Finance Committee Takes No Position On Key Library Votes

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The Finance Committee (FC), on March 30, completed its review of the financial aspects of the Jones Library renovation and expansion proposal, as well as a review of two repair options. A recording of that meeting can be viewed here. In a break with typical practice, the report from the committee to the Town Council did not include a recommendation about whether to authorize borrowing for the $36.3 million project but, instead, directed councilors to a 60-page document of information provided by the library team in response to questions from councilors and the public. The Council is expected to vote on whether to authorize borrowing for the project next Monday, April 5.

Councilor and FC Vice Chair Cathy Schoen reported that she had met the day before the meeting with the Owner’s Project Managers (OPM), Ken Guyette and George Barnes of the firm Colliers, to go over the project budget since some of the figures previously provided to the committee had been redacted. In the last committee meeting on March 16, it was revealed that $1.8 million had been cut from the budget in order to keep to the original total (see here). Guyette presented the following details about the $1,883,800 in reductions: $400,600 for loose furnishings, $292,100 for architect fees, $134,500 for OPM fees, $37,000 for building commissioning, $17,000 for consultant reimbursables, $5,100 for printing, $294,200 in Construction Contingency, and $703,200 in Owner’s Project Contingency. Contingency line-items are funds reserved for unexpected cost overruns during the project.

In the public comment period, resident Rudy Perkins said he believed the budget is “risky” and “unrealistically low” — by at least $1.5 million in his estimation. Perkins said he was concerned that budget pressures may lead to cutting energy conservation features of the project. “[The cuts] could mean losing all of the adopted Energy Conservation Measures, the cross-laminated timber, the rooftop solar — all the features that brought the building down to [Energy Use Intensity] EUI 29 — and those energy features are what is being used to sell this expansion to members of the public,” he said. 

Architect Jim Alexander acknowledged the pressure of the budget cuts, but said they needed to move into the next phase of design to know more about what adjustments might be needed. “On the energy items, we’d hate to lose them,” he said, “but even without them, the building is EUI 34, which is half [the energy use] of the existing building.” (However, the architects have not produced documentation demonstrating that the cost estimate included items, such as added insulation, that would result in an EUI 34 building.)

Not discussed was who will have the authority to approve any adjustments or change orders during design and construction.

The project, estimated by the OPM at $36.3 million, is based on construction beginning March 2022. It is expected to be funded from three sources: a $13.8 million grant from the state, $15.8 million from the Town using taxpayer dollars, $1 million from Community Preservation Act (CPA) funds (also taxpayer dollars), and $5.6 million from the Library through a combination of fundraising, historic tax credits, and other grants. 

The law firm KP Law, representing both the Town and the Library, drafted a Memorandum Of Understanding (MOU) that defines the terms of the financial agreement between the Town and Jones Library Inc., the legal entity that owns the library building and which is composed of the Director and Board of Trustees. 

Schoen expressed concern that the MOU was “not strong enough to protect the Town side” and offered some suggestions to make it stronger, including placing roughly $2 million of the Library’s $9 million endowment into a separate account under the Town’s control, amending the public library deed restriction from 30 years to “in perpetuity,” and removing the language that assumed the CPA funds would count toward the library share of the project. 

Councilor Pat DeAngelis had asked why the CPA grant wasn’t counting toward the Town’s share of the project since it is taxpayer money. Kent Faerber, who leads the library’s fundraising team, said that $6.6 million was the maximum that the Trustees and the Friends of the Jones thought was plausible, and if they had to raise another million, it would further jeopardize the endowment.

Councilors Andy Steinberg and Lynn Griesemer pushed back against Schoen’s proposed edits, as did Trustees, and resident member of the committee, Bernie Kubiak. “I guess I am more trusting of the Trustees than others,” Kubiak said. Griesemer said the library will be required to provide annual financial reports so that “the Town Manager could check on the health of the non-profit, rather than mess with its money.” In contrast with Schoen, Steinberg said he had “absolutely no hesitation in feeling the Town was secure in the agreement.”

