Town Manager Responds To Questions On Fate Of Jones Library Expansion Project
Jones Library. Photo: Wikimedia Commons
The Indy posed a series of questions concerning the fate of Jones Library expansion/demolition project to Town Manager Paul Bockelman on August 29. Bockelman sent the responses below (in purple) on September 16, 2022.
1) At the Jones Library Building Committee meeting last week (Aug. 23), Finance Director Sean Mangano indicated that the decision on whether or not to move forward with the building project, given the significant recent changes in cost estimates, rests with the town manager.
Do you agree with this assertion, that it is up to you to make the decision? If so, what is it based on (please be specific)? How and when will you communicate your decision and your process, and provide the relevant documentation to the public? If you aren’t responsible for the decision, who is?
This is an important project and careful consideration must be given to every step and stage of the project. The next phase of the project includes Design Development and Construction Bid Documents. Contracts are required to initiate these two phases. The Town Manager is the contracting authority for the Town, so the Town Manager must sign the contracts for the next phase of the project to move forward.
In short, the Town Manager ultimately is responsible for deciding as contracting authority. The decision to continue into design development is contingent upon two things:
1) An amendment to the MOA with the Jones Trustees that backstops any funds spent by the Town between design development and bidding. This amendment may be a direct repayment from the endowment or an investment of endowment funds into facility improvements. This amendment mitigates risk to the Town in light of the significant cost increases.
2) A fundraising plan that is feasible in the opinion of the Town Manager. This plan shall show a timeline for raising the full amount required from the Trustees with annual benchmarks and milestone benchmarks to judge progress.
If the decision is made to continue to bidding. The determination whether to sign construction contracts and proceed will be based on:
- A positive vote from the Town Council increasing the debt authorization to cover at a minimum all eligible costs of the project (if required by MBLC)
- A determination made by the Town Manager that the project financing is sound, fundraising is on track, and there is manageable risk to the Town or the endowment.
2) The total project cost estimates as well as design/features that would be necessary for the amended project significantly change the proposal that Town Council and voters (2021) approved for town spending.
Given the extensive changes, is the previous MOU between the town and the library moot? In consideration of the changes, should there be a new town council vote?
The Memorandum of Agreement between the Town and the Trustees is still active. Given the new circumstances, an amendment to the original MOA is being reviewed, as discussed at the Finance Committee.
3) The library trustees voted to pledge the entire library endowment to cover increased costs if needed, but the library relies on its endowment for the operating budget and capital expenses.
By pledging the entire endowment, might the trustees be in breach of their fiduciary duties? And if they significantly deplete or even exhaust the endowment, will the town absorb the costs that the endowment has been responsible for? Is that “Plan B”?
The Trustees are making decisions in the best interests of the Jones Library. I am confident that each Trustee will act in the best interests of the library. The Town has been clear that it will not make up any loss in operating support from the endowment.
4) The cost to move forward on the project until the bid phase (anticipated for June 2023) is estimated at ~$1.4M in designer and OPM fees.
If a decision not to proceed is made between now and then, who will pay for the costs incurred? Would the town assume some of it, if needed? What is the plan?
This would be the subject of an amendment to the existing MOA. Right now, the Town is incurring minimal additional costs while a decision is being made. The delays caused by the lawsuits and petitions were much more significant, creating delays that have clearly increased the cost of the project. That being said, ultimate project costs are rising due to cost escalation should the project move forward. Costs to date are the responsibility of the Town (not MBLC, not fundraising). If the Town decides to advance to bidding, the costs would be allocated per an MOU amendment.
5) The library director has labeled several potential funding sources as “in-hand” or “100% guaranteed”.
Have these claims been verified? By whom? Whose responsibility is it? Do you take responsibility for it? Please share the relevant documentation if it exists.
This is a question better directed to the Library Director.
6) The presentation to the Finance Committee and Town Council regarding the status of the four capital projects last July assumed the now-outdated library project cost estimate of $36.3M.
Will there be an updated public presentation about this, including how the new cost of the library will affect the other capital projects? If so, who will make the presentation and when will it be made?
The contribution from the Town to the Jones Library has not changed. Town staff will be updating the Town Council on the financial status of the four capital projects in the coming months. If the Town’s share remains $15.8 million, the only impact to the model is the debt service costs related to larger temporary borrowings for the amount to be fundraised.
What constitutes “a positive vote” of the Amherst Town Council?
A simple majority?
Or the supermajority required to borrow funds?
Thanks, Kitty, for directing these critical questions to the Town Manager.
