New Estimate Sees Library Construction $11.6M Over Budget. Trustees Consider Pledging Endowment To Cover Gap

Jones Library, Amherst, MA

Jones Library. Photo: wilkipedia.org

Jones Library News Highlights For The Week Of August 8, 2022

Members of the Jones Library Building Committee (JLBC) were disheartened to learn last Tuesday that, as designed, the Jones Library renovation-expansion is estimated to require $38.5 million in construction costs.  This represents an increase of $11.6 million over the amount projected in the March 2022 budget that the committee has been working with.

Adding to the bad news was the fact that “soft costs” – professional fees for design and project management, and contingencies – are also likely to rise, and the expected construction start date has been moved back several months to at least October 2023, if at all.

Owner’s project manager (OPM) Craig DiCarlo of Colliers laid out two basic paths forward for the project, for which Amherst Town Council has approved the borrowing of $36.3 million.

One option is to reduce costs by roughly $4 million by eliminating design features and to increase by $8 million the amount to be privately fundraised by the Library Capital Campaign and Trustees.

The other option is to back out of the current grant, revise the project, and re-apply in winter of 2022 when the Massachusetts Board of Library Commissioners (MBLC) will again begin awarding library construction grants.  This alternative would require that the town return the mostly unspent $2.7 million disbursement of grant funds it has received from the MBLC.

Possible Cost Reduction Measures Presented
Colliers and designer Finegold Alexander Architects (FAA) presented a list of 12 feature changes identified as possible and that could result in savings exceeding $4 million:

DescriptionEstimated savings (x $1000)
Modify HVAC design to $65-70/sf and electrical to $50/sf1000
Replace CLT with structural steel600
Eliminate sawtooth skylights500
Lower cost ceilings (drywall or ACT in place of compound wood)475
Reduce landscaping costs: concrete in place of stone and granite pavers; eliminate rain gardens; fewer plantings475
Standing seam metal roof in place of slate tiles400
Eliminate elevator and handicapped access to 3rd floor. Meeting rooms and Staff Space relocated to Ground floor. Art gallery function move to Conference Room, café or other.300
Decorative metal railings in place of glass railings120
Typical CMU “open” trash enclosures in place of closed with roof and siding65
Lower cost ceilings (2×2 ACT in place of planks)50
Change Arriscraft on exterior to brick30
Change curtainwalls to windows30

Sara Draper of the Library’s Sustainability Committee commented that her concern was less with building aesthetics than with how cost reductions might negatively impact the new building’s energy model.  Replacement of cross laminated timber (CLT) and elimination of sawtooth skylights would likely fall into this category.

Additional difficulties include the possibility that a metal roof in place of slate tiles might not comply with the building’s historic preservation restriction and eliminating the elevator to the 3rd floor could violate ADA accessibility standards for new construction.

DiCarlo acknowledged that “aggressive cost cutting might not give you the building that the community is envisioning.”

Trustees Tackle Fundraising Question
On Thursday, August 11 the Jones Library Board of Trustees met to address the need for several million dollars in additional fundraising.  Board President Austin Sarat instructed Library Director Sharon Sharry not to record the meeting.

Town Manager Paul Bockelman had explained that any pledge of increased fundraising by the library would need to be “backstopped” by the Trustees, such as by offering the value of the Library endowment as a contingency.  Finance Director Sean Mangano added that a contingency plan should not jeopardize future operations or operating budgets of the library or the town.

Director Sharry presented an outline of fundraising requirements for low ($46.9 million), medium ($49.9 million) and high ($53.3 million) possible project expense scenarios and which considered both hard and soft costs.

She calculated that the Trustees would need to raise $17.2 million for the low scenario, $20.2 million for the medium, and $23.3 million for the high.

The Library Capital Campaign reports that it has received $1,789,053 in donations and pledges, $246,000 in two recent grants and $1,000,000 in Community Preservation Act funds for a total of $3,035,053.

Though not guaranteed, Sharry “has high confidence” that the Library will also receive $1.1 million from a FY23 federal earmark proposed by Congressman Jim McGovern, $1 million from a National Endowment for the Humanities Grant, and $1 million in funding proposed by State Representative Mindy Domb for ADA upgrades.

Depending on where the building’s energy use intensity (EUI) ends up, it could qualify for $220,500 in funding from MassSave.  The Library plans to receive $1.6 million in Massachusetts Historic Tax Credits, a figure Sharry said is likely to increase because of the rising project cost.

“At the end of the day,” Sharry concluded, “we’re looking at a high probability of having eight million dollars in our hands.”

