MINUTES

The meeting was called to order by Chairman Monteleone. Mary Jo Thompson participated via telephone conference pursuant to WV Code 6-9A-2. It was determined that a quorum was present.

Approval of Minutes:

A motion was made by Roy Smith to approve the minutes of the August 2, 2001, meeting and seconded by Chairman Monteleone. There was no discussion relative to the minutes and they were approved by an unanimous vote.

Frank Drobot, Architect for the Department of Administration and Criteria Developer on the Huntington project, gave a brief update on the Huntington Project. He stated that there was very little activity currently on site. An on-site project representative has been selected and they are ready to go. They are expecting a 50% design package and there is quite a bit of design work going on behind the scenes. The on-site work is scheduled to begin in early March with a 16 month construction schedule. Roy Smith stated that it was his understanding that they were waiting on some type of environmental permit and inquired if this was accurate. Mr. Drobot indicated that they were, in fact, waiting on a NPDES permit which has not yet been approved. They hope to get approval within the next couple weeks. Mr. Drobot stated that he is unsure of what the hold up is on getting that permit.

Roy Smith asked about the status of the Marshall University project. Donna Prunty stated that she had not received any information or follow up status reports from them. Frank Drobot stated that they were well under way with the project. The Board directed Ms. Prunty to follow up with Marshall University and get a status report prior to the next meeting.

Larry Lawrence, Director of Facilities with Fairmont State College, made a presentation. He provided a master plan and a three ring binder showing studies that have been done. He stated that Fairmont State College has a ten year master plan that they would like to develop through design build which includes two projects. The first project is a 1000 space parking garage and a 600 bed student housing project. They have reviewed the Legislation, Procurement Act and Rules provided by Ms. Prunty and believe that their projects meet the criteria for Design Build. They are currently talking with Invisions in Charleston in regard to being their criteria developer on the project.

Lloyd Miller, an architect with Invisions Architects in South Charleston, West Virginia, stated that he had been retained by Fairmont State College to be the criteria developer on the project. He stated that he was there to answer the three questions that are required to be answered in order to be a design build project.

Mr. Miller stated that the first question is the accelerated construction project design time line. Currently Fairmont State is investing quite a bit of money in redoing all of their infrastructure with all the underground utilities such as power, gas, water, sewer, storm water, etc. All these facilities are antiquated and the number of additions that have been put on campus over the years has really taxed the ability to serve the campus. In order to facilitate the installation of those items they must get rid of the vehicles that park along the street. Therefore, they need a place to put them. They need quickly to get a parking facility developed on the site so they can pull the cars off the street to allow the infrastructure installation to proceed. That is a cornerstone for a lot of other things that are happening at Fairmont State College. In addition to that, the new student housing that is planned will require additional parking space because it is a very tight campus and geographically prohibited so additional parking space must be erected before the student housing can be fully utilized. The garage needs to be up and running quickly so it is operational in early 2003 so the other components of the Fairmont State Campus can be implemented.

The second question is the close coordination of design construction and expertise. With the ongoing infrastructure development, along with the extreme sloping sights and the need to tie the circulation of the parking facility and student housing together, it would be advantageous to the process if the contractor and the designer were working together up front to identify issues of constructability, appropriateness of systems, economy of systems, and in order to address some of these extreme conditions that Fairmont State College is addressing. Fairmont State would love to see all of this up front in the design process to get the benefit of all data banks.

The third question is in regarding to funding. The project is going to be funded through the issuance of bonds. In order for the bonds to be sold expeditiously they would like to get a stipulated sum as quickly as they can. In the design build process they can get that number established even before they get into the construction end of the project. Once the number is established they can issue the bonds and the project can begin quickly.

Mr. Miller responded to questions posed by the board members. Mr. Thrasher inquired as to whether the student housing project and the parking garage project would be one project or two separate projects. Mr. Miller stated that there could be three different projects because they were planning on two housing facilities and one garage project. They have not completely explored whether they will build the two student housing facilities simultaneously or separately as they will be located adjacent to one another. However, the garage project must be done immediately so it will be done separately. Mr. Miller stated that he would like approval from the Design Build Board to do both projects so he will have flexibility in the event that the college decides to proceed with the housing project along with the garage project. Also, if the housing project is done later there would be no need to come back to the board again for a second approval.

