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Mayor & City Council <br />April 5, 1996 <br />Page 2 <br />They feel they are receiving zero return from the <br />buildings being sprinkled given the minimal savings in <br />insurance premiums they would experience. (See letter <br />attached.) <br />Partial sprinkling for $120,000 is not a good option <br />given concern that without full building coverage, <br />serious fire damage could still result. When you <br />consider the difference in cost, this additional <br />exposure does not seem warranted. <br />* Dominium is prepared to install the upgrades to the <br />detection /warning system which they feel benefits their <br />entire population rather than only a portion of it. <br />The City has up to $38,850 to contribute to the sprinkling system <br />if we were to use the 1% loan origination fee generated from the <br />issuance of housing revenue bonds. Two schools of thought exist <br />regarding the usage of these funds. The first is that these <br />funds would not exist but for the project being considered. <br />Therefore, their usage in assisting with renovation of the <br />structures is warranted and appropriate. The other is that this <br />is a new source of revenue to the City and this money could be <br />used in other areas. Is it appropriate to use this money to <br />assist a private development? The resolution of this matter is a <br />policy question for the Council to decide. <br />Our recommendation is to proceed with sprinkling of one building <br />at this time. (Estimated cost is $70,000 of which $27,000 would <br />be City funds.) However, I would not recommend approving a <br />clause which defends and indemnifies Dominium for any claim <br />resulting from the sprinkling of only one building. The City <br />Attorney should be consulted for his opinion on this issue. <br />JRH:kpv <br />cc: Armand Brachman, Dominium <br />Dick Boss, Fire Chief <br />Duane Williams, Fire Marshal <br />Page 40 <br />