NORTH MANKATO — The North Mankato City Council approved a guaranteed maximum construction price of more than $21.5 million for a new public works facility and authorized the purchase of approximately 16 acres for the project, advancing plans at 11 Industry Court.
The two resolutions passed on 3-2 votes, with council members Sandra Oachs and Billy Steiner voting against both measures. The approvals allow construction to move forward and finalize the city’s purchase of the site from the North Mankato Port Authority for just over $1 million, at a cost of $65,000 per acre.
RW Carlstrom representatives told the council the project team reduced building costs through a series of modifications that did not alter the facility’s overall function. Changes include reducing the lot size, modifying portions of the foundation, reducing landscaping and fencing, changing some interior wall materials, removing geothermal components and making adjustments to paint and lighting packages.
The approved construction contract represents only part of the project’s total budget, which exceeds $27.9 million. Approximately $5.3 million in project-related costs are outside the guaranteed maximum price and include items such as land acquisition, bonding costs and other development expenses, said public works director, Luke Arnold.
Oachs questioned the status of solar, geothermal and other items listed outside the guaranteed maximum price. She said she remained concerned that features initially associated with the project could return as future budget requests and stated she was not comfortable approving the project without additional clarification about long-term taxpayer impacts.
“This project deserves really close scrutiny,” she said. “Are we truly reducing the cost, or are we simply just shifting it to a future budget?”
Arnold said solar energy infrastructure was removed from the contract because grant programs are more favorable to solar installations added to existing public buildings rather than incorporated into new construction. He added the city intends to pursue grant funding and install solar panels later if funding becomes available.
Addressing the removal of geothermal heating components, Arnold said initial estimates placed the system at roughly $300,000 to $350,000, but updated bids exceeded $1 million while offering minimal annual energy savings. Based on those figures, Arnold said the projected payback period stretched hundreds of years, making the investment impractical at this stage.
Oachs raised concerns about whether the building is being sized for realistic staffing needs and whether project costs are being deferred rather than eliminated. Oachs questioned the number of offices, conference rooms, locker rooms and wellness spaces included in the design and asked how the facility’s staffing projections compare with current city staffing levels.
Five of the building’s six offices would be occupied immediately, Arnold responded, with one reserved for future growth. He said most staff work from an open office area because many employees spend much of their time in the field. He described the conference rooms and training space as flexible areas intended for daily staff meetings, departmental training, citywide use and potential emergency management functions. Arnold said the wellness room is a small space designed for employee privacy, including use by nursing mothers.
During public comment, several residents questioned whether future costs could be added through change orders, raised concerns about the removal of solar and geothermal systems and urged the council to delay the project because of economic uncertainty and potential taxpayer impacts.
“I know construction never goes exactly as planned, but if they start asking for more money because of unexpected costs, you were elected to be our advocates, not theirs,” resident Benton Bakke said during public comment.
Others questioned whether the city could reverse or retire project bonds and McCann said the bonds cannot simply be paid off immediately and explained that early repayment would be subject to bond terms and accrued interest obligations. It was also noted that unused bond proceeds could ultimately be applied toward repayment of project debt rather than spent on construction.
“I think it’s important for everybody to understand at this point, with the funding having been approved and now those bond proceeds have been received,” Arnold added. “A reminder to everybody that that money is now dedicated and can only be used for construction of a new public works building on this property.”
The project is intended to consolidate public works operations into a single location. City officials have cited space limitations, environmental concerns and operational inefficiencies at the current Webster Avenue facility as reasons for the new building. The approvals mark the latest step in a project that has generated significant public debate.
Earlier this year, the city authorized approximately $27 million in general obligation bonds to finance construction. A lawsuit challenging the financing structure was dismissed in Nicollet County District Court, and a citizen-led petition effort seeking a public referendum on the bonding decision failed to gather enough signatures to qualify for a vote.
City officials expect the new public works facility to reach substantial completion within approximately 14 months after construction begins.
“This is the last step before proceeding to construction,” Arnold said. “So, with this approval this evening, accepting their guaranteed maximum price, which, as we said, is a guarantee, then we will proceed with construction.”