254 square feet). The cost estimates include work to prepare the 1.72 acres assumed for the project, the core building shell and tenant improvements. Option Three – Remodel of a Generic Building on a Generic Site: The estimated cost for remodeling an existing building to accommodate the Maintenance Services facility at a generic site with surface parking is $8.9 million including soft costs and moving expenses, a total cost per gross square foot of $134.57. The cost estimate includes $4.0 million in hard construction costs and $4.7 million in soft costs including the purchase of an existing building and land for $3,644,000 plus a sales commission of $182,200 and estimated moving costs of $198,800. This cost estimate, the full details of which can be found in “Table 17 Maintenance Services Remodel Cost Concept Estimate of a Generic Building on a Generic Site” located in Addendum Number 1 on Page HH, assumes PPS will remodel an existing building to replace the existing Maintenance Services square footage. The cost estimates include work to prepare the 2.09 acres assumed for the project, to remodel the building for the project and tenant improvements.

G. Scenario F – Relocation of Nutrition Services, Warehouse and Maintenance Functions,

Remodel of 1st and 2nd Floors of the BESC: GBD Architects prepared a cost estimate to relocate the Nutrition Services Department, the Central Warehouse and Maintenance Services Departments and remodel the remaining space, plus the existing administrative space, into a more functional area for Central Administration Services including new professional development and training space. (Note: The cost to relocate the Nutrition Services Department, the Central Warehouse Department and the Maintenance Services Department are not included in the cost estimate.) This allows PPS to update its Central Administration Services space so it can be more efficient and so senior management can house all of the staff that should be in the central office, some of which are currently located off site in PPS school buildings, and add new training and professional development and training space. This cost estimate is for informational purposes only as PPS does not have the funding to undertake this project, and no funding sources for this project have been



identified or are currently being pursued by PPS senior management. The estimated cost for the remodel is $15.3 million including soft costs, including LEED Gold certification ($601,700) and moving expenses and temporary relocation costs ($835,100) a total cost per gross square foot of $109.81. This cost estimate, the full details of which can be found in “Table 18 – BESC Upgrade Option Remodel Cost Concept Estimate” located on Page JJ. The cost estimate includes temporarily relocating the Central Administration Services functions during the remodel.

V. NUTRITION SERVICES DEPARTMENT ANALYSIS As an additional part of the work performed by the Project Team we conducted an examination of the space, fixtures and equipment requirements for an updated and relocated Nutrition Services facility in addition to developing a cost estimate to relocate Nutrition Services to a new facility; (the cost analysis to relocation the Nutrition Services Department to a new facility is covered previously). The Project Team had the benefit of input and critical review of the draft Kalberer report from Nutrition Services Department Director Gitta Grether-Sweeney. The Kalberer Company also analyzed space requirements including refrigerated storage space, food preparation space, dry storage/warehouse space, food preparation and staging space, dock/delivery requirements, and office/support. They evaluated the existing equipment and fixtures to determine costs of moving the existing equipment and/or replacing certain equipment they felt would improve overall efficiency, and they determined the estimated costs and space requirements of relocating the Deli to a new facility, most likely the new Central Administration Services facility in order to serve the employees. (The reader may refer to the complete draft report from The Kalberer Company in Attachment 21 – Copy of the Final Draft Report from The Kalberer Company Regarding the Nutrition Services Department on Page XXI, and the Bargreen-Ellingson Cost Information in Attachment 22 – Bargreen-Ellingson Cost Information on Page XXII.) Nutrition Services Department Overview: Nutrition Services provides on average 11,000 breakfasts and 21,098 lunches daily; the department serves 46,890 students at 85 schools; 45% of the students are eligible for free and reduced price meals. This compares with 20,000 breakfasts and 20,000 lunches provided six years ago when the Original Study was done. A steady decline in breakfast participation can be attributed to the following: a) changes in Provision 2 base year reporting to Oregon Department of Education, b) demographic changes in individual schools, and c) leadership at the school level made schedule changes moving breakfast from the class room to before school. (As additional backup in support of feeding the students before school begins please refer to Attachment 1 – Food Research and Action Center (FRAC) School Breakfast Program on Page I and Attachment 2 – 10 Reasons to Try Breakfast in the Classroom on Page II produced by the Food Research and Action Center.) Present Facility: The present facility was built in 1980 as a central kitchen producing, baking, holding and distributing much of the food which was served at the schools. A cook-chill system was utilized, and a vast amount of baking and cooking was done in the facility. The food would then be finished off and served at the school. Because of the costs of operating such a system, and the demand for more nutritious and tasty food, Nutrition Services transitioned from producing the food product to procuring food from high quality local producers and distributors.



Gone are the cook-chill system, the steam kettles, the flour system, the proofing ovens, the cooking ovens, and the icing stations. In its place is a sophisticated system of purchasing, warehousing (both cold and dry), sorting and delivery to the schools. Nutrition Services delivers fresh food to the schools at most locations daily, fresh and frozen food to all schools at least 2-3 times per week, and dry and disposable supplies twice monthly. Nutrition Services employs a fleet of 7 refrigerated trucks. At this time only milk is delivered directly from the purveyor to the school, and this occurs 2-3 times per week. Nutrition Services leads a purchasing cooperative with Beaverton and Hillsboro School Districts to maximize their collective purchasing power. They procure most products directly from the manufacturer, although some are procured through food distributors. Nutrition Services has in its mission to buy as much as possible from local producers. The food is sorted (using a long, non-mechanical roller system) by pickers, and packed onto trays and into carts designated by school, held in walk-in refrigerators/freezers, then put on refrigerated trucks and delivered to schools. The carts are returned to the Central Commissary and washed in a special cart washer. The trays are sanitized in a utensil flight-type dishwasher. Nutrition Services also operates a small test kitchen to analyze menu items for nutrition, taste, variety and cost. In addition to dry groceries and disposable supplies the Nutrition Services portion of the warehouse also stores equipment used seasonally, new equipment held for installation at the schools, and some old equipment returned from the schools to either be reused or disposed of through appropriate channels. Space Usage in the Existing Facility: Nutrition Services management estimates it is currently using approximately 64,000 square feet of space. The space is broken down between refrigeration/freezer space, dock space, warehouse storage/surplus equipment storage, the test kitchen, office space, employee spaces, and receiving/staging areas. The dock space is also currently used by the Central Warehouse facility. A secondary program operated by Nutrition Services is the Deli which provides light meals and food service for the employees and visitors to the BESC. This program presently uses about 2,300 square feet; it is estimated the Deli would need about 2,400 square feet if the Deli was not located in the same building as Nutrition Services since more refrigeration space would be required. The program is self sufficient and is a benefit to BESC. Space Needs/Moving Costs/New Equipment Requirements: The Kalberer Company, with assistance from Matt Hastings at Bargreen-Ellingson, developed an estimate of the space needs, moving costs and new equipment requirements for both Nutrition Services and the Deli. (The cost estimates from Bargreen-Ellingson are contained in Attachment 22 – Bargreen-Ellingson Cost Information on Page XXII). The presumption is that all existing functions will take place in the new facility and that all existing equipment, other than that which is being replaced, will be moved and reinstalled. (Utility hookups are provided in estimated building costs by others; these costs are included in the GBD cost estimates.) A summary of the square footage and cost estimates is contained in Table

besc relocation feasibility study update...

Documents