By Kim Siebert MacPhail
At their October21 meeting, the Selectmen once again postponed a decision about whether to recommending approval of Special Town Meeting Article 13—Town Hall Building Systems Maintenance. At issue, primarily, is that the cost for the upgrade project more than doubled from an expected $1.141M to a total of $2.975M once the schematic design was rendered. Additionally at issue was the concern that if the project is voted upon in November, it would not go through the Capital Expenditures vetting process in context with other high-ticket needs, nor would there be a thorough understanding of how the project fits in with the cycle of future municipal building refurbishments.
As he had done previously for the Selectmen and the Finance and Capital Expenditures committees, Facilities Director Richard Jones again presented information about the project, including reasons why the price climbed from the original estimate. One of the major drivers of the cost increase is a more competitive construction market. Jones explained that many companies that existed before the economic downturn are no longer in business, so fewer companies are available to provide competitive bids.
Another major factor for the price differential is the HVAC system, chosen because it would provide the greatest energy efficiencies and because it would be the least invasive to building. Jones also said that the work planned for the Multipurpose Room—staircase realignment, acoustical improvements, lighting, cooling and heating—carries a higher price tag than originally thought. Lastly, the relocation of offices and staff during the reconstruction project—with temporary cubicles, phone and data lines needed—is more expensive than previously calculated.
Jones described a variety options for doing the work in as many as four phases, although he demonstrated that the total cost of the project increases with each additional phase. For example, the cost for completing the project in four years instead of one is estimated to go from $2.975M for one phase to a total of $3.553M for four phases. In addition, a spread-out project would create greater upheaval to the building, staff and public.
Town Manager Rick Reed said utility rebates would lower the total cost but have not yet been calculated into the estimate. Besides the rebates themselves, Reed added that the energy efficiencies achieved with better heating, cooling, and lighting would accelerate the payback timeline.
Town Finance Director Victor Garofalo provided figures about how the borrowing costs would affect the price of the project. If the Town chooses to borrow the money for the project for ten years and does it in one phase, an additional $689,500 would be added to the construction cost, resulting in a $3.664M price tag. If the same 10-year borrowing is chosen for a four-phase project, an additional $947,793 would be added to the $3.553 project cost for a total of $4.426M. Costs of bonding for 15 years rather than 10 would increase the total price as well.
Garofalo also provided a schedule that shows the town will shortly amortize debt from several previously bonded large projects, illustrating the ability to borrow for other upcoming projects while still staying under the 10% debt cap identified as fiscally judicious for a municipality.
The parts of the project that are of the highest priority, pros and cons of phasing the project, and the idea of waiting for Capital Expenditure Committee’s recommendations at March Town Meeting were debated.
Trying to move toward a decision about the article, Selectman Mike Rosenberg asked FinCom member Barbara Perry to explain why the Finance Committee has unanimously recommended disapproval of the article. “Our primary concern was that we felt we needed to see the detailed picture of what other projects are going to come along, including refurbishing any upgrades for [other] buildings. This was the first building [that started the recent round of renovation and reconstruction of town buildings.]”
Capital Expenditures Committee Chair Mary Ellen Carter, also in attendance, said that CapEx hadn’t formed a position on the project because the Committee wasn’t made aware of the article until after it was placed on the Special Town Meeting warrant.
“Mr. Jones came and presented to us at our last meeting. I would say the reaction was surprise and disappointment that [the article] was placed on the warrant without any discussion with Capital Expenditures Committee and there was also some sense that the information was still a bit preliminary. We didn’t have enough detail. Then, there was concern that the project is out of the CapEx cycle so we are unable to put it in the context of the total capital needs for the town for the upcoming year. If someone at [Special] Town Meeting were to ask ‘are there any big expenditures coming in the spring?’ the only appropriate answer we could give is ‘we don’t have that information so we can’t tell you yes or no,’” Carter said.
In response, Town Manager Reed said that the project has been in “various stages of development” for 21 months. “We knew we needed to do this [work] prior to the Annual Town Meeting (ATM) warrant of 2012. In 2013 at ATM, design funds were appropriated and since that time, we’ve had on the Selectmen’s agenda the award for the design contract.
“At the staff level, you think when you design a project, you’re going to proceed with it,” Reed continued. “We’ve kept advancing the project because the equipment is reaching the end of its useful life expectancy. I don’t agree that this is a surprise. What is a surprise is the change in price. I agree with that— but the project itself isn’t.”
Selectmen Chair Bill Moonan said, “I don’t think [the project] is a surprise, but just because you study something doesn’t mean you instantly implement it. We do have a normal process here of doing things with CapEx involved and looking at things in conjunction with other projects. The whole point of the new [Capital Asset Management software] is to make sure we look at these things in context.”
However, Selectman Mark Siegenthaler responded that he didn’t understand why the Town would wait to move forward with the project. “When we go to study something and then we produce the design and drawings, the expectation is that when we’re ready, we’ll bring that to the next Town Meeting to ask the town whether or not they’re willing to pay for it. The only surprise is that the fact that the project is going to cost more— and there are a variety of justifications for why that is.”
“I also have to repeat my [previously expressed] frustration with Community Preservation for basically ignoring this building when it is completely eligible for a construction project. It’s basically been set aside in favor of other things,” Siegenthaler added.
“The thing is, we have a building that is coming around the bend and needs to be renewed. I’m not uncomfortable pursuing this. Just because it’s more expensive than we thought it would be, doesn’t mean it isn’t beneficial,” Siegenthaler concluded.
After reviewing the options—to recommend approval, disapproval or indefinite postponement of the article— Selectman Siegenthaler said, “I sense a majority of us are uncomfortable with this project. Maybe we need to bring it back at a different time.”
Selectman Margot Fleischman added, “[Some] of us might be more comfortable hearing what the recommendation of CapEx would be. They intend to take this up at their next meeting. For my part, I support the project. I think it’s gone through the steps it needs to. There is sticker shock that we’re all experiencing and a sense of apprehension about what else is coming down the pike. I get the sense that not all of us think this is fully-cooked.”
Chair Moonan concluded the discussion by asking CapEx Chair Carter to inform the Selectmen of her Committee’s recommendation prior to Special Town Meeting so that the Selectmen can reach a decision before the article is addressed on November 4.