Sharry described cost reductions that included the $4 million discussed at the JLBC meeting plus $750,000 gained by lowering the annual cost escalation assumption from its current 11%.  She also proposed that the project could save $1,750,000 by reusing existing furniture and moving IT upgrade expenses from the project budget to the Town’s capital budget.

In summary, she concluded that if no additional money is raised in the next four years, the Trustees would need to backstop $2,694,447 in the low-cost scenario, $5,694,447 in the medium-cost outcome, and $9,094,447 in the high-cost scenario.

The value of the Jones Library endowment stood at about $8.6 million on July 31.  Sharry predicted that the Library could withstand tapping the endowment for the $2,694,447 in additional funds required in the low-project-cost scenario and still have $240,000 available to its annual operating budget assuming the customary 4% draw from the endowment.  This would require reducing library operating expenses by $90,000 which Sharry described as “very doable.”

However, the cuts required in the medium and high-cost scenarios would be unachievable according to Sharry.  “We would need town help,” she said.

President Sarat proposed a motion that the Trustees “enter into a new agreement with the Town, pledging the value of the endowment to help fund the Jones Library Building,” and Development Committee head Lee Edwards seconded.  Sarat asked that a vote on the motion be postponed until the Board of Trustees meets again on August 22.

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9 thoughts on “New Estimate Sees Library Construction $11.6M Over Budget. Trustees Consider Pledging Endowment To Cover Gap

  1. Costs have risen and fund-raising is way below budget and the Library Board is considering spending the endowment to fill (some of) the gap.
    Think about it: are we prepared to borrow more to pay for this white-elephant? Then why are we even considering spending our savings (the library endowment) to pay for it? Spending our endowment is the equivalent of borrowing from ourselves and mortgaging our future. Is this prudent? I doubt it.
    It is clear what we should do: the minimum necessary repairs to the existing library, perhaps using the Community Preservation and ADA compliance funds, and ditch this boondoggle.

  2. The Jones project looks to be a “canary in the coal mine” for our town’s aggressive capital program. How much overbudget should we expect our new school, fire station, and public works buildings? How much more will we be spending on these? Unlike the library, these are all essential projects. In the face of inflationary pressure, we have to prioritize: do we need a new giant library, or safe public facilities? A new giant library or fire protection? A new giant library or safe schools for our children? To ask these questions is to answer that we need to ditch the library.
    One other point: it appears that fund raising is falling short of expectations. What does this say about the town’s enthusiasm for the library project?

  3. “Board President Austin Sarat instructed Library Director Sharon Sharry not to record the meeting.”

    This sentence leaped out at me. To record, or not to record? Video recordings pick up what every Trustee says about every point. Minutes, necessarily, do not. Body language and nuance can be revealing. Minutes omit them. The Trustees have Zoom technology or an equivalent. I understand that recording is thus simply a matter of editing the settings for a meeting. This financial issue is vexed and troubling. It will potentially hike Amherst taxpayers’ bill for the Library’s demolition/expansion project. So why did Trustee President Sarat deliberately narrow the Amherst public’s scope of information on how the Trustees propose to address it?

  4. Let’s be clear that the project’s total increase is not $11.6 million. It’s $13.6 million. The official “Jones Library Building Project Newsletter” that arrived in my inbox on Sunday, August 14, says so. To the “hard” construction cost increase of $11.6 million (forgive their Newsletter’s typo saying “$10.6”) must be added “soft” costs such as fees that cannot be avoided. That $13.6 million increase brings the project total to $49.9 million, according to the Library’s own consultants. And that’s their projection today. In this time of inflation that may decline but will not disappear, we can only hope that their next report will not project an even more expensive project.

  5. Ken Rosenthal is correct in that the total project cost (construction cost + soft costs) is estimated at around $50 million at this point.
    The soft costs, as I understand it, are typically a percentage of the construction or “hard” costs, so as the construction cost rises, so too do the soft costs (like Furniture, Fixtures, and Equipment, Fees and Expenses, Contingencies, etc.) In the school building project, they are using 25% for soft costs, so its total project cost = construction cost x 1.25.

    The other point that Library Trustee Alex Lefebvre brought up at the Building Committee meeting is that the estimated costs for the sustainability measures were not updated in the recent estimates – they are still using 2020 figures for those. So the costs are probably higher than presented to date.

    At the end of a very long Town Council meeting on Monday, Town Manager Paul Bockelman gave a brief update on the library project cost increases [at 5h55m https://youtu.be/quw7TF8MTjk?t=21331%5D and said it will come back to the Council soon for a “pretty substantial conversation.” It would appear that a new Memorandum of Understanding between the Library and the Town, that may put the entire library endowment on the line, would be required to move forward, as well as a new borrowing authorization from the Town for the higher project cost.

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