Chairman Monteleone questioned whether the bond deal would cover all three components of these projects or only the garage project. Mr. Miller stated that the bond would cover even more than these projects. Jackson & Kelly is the law firm working on the bond issues. This is a $75 million bond deal and it will cover these projects as well as a variety of projects. All projects will be owned by Fairmont State College as they amortize the bonds. The bonding will be done through the City of Fairmont Building Commission.

Chairman Monteleone inquired as to when they would know whether the housing projects would be done through Design Build or by other methods. Mr. Miller estimated that the decision should be made within the next two months. He would like the flexibility from this board to go the Design Build route. Chairman Monteleone asked whether they would have any problem coming back to this board on the housing projects at a later date and Mr. Miller stated that they would like approval for all projects right away so they can go to the underwriters and give them a maximum total cost.

Mr. Thrasher stated that Fairmont State College has established the criteria under which Design Build is an acceptable methodology and made a motion to grant their request for all three projects. Mary Jo Thompson seconded the motion. Mr. Smith made a motion to amend that motion by requiring Fairmont State College come back to the Design Build Board if it was decided that all three projects would not be done by the Design Build method. The motion to amend was seconded by Mary Jo Thompson. Both motions were approved by a unanimous vote. The board requested Fairmont State to provide Donna Prunty with follow up status reports from time to time so they would know how the projects were developing. Fairmont State agreed to provide the status reports.

The next order of business was a presentation by the Pendleton County Economic Development Authority regarding a renovation project for leasing of office space for the Department of Health and Human Resources. Ms. Prunty stated that she had been in contact with Dee Kimble of their office and they have decided not to go the Design Build route. A letter was provided by the Development Authority and is included in your board member packets confirming that decision.

Mike Callaghan, Cabinet Secretary of the Department of Environmental Protection, made a presentation. He introduced his staff who is working on this project. Randy Huffman, the number two man at DEP, and Cap Smith, who is heading up the project from his office were introduced.

Mr. Callaghan gave a brief overview of the project and stated that Cap Smith would address the statutory provisions and give detailed information on the project in a moment. Mr. Callaghan stated that the Department of Environment Protection is an agency of about 800 people. They have an annual budget of about 240 million dollars. Approximately 100 million of that is flow through money that they take and then loan back to communities. So in reality they gave a $140 annual budget. Some of it comes from the State and some of it comes from Uncle Sam. When he came to work at DEP over a year ago he found out that they had six offices in the Kanawha Valley and they are leasing all six offices. They have people strung from one end of the valley to the other which has made it extremely difficult for two things to happen. One for him to manage DEP properly and effectively but number two is that it has created a great inconvenience to their customers. The people who do business with DEP must go to at least three different offices before they can get permits to get things done. They are currently running their customers around. The concept they have right now is to put an office building within the Kanawha Valley that would be approximately 165 thousand square feet and bring into that office 600 employees. There are several factors driving that. The number one issue is the cost savings to the tax payers. Their estimates show about $600,000 will be saved on an annual basis. They want to take that money and pour it back into front line environmental protection and front line programs where they are in need of those resources. Their goal is to have one building in the Kanawha Valley, save money, and put those resources to a better use.

Mr. Callaghan stated that what they have done up to this stage is to look for property and put out a request for proposal where they asked anyone in the area would they like to propose a piece of property for them to look at to build on of about 8 ½acres typical of holding 600 parking spaces and within a four mile radius of the state capitol. They got several proposals

back that met that criteria. Secretary Burton and Secretary Callaghan appointed a committee of four people to go through those proposals and make a recommendation of the best locations by listing by number one, number two, number three, etc. The committee did that and recommended what is now called the Kanawha Cinemas property in Kanawha City as the number one location. A piece of property at Northgate was ranked number two and the Maier foundation property known as Kanawha Landing in Kanawha City was ranked number three based on the committee’s analysis. Department of Environmental Protection has engaged in discussions with the Kanawha Cinemas representatives trying to come to some agreement to purchase that property. They are here today to present their proposal of the building they want to build. He would like to leave it open at this stage as to the location because they are not in contract yet on the property. It makes no difference where the building is located. The building will remain the same no matter where it is built.

