by Art and Maura Keene
We suspect that most folks in this town are suffering from Jones Library Demolition/Expansion Project fatigue. So the essence of our argument is reduced to the lines below in purple. Read on, if you want the details.
The Jones Library is going to cost a lot more than town officials and library trustees are letting on and many of those additional costs will be borne ultimately by Amherst taxpayers. There are four additional cost considerations that have not been mentioned when the cost to the town of the Jones Library project has been discussed. These are:
1. Debt service for additional borrowing (beyond the $36.3M originally allocated)
2. Costs that are being excluded from the budget but nonetheless will have to be paid for (like furniture) and hidden costs that will ultimately revert back to the town (like the fundraising costs of the Friends of the Jones, which will be deducted from the Friends’ promised reimbursements to the town).
3. Shortfalls in fundraising may have to come out of the town budget.
4. Ongoing cost escalations for construction, material, and debt service continue to drive the cost of the project beyond what anyone originally imagined or predicted.
Want to know more? Read on.
Why Taxpayers Will Likely Pay a Lot More Than They Have Already Committed
In response to the Indy’s questions for candidates (see also here) about borrowing for the Jones project, nearly all candidates for council or library trustee said that the town will not be on the hook for more than the $15.8M that was originally committed by the town back in April 2021, with the remainder of the original $36.3 M total cost coming from grants. Sadly, claims that the library project will not cost the town any more money are quite obviously incorrect and for several reasons.
First the $15.8M doesn’t include debt service on the borrowing of the original estimated costs of $36.3M. Those borrowing costs are currently estimated in the neighborhood of $9M and are rising. But the library is going to cost even more than $36.3M and that will entail additional borrowing costs (see below).
As Council President and District 2 council candidate Lynn Giesemer notes in her response to the Indy questionnaire, the town will have to borrow, up front, the full cost of library construction and she says that they will do so with the expectation that the Jones Trustees will raise the funds for any cost overruns above that original authorization and will subsequently (two years following the issuance of a certificte of occupancy for the rennovated building) reimburse the town for those added costs. Recently, they have said that if they come up short in fundraising for those added expenses, they may borrow the amount of the shortfall against their endowment in order to reimburse the town. But it is not apparent that this would be fiscally viable for the Jones which already struggles to meet annual operating costs without the additional burden of a substantial loan. And they have made no commitment, as far as we know, to reimburse the town for the debt service on any additional up-front borrowing by the town.
The cost estimate for the library is currently $46.1M. That estimate is almost a year old and construction economics have been harrowing since that last estimate. An updated cost estimate was expected last week and has yet to be made available to the public. But while waiting for that estimate – the architects and trustees continue to exclude items from the budget, things like cost escalations for furniture and related items ($400,000), a book sorting machine and a maintenance contract for it (estimated in the neighborhood of $400,000),and cost escalations for landscaping and site work ($815,000) that led trustees’ treasurer Bob Pam to protest with alarm. Payment for these items and other essentials that are excluded from the budget will have to come from somewhere, and as far as we can see, at some point, the town will have to pony up to pay for them.
But the library will not cost $46.1M, even with all the value engineering and exclusion of expenses that continues to produce the appearance of cost reductions. If other projects around the state are any indication, the library will cost a LOT more. How much more? Hard to say, given how stingy the trustees have been with project information, but given the escalations that we have observed for the Shutesbury Library (100% over original cost estimate), The Lynnfield Library (72% increase over the original estimate), the North Amherst Library (400% over the original estimate), and the town’s Centennial Water Plant (300 % over the original estimate) and the dramatic cost escalations that we have observed between final cost estimates and final bids that have led 11 other MBLC funded projects to bail and return their grants , this project is certainly not going to come in at the year-old estimate of $46.1M.
Our back of the envelope estimate for the debt service on $70M will be about $14-15M (perhaps more with escalating interest rates) and it looks like that debt service will have to be paid out of town coffers and as far as we can see, is not currently budgeted anywhere. The town might drain it’s cash reserves (currently about $24M) to cover this unanticipated expense, something it refused to do to lighten residents’ tax burden for the new school construction (see also here), with the argument that those reserves were needed to support construction of a new DPW headquarters and fire station. But if reserves are used to pay for escalating debt service for the library, it will push construction of a DPW and firehouse well into the future and construction of a senior center and teen center off the map.
The trustees have promised to reimburse the town for the full amount of any cost overrun beyond the $36.3M that was originally authorized. but as far as we know, there is no mention in the agreement between the trustees and the town that covers the debt service for the money that the town will have to borrow up front. That burden appears to fall to the town.
And, it is simply beyond imaginable that the Friends of the Jones could raise another $10M, or $20M or more to cover burgeoning cost escalations. They have promised to do so, but have not offered any collateral on that promise. An earlier agreement that put up as collateral, the Jones endowment, now valued at about $8M, was retracted. The Friends have raised about $9M toward a promised $10M which they say will cover anticipated cost overruns, but in fact will not, as the construction and borrowing costs continue to rise.
And as we noted above, the Friends will deduct their fundraising expenses from their reimbursement and hence are expenses that the town will effectively have to pay. Those expenses currently total $278,000 and will continue to accumulate thoughout that campaign which will apparently continue throughout construction. A public records request was filed by the Indy to get a breakdown of those expenses and information on who among the Friends is receiving disbursements that will ultimately be borne by the town. That request was denied because the Friends are a private organization and not bound by public records law.
A Vote to Borrow More Money?
The rumor around town is that a vote to authorize borrowing for the full cost of the Jones project is imminent, though we won’t really know what the full cost of the Jones renovation will be until we receive final bids for the project. Last we heard, those were expected in February 2024. Rushing a vote on an important issue is certainly in character for our town government, but we haven’t seen the latest cost estimate yet, much less construction bids, and if other projects are any indication, we can expect bids to come in considerably higher than the final estimate. A rushed vote will hobble our efforts to vet the next estimate. And a thorough vetting by folks who are not central to the project is essential. The recent claims by the architects that construction costs went down $2M ,was more asserted than demonstrated and bears no resemblance to what is happening with other libraries and other municipal construction projects around the state. We note that once borrowing is authorized, the town will pretty much be locked into the project regardless of how much additional cost escalation we run into as we go forward or how much additional money needs to be borrowed. At that point, many will argue, perhaps correctly, that it will be just too expensive to back out. Some councilors argue that it already is. And so we will be committed for the long haul – regardless of the final cost. And that could have dire budgetary consequences for Amherst residents for a generation. Voters would do well to visit the Indy’s questionnaire and study candidates’ responses on the library question before they cast their votes on Tuesday.