Following a presentation from a seemingly miniature army of county staff and division leaders, Frederick County Council members unanimously approved a $7.76 million capital budget project to purchase a warehouse for personal protective equipment (PPE) storage.
Chief Administrative Officer Rick Harcum helped lead the discussion between county leaders and council members. County staffers said it would be beneficial long-term for county officials to buy a warehouse rather than lease it, not only for PPE storage but also for logistics due to growth in the Division of Fire and Rescue Services and other areas.
Before the meeting, Harcum declined to state which building the county wanted to buy, or the specific square footage — citing that the sale hasn’t been finalized with the warehouse owner.
He added, however, that the extra warehouse space is needed, given PPE supply chain collapses from earlier this year and the need to prepare for a possible second surge of the coronavirus. The county is also starting to store PPE in areas where it probably shouldn’t be stored, Harcum added.
“It’s a two-part argument … one is we’re being told by the health professionals now is the time to get ready, and we’re told the supply chain could fail us,” Harcum said. “This is the quiet before the storm, so we should be stocking up.”
During a council presentation with county leaders, Jack Markey, director of the county’s Division of Emergency Management, seconded that point.
He said the supply chain has stabilized somewhat since earlier in 2020, but that could change if a second wave occurs.
“The supply chain for PPE is not normal at this time,” Markey told council members. “And despite hard work at the federal, state and local level, we do not believe that is going to suddenly change ... Our challenge is we do not know the exact delivery dates for products we’re going to get.”
Along with the need for PPE storage space, Tom Coe, chief of the county’s Division and Fire Rescue Services, said additional space is needed for the growing demands of his division. Currently, they operate out of a 11,500-square-foot facility on Scholl’s Lane in Frederick.
Coe said logistically, he could shift some of his staff members to the new warehouse. That includes a logistics manager and various technicians, he said.
The Scholl’s Lane property could also be sold by the county, helping to finance the new warehouse. Lori Depies, the county’s finance director, helped complete a financial analysis of how much it would cost, per square foot, to lease the warehouse or buy it during a 20-year term.
The county’s analysis, which looked at operating expenses, recoverable costs and increasing rent among several other factors, determined the county would spend $264 per square foot if they rented the facility, versus $107 per square foot if they bought the building and sold the property on Scholl’s Lane.
“We think it is a better bang of the buck for our taxpayers,” Depies said of buying the warehouse.
Councilman Steve McKay (R) said county officials should have factored in the sale of the Scholl’s Lane building into both the rent and purchase scenarios. But ultimately, he supported the capital project proposal, considering the long-term benefits.
“The bottom line is you convinced me about the enduring storage requirement,” McKay said. “It is a volume requirement for PPE storage and we’re going to need that for an unknown amount of time.”
Chuck Nipe, the county’s director of the Division of Public Works, said owning the warehouse also gives officials more latitude with permanently modifying it.
Leases often require tenants to return the overall infrastructure of the building to its original state, Nipe said.
“One of the things that concerns us is the landlord has the ultimate decision on capital [project] replacement,” Nipe said. “At the end of a lease, and I guess as well as at the beginning of the lease, we have a lot of tenant fit-out requirements.”
According to the staff memo for the purchase, up to $1 million of CARES funding will be used to help finance the project. Harcum said before the meeting that a recent change in state law for 9-1-1 collection fees is also bringing more money into the county, because fees are being charged per each device, not the overall plan. That’s noted in the staff plan, in $250,000 in revenue.
The staff memo indicates $4.06 million would be used to purchase the warehouse, and another $3.7 million for outfitting the building for county needs and storage.
Budget Director Kelly Weaver noted that $7.76 million in general obligation bonds were needed in case the county can’t use all of the $1 million in CARES funds, because of all the rules surrounding that funding. Depies noted those funds have to be spent by the end of the year.
Perhaps in a bigger sense — and following a line of questioning from Councilman Kai Hagen (D) — Harcum noted purchasing the warehouse wouldn’t impact the overall county’s capital improvement program schedule.
“It’s not like this warehouse is going to knock a park out of the priority order,” Harcum said. “This is not a choice between a warehouse versus another project, this is just a choice of whether we can buy the warehouse now.”