November 1, 2020
Why do you need a new building?
Simply put, we are out of space and the cooperative continues to grow rapidly. Our growing ranks and the fleet of vehicles used to serve our members are straining our headquarters facility. A third-party professional study of our long-term needs places our property requirements at more than twice our current facility size. Below are some of the specific growing pains we must overcome in the immediate future.
- KEC has a fleet of more than 100 vehicles. Our current facility does not have enough enclosed or covered vehicle storage for a fleet of this size. This forces a portion of our fleet to be parked outside in the elements, which shortens the overall life of the vehicles and can increase our response time during outages. We need another nine truck bays (or nearly double our current space) to adequately serve our membership. It may seem more logical to park these vehicles outside, but when you consider that an average line truck costs well over $100,000 and the price of a digger derrick (a truck with a long boom and a drilling/digging bit on top) can top $400,000, it’s clear KEC needs to protect these assets to ensure they can serve the membership for as long as possible.
- KEC’s mechanics’ bay is too small to effectively support, maintain and repair a fleet our size.
- Traffic flow in and out of our facility is inefficient for the size of our fleet as well as for large equipment deliveries. Road restrictions imposed by highway jurisdictions and round abouts planned near our headquarters further impede our operations.
- We have outgrown our material warehouse which needs to be expanded by about 30%.
- KEC’s outdoor space is limited and doesn’t allow for adequate onsite material storage.
- Due to our growing workforce, the space our crews need to meet daily and complete required safety sessions is no longer adequate and must be increased to accommodate growth.
- Interior office space has reached maximum capacity. There are currently no available offices to accommodate new employees, even considering work from home opportunities.
- Space required for storage and IT equipment is largely undersized and cannot be expanded without eliminating offices.
Our current headquarters facility sits on about 15 acres of land divided by Dakota Avenue in Hayden. This division causes some logistical and safety challenges, as it requires a steady flow of both foot and vehicle traffic between sites on an increasingly busy road. While some of our current constraints could be corrected through a major building remodel on our current site, it would not be efficient or effective in the long term. Additionally, there are some challenges that are location specific:
- Current road configurations and traffic restrictions make it extremely difficult for materials and equipment to be delivered to our headquarters and for our own trucks to leave our site. Annual spring road restrictions further exacerbate these problems.
- Due to the proximity of our location to the airport, the cooperative is subject to significant building restrictions, thus constraining our ability to remodel the facility or construct additional vehicle storage.
What is the status of KEC’s current headquarters?
Our current headquarters was built in the late ‘70s and has been incrementally expanded as needs arose. Additions were constructed in 1994, 2004 and 2015, but that potential has been exhausted. The site across the street from our headquarters was purchased to use for pole, transformer, machinery and other equipment storage.
Our current headquarters was constructed with the future in mind and we are keeping that same long-term vision as we evaluate our next steps. In order to provide a safe and efficient facility to serve our members and in which our employees can work effectively, the current building would need to be expanded beyond what the site can accommodate. All things considered, it has been determined to be more cost-effective to construct a new building that meets our needs now and into the future than to further renovate and expand the existing one.
How much growth has KEC experienced?
In the early 1970s we had 18 employees and approximately 4,000 meters on our system. Today we have nearly 100 employees and 30,000 meters on our system. We have added 18 employees to our workforce just since 2015. Looking ahead, we expect to add an additional 12-15 employees over the next five years as our membership and community continue to grow.
How was the decision made to build a new facility?
In 2020, we engaged a third-party consultant to provide an independent evaluation of the cooperative’s facility needs and use. The consultant specializes in headquarter facility planning studies and planning and design for electric cooperatives around the country. They completed a comprehensive site, facility and needs assessment with these goals in mind:
- Protect expensive material, vehicles and equipment
- Improve operational efficiency
- Accommodate future growth
- Provide facilities that allow for adequate emergency operations response
- Improve and foster safety and security
- Foster a collaborative and high performing employee culture
This study was commissioned in part to validate the findings of a similar study that had been completed the year prior. The construction of a new facility represents a considerable undertaking for the cooperative. We wanted to ensure all alternatives were considered and our decisions were fully informed. Crucially, both studies arrived at the same conclusions.
What did you learn from the study?
