Report on the Meeting of the Amherst Finance Committee, November 17,2023
This meeting was held over Zoom and was recorded.
Because the requested document on the cash flow of the $46 million bond was not added to the Finance Committee packet until less than an hour prior to the meeting, the council will not vote on the additional borrowing at the November 20 meeting. The earliest the vote can take place will be December 4.
Council President Lynn Griesemer explained that the entire amount for the project will not be borrowed at once, but as needed during the construction process. Therefore, the debt incurred will be for a shorter term, will be outside of the $15.7 million that the town has already committed as its own contribution, and will be paid off within a year of the project’s completion. The interest rate used to calculate the debt service for the short-term bonds was 4.25%.
Bob Peirent, the capital consultant, said he carefully reviewed the latest cost estimate and feels it is “solid.”
Michele Miller asked what the guarantees were for the library to fulfill its financial obligations to the town as stated in the memorandum of agreement signed by the library and the town in 2021. Town Manager Paul Bockelman stated that the library was legally bound to pay its share of the project cost (now about $14 million) by one year after the project is finished. If the bids came in higher than the $46 million, the trustees would have to raise more money by taking out a loan, cutting costs, or canceling the expansion plans. Jones Trustee Treasurer Bob Pam said he hoped the shortfall would be $4 million or less, so as not to jeopardize the library’s endowment. Bids are expected to be received by March of 2024.
In response to questions from nonvoting Finance Committee member Bob Hegner and Councilor Pam Rooney, Bockelman said the library project will affect the town’s ability to finance other capital projects, such as the fire station and the DPW. However, he also said that he did not think it would have a “major effect” and that the town can still move forward on them in the next five years. Rooney asked to see an updated five-year capital plan, and Bockelman agreed to prepare one.
Problems with the Plan B Estimates
Councilor Cathy Schoen asked how Peirent calculated the new estimates of $19 to $21 million for completing necessary repairs on the building as an alternative to completing the full expansion project. Peirent answered that he took the 2020 Kuhn, Riddle estimate and added 28% for inflation. He did not look at the individual line items. Schoen pointed out that the Kuhn, Riddle estimates were based on work done by Western Mass. Builders, and included replacing the fossil fuel burning boiler and the slate roof. The plans for the expansion project include a less costly air source heat pump HVAC system and synthetic slate roof, both of which could also be used in a repair project.
Councilor Ellisha Walker asked if some of the money raised by the Jones Trustees could be used to repair the library if the full project does not go forward. The trustees were adamant, but not necessarily correct, in saying that it could not. Trustee President Austin Sarat said that the enthusiasm of the donors is for the large project, not for renovation only. Lee Edwards believes that all of the grants are specific to this project and “would go away” if the project does not move forward. She estimated that the town would forego $23 million in pledges and grants. [Editor’s note: This is clearly not true, as the $1 million Community Preservation Act money cannot actually go to new construction, as stated by state CPA Executive Director Stuart Saginor in a February 15,2020 memo. The town attorney, however, thought the Jones construction might qualify, but the ultimate decision would be up to the CPA commission.] Regardless, the CPA grant to the Special Collections should be able to be used for needed repairs to how those documents are stored. In public comment, Ken Rosenthal hypothesized that some of the donors, such as Amherst College, would give to improve the library whether it is for expansion or renovation only.
An amendment to the Memorandum of Agreement obligates the library to contribute $1.8 million to repairing the Jones if the full project does not proceed. Sarat said this amount would constitute the library’s full contribution to repair. It is likely the $1 million in CPA funds would go to meet this obligation.
A Selection of Answers to Questions Submitted by Town Councilors
The library and town officials answered 19 questions submitted by councilors over the past week, including that authorizing the additional borrowing will need an affirmative vote of at least nine councilors, and that the library project is scheduled to be finished in December of 2025.
As to why the increase in borrowing is being voted on now when the bids are not due until March, the town offered the following answer: “There are various reasons to vote now.:
- It provides confidence to potential donors that the project is moving forward.
- When the RFP is released in early 2024, it is important to contractors to know that the money has been voted. AND, it provides them with a sense of the ceiling for their bids.
- You have to have a Bond Authorization to sign a contract to move forward.
- We have a strict June 30, 2024 deadline with the MBLC to sign with a General Contractor.
- We need time to outfit and move into the “swing space.”
Library Director Sharon Sharry insisted that the $280,000 (plus $100,000 in associated expenses, but not including an annual repair contract) automated book sorter that is slated to occupy the current director’s office is a “necessity.” She said the Historical Commission had no objection to this plan, although the commission only reviewed the book return slot next to the front entrance because the interior of the building is apparently not in its purview. Sharry said that the librarian at the recently completed Greenfield Library regrets that she cut the book sorter from the plans;increased library usage has resulted in more staff time being devoted to materials check-in and sorting.
Responses to a request for proposals (RFP) for a temporary location for library services and materials did not produce a viable alternative space. A new RFP will be issued after Thanksgiving. Even if the full project does not go forward, a substantial repair plan will require the library to close for up to a year.
Schoen questioned the reduction in the furniture budget from the 2021 estimate. Sharry said the library plans to reuse some of its current furniture and will apply to the Joint Capital Planning Committee for additional funds as needed. There is a contingency fee of $3.3 million in cost estimates to guard against construction cost overruns.
Nonvoting Finance Committee member Bernie Kubiak noted that the library has gone from 3% to 2% of the town’s full budget over the past years, so it deserves the extra contribution required for this project. However, Finance Committee Chair Andy Steinberg refuted this statement, saying that the budgets of the library, town departments, and the schools are increased by the same percentage every year, with a few minor adjustments. The decreased percentage of the total town budget is due to the increase in other costs, not a short-changing of the library.
In public comment, Rudy Perkins suggested amending the Memorandum of Agreement between the town and library to better protect the town. He noted that the library is only obligated to provide library services to the town for another 30 years under the agreement, and that the substantial contribution of the town should make that service permanent. He also suggested that if the library’s share of the project is delayed, the trustees should be responsible for any increased interest that accrues due to the delay.
The council will hold a public forum on the proposed increased borrowing for the Jones Library on November 20 at 7 p.m. The forum will be part of the regular council meeting, which begins with the councilors reading input to the Town Manager evaluation process from 5 to 6:30 p.m., followed by a public forum on the FY 2025 budget. The meeting will be held in hybrid format and can be accessed here https://amherstma.zoom.us/j/87958454126#success