Schoen, however, said she felt the financial risk to the Town was significant. “We have to take on all the debt,” she said, noting that the library’s ability to raise $6.6 million was not assured, and repayments will come late in the process (i.e., roughly 2026). If it turns out that the library cannot raise the money, the MOU states that the Town “shall have all available rights and remedies to enforce the library’s obligations,” including the right to compel the library to use the endowment to pay the library share. The agreement does not preclude the library from requesting additional Town funds through CPA or the annual capital planning process.

The two financial orders that will come before the Council on April 5 would authorize the Town to borrow the full $36.3 million cost of the project. The first is for $1 million to be repaid from CPA funds and the other is for the balance of $35,279,700. Finance Director Sean Mangano said that, while they are authorizing the full amount, he expects the actual amount borrowed to be $20-21 million, $5 million of which would be short-term notes. The expectation is that the short- term borrowing would be paid back as state grant funds and library fundraising monies are received. Schoen pointed out that for a repair option, the amount authorized to borrow would be much less — about $14 million.

Rather than a vote on whether or not to recommend the borrowing authorizations to the Council, Steinberg made a motion that included the following: “The Finance Committee finds that the information provided in the [library’s financial] document is a reasonable projection of the costs and funding plan for the renovation and expansion plan and the repair alternatives, and recommends that the Council rely on this information.” This motion passed 5-0 and had the support of the three resident members of the committee. 

The Town Council will hold a public forum on the project Monday April 5 beginning at 6:30pm, after which they are expected to vote on the MOU and the two financing measures. If approved, the project would move into the design development phase. 

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5 thoughts on “Finance Committee Takes No Position On Key Library Votes

  1. Why is the Finance Committee refusing to do its duty?

    According to its charge, as published on the Town website, it is one of the Finance Committee’s responsibilities to “Review and MAKE RECOMMENDATIONS to the Town Council on borrowing and debt.”

    If the Finance Committee cannot come to a reasoned decision on something as important as borrowing $36,300,000, what’ is it good for? Apparently, after full study and extensive consideration, it cannot decide. So how then, does it expect the Council to decide?

    Simply referring councilors to a 60-page document of information provided by the library team is a dereliction of its duty. The Committee’s job is to recommend a course of action to the Council. C’mon, take a stand. Better a 3-2 split vote for (or against) borrowing than no recommendation at all.

    So again, Finance Committee , why do you shirk your obligation? Do you think by avoiding a vote you can appease both Amherst Forward and the many Amherst residents who oppose this proposal? Where does the buck stop?

  2. The Finance Committee is supposed to be the grownup in the room. It should be looking at Amherst’s financial situation, present and future, dispassionately, analytically, objectively, and — to the extent possible — immune from the pressure of local politics of all stripes. It should tell us what the financial benefits and drawbacks of projects are, and what their effect will be on the town’s budget and on taxpayers, as well as on the other three major capital projects that the town is planning. The library project will involve not only approximately $16 million of taxpayer monies, but interest payments of approximately $22 million on the entire amount that has to be borrowed. (If I am wrong on that latter figure, would someone please note the correct one?) It is the Finance Committee’s duty to inject reality into this situation. If they are not willing to do so, then they have clearly abandoned their fiduciary duty to the town and its taxpayers, and have shown their craven willingness to play politics.

  3. Denise, Sean Mangano has said he expects the Town will need to borrow about $20-$21 million. If that is correct, the interest would probably be around $7 million, all of which would be borne by the Town. A cash flow projection was provided for borrowings that totaled $20 million for the renovation/expansion. In addition, there would be $1 million more borrowed, to be repaid out of CPA funds.
    I don’t quite understand how this works out since the cost will be more than $36 million, but I guess they expect the state to pay their $13.8 million share in installments during construction (with the final payment one year after an occupancy certificate is issued), and some of the fundraising by the Jones to come in during construction, offsetting the need to borrow the full amount.
    We shall see if this projection of costs and funding plan really is “reasonable.” From what I have seen, the project budget involves quite a bit of magical thinking, and trust in the Trustees.

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