The results revealed that our current facilities are inadequate for current and future space needs. In fact, our existing facilities only meet approximately 54% of our anticipated square footage needs based on our historic growth. The existing buildings would require moderate-to-significant modifications to meet our needs and building code requirements. While repairs/replacements would improve the physical conditions, energy efficiency and overall layout, items like traffic flow and operational efficiencies could not be overcome at our current location.
What options were considered?
The consultant presented five options to KEC’s board of directors based on the needs assessment. Each option identified which needs would be addressed. The options are outlined below and ranged from addressing only immediate facility deficits to finding a new site and constructing a new facility.
- Remain on current site and address immediate facility needs.
- Remain on current site and renovate it to suit future needs to the extent possible, given size and location constraints.
- Purchase a five-acre site directly across Dakota Ave. from our main building and construct a new engineering and operations center on that site, along with major renovations of our existing facilities. The site sold, in fact, prior to the completion of our assessment, rendering this option less likely.
- Construction of a new engineering and operations center at a new location while maintaining our administrative presence at our current location. In this scenario, we could lease out the space currently occupied by our engineering and operations departments to another tenant. The new facility could be constructed in such a way as to accommodate the alternative below should that be needed in the future.
- Construction of a new headquarters facility at a new location. In this scenario, our current headquarters would be sold or leased to another tenant.
The KEC board of directors ultimately eliminated the first three options due to their limitations and will be further evaluating options 4 and 5 depending on the interest of a buyer or tenant in our existing facility.
KEC has engaged a commercial real estate agent to help locate a suitable property. We have also listed the following properties for sale:
- Our headquarters facility located at 2451 W. Dakota Avenue that sits on approximately 10 acres of land.
- Our operations support facility located at 2450 W. Dakota Avenue that sits on approximately five acres of land.
- A five-acre parcel in Post Falls previously intended for a substation that is no longer needed.
If we receive reasonable offers, we will sell and pursue option 5 above. If we do not, option 4 may be more appropriate and cost effective.
What will happen to your staff and equipment if you sell the headquarters before the new facility is constructed?
Our plan is to sell the property with the right to lease it back for up to three years. Any purchase offer accepted for our headquarters properties must include this provision.
How long will construction take?
Providing we find suitable land by the end of the year and we receive a reasonable offer on our current property, construction could begin as early as next year. This would allow KEC to occupy a new facility in late 2022 or early 2023. If that window is missed, the timeline would be pushed back to 2023. That said, the process will not be unreasonably rushed. Ensuring our future facilities are well planned and constructed efficiently is a primary goal.
How will you finance the new building?
Our current headquarters has served our needs for more than 40 years and we expect our new facility to have a similar lifespan. The good news is interest rates are historically low and the financing for the facility would be paid back over a 30-year period. This allows for members today and into the future to contribute to the benefit they receive.
How will this impact my bill?
We don’t believe the new facility will have a significant impact on rates. Through years of prudent financial planning and management, KEC is in a strong financial position. KEC also has a long history of effective cost management which has enabled us to keep our rates among the lowest in the nation. KEC is growing rapidly, which helps spread out operations costs over many members.
Why is a new building needed when other companies are moving to work-from-home environments? Has the cooperative considered this?
During the coronavirus pandemic KEC gained firsthand experience with employees working from home and many may continue to do so. While work-from-home opportunities have eased the current space issues in our administrative offices somewhat, many employees live in areas without adequate internet service, don’t have homes that are conducive to work from, or must work from the office due to the in-person service they provide the membership. The greater and more urgent capacity issues for our engineering and operations functions are unfortunately not alleviated by the ability of some administrative employees to work from home.
How hard will it be for the cooperative to sell its current headquarters?
We've enlisted the help of a commercial real estate agent and are optimistic that we will be able to find a buyer. Although we have outgrown this space, it can work well for other organizations having a need for office and warehouse space within our growing business community.
Will I be able to get more information about KEC’s facility plans?
Yes. As more details about our facility plans are finalized, we will provide that information in many ways, including articles in our member newsletter (PowerLines), our website (www.kec.com) and social media channels (Facebook, Twitter, Instagram and YouTube). As we move forward with this process, we plan to provide information in other meaningful ways.
You may also contact KEC at firstname.lastname@example.org or 208.765.1200 if you have a specific question. We are on the front end of this journey and will share more information with you as plans progress.