Cap Smith gave a presentation regarding the specifics of the building. He provided a three page handout regarding the project and allowed time for the board members to review it. The first page is a brief overview of the project. The second page addresses the three questions that must be answered in order to justify the design build concept. The third page is a schedule for doing a design build project starting from this moment.

The building will include 165,000 square feet of office space, 9,000 square feet of storage space which will be attached to the back of the building and 1,200 square feet of lobby. The storage area and lobby area are not included in the 165,000 of office space. The schedule compares a design bid project and a design build project and reflects that the design bid project takes one year longer. It shows a completion date of winter 2003 for the design build route.

Cap Smith states that one of the key elements of the project that he would like to point out is the "bridging" that they have done. They have been working on this project since June in earnest and they have spent $125,000 so far making all the key decisions on the building. They have already designed the floor plan which accommodates the organization, Secretary Callaghan has organized the people who would come from the six sites in the valley, and they have made the decision to go with the "green building concept". This concept is the Leadership in Energy and Environmental Design (LEED) program. There are no buildings in West Virginia like it but they are catching on around the world. They hope to put enough of the green ingredients in the building to acquire a national certificate. They would also expect to get the energy star for the way they have designed this with the HVAC system. They have also designed the exterior and the roof. Basically all the major decisions have been made and they are between a request for proposal and a request for quotation. Frank Drobot, the architect for the Department of Administration, is making a lot of the smaller decisions such as the type of vinyl, door frames, etc. They are trying to go ahead and make as many decisions as they can so when they get the bids back will get exactly what they want.

In regard to the question about close coordination of design expertise, Mr. Smith stated that since this is the first "green" building so the designer, architect and contractor will have to work closely with one another to understand what the green concept is because there are 69 separate things you can do. It is a pretty complicated concept so the architect and contractor would need to work with someone the agency would hire to understand the "green concept".

In regard to financing the project, they have been advised by Secretary Burton and General Counsel John Poffenbarger that they should get some low interest government bonds and the mechanics of how it works would need to be answered by Mr. Poffenberger.

They are asking that the Board buy into the Design Build concept because they believe they can manage the project properly through this method.

Mr. Smith passed out some handouts which would explain what Leadership in Energy and Environmental Design (LEED) is all about. It is a national organization. Basically they have a list of ingredients that you can put into your building and get points for each one. If your building meets the criteria for each of area you get a point. There are a total of 69 points that can be obtained for things you do to your building regarding energy efficiency, water runoff, recycling, controlling what materials go into your building, indoor air quality, etc. They have picked out 37 points that they can build in their building. It would be West Virginia’s first entry into the "green concept". An interesting note is that Pennsylvania’s Governor came out a few years ago and said that all their state office buildings would be built with the "green concept".

Mr. Thrasher questioned whether the anticipated savings that they hope to realize from the consolidation of the buildings is due to anticipated efficiencies that will be gained from the consolidation or just the rent payments versus debt service. Secretary Callaghan stated that the savings does not take into consideration the increased productivity of the workers. It does take into consideration the utility costs etc. The debt service on the bonds will be revenue neutral if you add up everything we pay now and what we expect to be paying through the years. The savings will be from a utility standpoint, not having to travel from office to office, and the decrease in administrative duplication that is now occurring at the separate offices. They are starting to attrit people out now in anticipation of being together so a lot of personnel costs are included in the $600,000 savings.

Roy Smith inquired as to whether they rent or lease these six sites where there offices are currently. Secretary Callaghan stated that they are leased. Mr. Smith also inquired as to who would own the land where the new building would be located. John Poffenbarger responded and stated that the property would be conveyed to the WV Economic Development Authority. They would own the property and then lease it back to the state. Once the bonds are paid off the property would become state owned property. The West Virginia Building Commission has been abolished so all this now comes through the Department of Administration.

Roy Smith asked whether or not they had already retained an architect. Cap Smith stated that if this board agreed with their request for design build then the architect group would be a part of the request for proposal for the design-builder. To date, the state architect has been working with him on the project. Other people who have been involved are Chapman Technical out of St. Albans, Mr. Khan, a local engineer who has also worked on most of the recent school buildings, and Tom Davis, who has spent his life estimating buildings like this for various contractors. All of these local folks have helped them to put the package together. Roy Smith also questioned whether he would bring in a lot of contractors and workers from other areas for the project. Cap Smith stated that this is out of his area as he does not know what contractors are qualified to bid on the project but he has been told that there are a number of contractors in the state and out of state who can do this project well. He does not have any preconceived notion as to who the contractor will be on the project. Frank Drobot, the state architect, has been the criteria developer on the project.

Mr. Thrasher made a motion to approve the project and it was seconded by Roy Smith. Passed by an unanimous vote.

Donald Chapman of C&O Designs, working with a development team led by Century Equities, Inc., made a presentation regarding the Wheeling Victorian Outlet Center. The project involves the renovation and restoration of the downtown historic area for the City of Wheeling. They have been working on the project for over a year and have solicitated the assistance of the State of West Virginia for a financial level playing field for the project to be successful. It is fundamentally a retail project. The idea is to restore Wheeling to it’s original robustness by restoring the existing buildings and by building new buildings where the parking lots have sprung up over the decades. The buildings would be leased to retailers who specialize in the fashion industry. A benchmark project that they compare the project to is the one that was developed in Grove City, Pennsylvania, north of Pittsburgh.

This project is unique as no one has ever done a project like this one in an existing city. They believe this will be the next generation of projects of this sort and it is a very interesting project as it will be the economic engine to drive the restoration and renovation of entire urban core. Many cities around the country and in West Virginia have suffered from the effects of urban sprawl and the flight of retail out of our city center. It also means that it is one of the most complicated projects anyone has ever undertaken.

The development effort has been spearheaded by a group including the City of Wheeling, its’ Urban Renewal Authority, and the Wheeling National Heritage Area Corporation (WNHAC). The WNHAC was set up by the federal government to protect, preserve and make self sustaining the national heritage areas that are around the country. That group has provided a lot of the seed money that was necessary during the planning process over the past twelve months. They are now at the point where they are transitioning into the implementation phase of the project and hence their presence at the capitol working with the Economic Development Authority, the Governor’s office and the leadership of the House of Delegates and the Senate in finding a way that the State can participate to make this project happen and create a win-win situation for the City of Wheeling and the Government for the State of West Virginia.

Relative to the Design Build process, this is a public/private project. There are components of the project that are distinctly private, components that are distinctly public and parts of it that are gray in between. There are four principal components. First is the need to acquire all of the existing real estate in the 12 block area down town. This is comprised of some 80 odd existing structures and another four acres of parking lots that once were structures. The surface parking lots will be replaced with buildings of a design and scale consistent with the rest of the city. The existing buildings will be renovated. They will all then be turned over for the first floors to be leased as retail outlets to national brand name tenants around the country.

They will also have to park a very large number of people. They hope not only to have the first floors of the buildings for retail but hope to develop the upper floors of these six to eight story buildings. They hope that the development of the retail will be the engine to develop the upper floors for other uses, whether it be for residential, office use or other typical urban uses.

The city is blessed with having an initial investment made in structured parking that serves the project boundaries but they will need to increase the capacity by 2,200 to 2,300 cars in structured parking buildings. That is a truly public entity. They plan to build the garages through the Design Build method and then dedicate them to the City’s parking authority for the City to own and operate.

The other major components that address specifically the issues of statute are the fact that they have a time line that is cast in stone largely by the realities that it is a retail project. There are certain times throughout the year that you must live within in order to deliver a retail project. There are only certain times during the year when a retailer will accept delivery for opening. You can simply not open up the first quarter of the year. In fact, the leases will have "black out dates" when they will not open. They must have an opening date to work toward in order to lease the buildings and make them economically viable and financeable. They must have drop dead dates in the leases that says they must deliver it within a certain time frame or the tenant will have the right to walk away from the lease. Therefore, you have to look at your delivery date and make sure that it falls comfortably within the envelope of the drop dead date in the event that you have any time over runs you won’t risk losing the binding nature of the leases. You combine the two deadlines, the viability of when you can open retail and the lease requirements you have to make it finance able, to set an opening date. The opening date is set right now for the third quarter of 2003. It is imperative that they make that schedule in order to sign up retailers because they will not make commitments too far in the future. They must do this project by the Design Build method in order to stick with this time frame. If they were to use the standard procurement process, they would in all likelihood be substantially longer and they would run the risk of having three different contractors working towards one completion date. This would be fraught with disaster and almost impossible for all three to finish on the same date, which is paramount to their project.

The coordination issue speaks for itself. The request is for the entire project to be completed through the Design Build method. The total construction budget for the whole project is 160 million dollars. It will be done in phases. The initial phase will represent 60 % of that number and will constitute about 325 thousand square feet of leaseable space, about 65% of the total project area, one of the garages and upgrade to related infrastructure. Because of the timing, the coordination is paramount in this case.

The funding issues are being dealt with through the Development Office and the Legislature. One question which has arisen in connection with possible legislation is whether the project is subject to state procurement procedures. Although the final form of any possible legislation is uncertain, the project team is seeking to comply with the State’s Design Build procedures since the design build process seems to be most appropriate to the project.

On the issue of cost, they have requested a specific amount of money from the state as participation in the project. If the Legislature approves that then that number will be fixed forever and unchangable. The rest of it is underwritten by the value of the leases on the property. Because it has to be substantially pre-leased before you start construction you are essentially casting in stone what your construction costs can be. The only way to vary that is for additional equity to come into the project and that is not viable. If you sell the equity in order to do the project then you can’t very well go back to your investors and say we need more money. You must go into the project knowing exactly what it is going to cost. They must have a guaranteed maximum price on a Design Build contractor going into it where he understands the ramifications of a project of this nature.

Mr. Chapman handed out an application letter which is a joint application from Urban Renewal Authority and Century Equities. Ultimately the contracting entity, which has not yet been formed, will be a public limited liability corporation that will be the developer. That developer will hold a contract between Urban Renewal Authority and the Economic Development Authority of the State. Because the Legislation has not yet passed it has not been appropriate to set up that corporation.

A copy of the Builder’s Project Program and their class II advertisement was provided to the board members. He also provided copies of their leasing packages and their master plan which shows the project area.

Mr. Thrasher asked who owned the buildings currently. Mr. Chapman stated that there were 60 different owners and several of them own large portions of the property. The largest property owner is Wesbanco. Mr. Thrasher asked if at the end of the day the Urban Renewal Authority would own the property and Mr. Chapman stated that this is correct. Mr. Thrasher inquired as to who would own the infrastructure. Mr. Chapman stated that the City of Wheeling would own the infrastructure. Mr. Chapman also pointed out that the Urban Renewal Authority Board and the City of Wheeling Council is the same board. They do not have a separate Urban Renewal Authority.

Mr. Smith asked whether they would declare the entire tax increment area in phase one. Mr. Chapman stated that they would. All the acquisition of the entire area will be done initially in phase one. The redevelopment district is the entire project. The Wheeling Victorian Outlet Center is the name of the project. The total price tag is 160 million dollars. It is a public/private venture. The City will own the fee interest in the buildings and land and the private sector will operate the center. It is a cooperative venture program and there are substantial public dollars going into it.

Mr. Thrasher asked if the board was allowed to approve Design Build on roads and utility work. Chairman Monteleone stated that if the infrastructure work is a minor part of a larger project it is permissible but if the project were solely for road work or water work then it cannot be approved for Design-Build. This is an acceptable Design Build project because they are not doing any new roads or infrastructure, they are only updating and improving and it is ancillary to the project. Of the 160 million project, the infrastructure which consists of the utilities, roads, streets, water, sewage etc. amounts to approximately 11 million dollars. The parking structures make up about 24 million dollars. The balance is on the acquisition, renovation and project itself.

Chairman Monteleone stated that his law firm has consulted on this project so he will be abstaining from voting on the project. Mary Jo Thompson stated that Wheeling needed that project up there and would suggest a motion to approve the project. Mr. Winter made a motion to approve the project subject to funding by the Legislature. Mary Jo Thompson seconded the motion. Mr. Thrasher made an amendment to the motion that the infrastructure be limited to what is necessary for the project. Seconded by Mary Jo Thompson. The amendment and the motion were approved by a unanimous vote, with Chairman Monteleone recusing himself from the vote and not voting.

Other Business:

Chairman Monteleone requested Ms. Prunty contact the Governor’s office in regard to the status of whether the board members were going to be reappointed for another term. Ms. Prunty stated that she has been in contact with the Governor’s in regard to this and will follow up again.

Chairman Monteleone made a motion to adjourn. All voted in favor and there being no further business to come before the board, the meeting was adjourned.