While he dodged a few, and one answer blames cost increases on “lawsuits and petitions” rather than the Town’s failure to certify valid petition signatures, I am most concerned with Mr. Bockelman’s response to Question 6 where he states “the only impact to the [four capital project] model is the debt service costs related to larger temporary borrowings for the amount to be fundraised.”
The Town Council and the public have been given no idea how large debt service costs are projected to be, nor what impact the increased borrowing will have on the size of the debt exclusion override required to fund the new elementary school project. More borrowing accrued to the Town’s debt limit by the library will mean more borrowing for the school project beyond the debt limit, and therefore a larger debt exclusion override. It is important for councilors and taxpayers to know this information before a decision on continuing with the cash-strapped library project is made.
With 2-Universities and 1-College having libraries of their own; that I would hope would available to anyone in the Amherst area in addition to our North Amherst Library; I question the need for any major expenditure for Jones Library.
Our Town has many ‘more important needs’ that keep our taxes going up. Our roads are in need of resurfacing, we have a lack of safe sidewalks, our bridges need attention, an ambulance that needs to be maintained or replaced, parking in the center needs to be addressed, a water filtration plant that needs upgrades, new school, new fire station in South Amherst and a Replacement to our Public Works to name a few.
My family has lived in Amherst since the late 1940’s and I have seen major projects getting passed with little maintenance.after the fact. Amherst has a lot of protected land, several Town owned golf courses. We have to start thinking about the residents that include the older ones. Amherst is pushing out the long timers by Taxing them beyond their means. My parents always said to ‘live and spend within your needs’ . ‘If you can’t afford it, you don’t get it’.
Let us be fiscally responsible and not try to be something that we are not. We are not Boston or Cambridge…..
Paul Brunelle
…and the Munson Library in South Amherst.
Be careful Paul, there are some who complain when long-time residents make mention of being long-time residents.
Apparently, our investment/vested interest in Amherst (the town we stayed in and, therefore, have supported through thick and thin) is somehow diminished in the eyes of those who came more recently-almost seems like a version of ageism to me.
PS
And, it truly seems strange to me that some would come to a town for what it was or is and then set out to change so much about it.
James Murphy
It bears noting that Finance Director Sean Mangano has prepared a cash flow analysis and schedule of library-related borrowing. The document was included in the packet of the Sept. 19 Town Council meeting, but was not discussed before the Council voted 8-5 to continue the project through the construction bid phase.
According to the projection, if promised fundraising donations arrive at the end of the project, interest payments will total $8.9 million over the lifetime of the project-related bonds, with an additional $239,400 in interest on borrowing for the $1 million CPA award.
Sean Mangano’s interest rate analysis is “the day-before-yesterday’s news”!
Interest rates fluctuate. Recently — using the “Daily Treasury Par Yield Curve Rates” as a guide — they have been increasing at an accelerating pace:
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202209
The Federal Reserve Board is meeting this week, and the bond market may already be pricing-in the expected sharp increase in the Fed’s benchmark rate.
So, if you expect Amherst General Obligation bonds can be sold to yield much less than Treasury Bonds of similar terms and maturity dates…,
then somebody has a bridge — no … , … a library demolition/expansion project — to sell you!
In other words, SM’s analysis may prove a bit rosier than reality….
I find Paul’s answer to the final question distressing and disingenuous. He states that the town’s contribution remains $15.8M and so the cost of the library does not yet impact the capital spending model. But Paul knows that final bids are coming in just over a year from now and he has acknowledged that costs are expected to escalate and hence more borrowing will be necessary for the project to move forward. What will be the impact of more borrowing for the Jones, and the other planned capital projects, on town services and even on taxes.? To say we have to wait until December of 2023 to begin to consider the risks involved in undertaking more borrowing for this already bloated project is irresponsible. If the town is going to borrow more money to support this project, tax payers are entitled to know how that increase in debt (including debt service) will impact other town projects and services. We have heard from the trustees, over the last couple of months, fantastic scenarios of how everything will work out fine for the town if all of the pieces fall into place. But neither the trustees, nor the town manager, nor the eight town councilors who voted to move the project forward on Monday are willing to undertake a risk analysis or to tell us what will happen if things don’t go perfectly. What does the worst case scenario look like? What happens if things go poorly? What is being risked? I’m sure I’m not the only one who wants to know and the council and town manager, as stewards of the town’s well being, have an obligation to take up these questions.
In the Jones Expansion Project Cash Flow Projections from April 2021, the total cost to the Town was projected to be $20,820,790, which included $5,742,456 interest on the borrowings.
In the new Cash Flow Projections included in the 9/19/22 Town Council meeting packet (Scenario 1, donations at end), the total cost to the Town is projected to be $24,314,025, which includes interest of $8,924,025, an increase of $3.5 million.
If I understand it correctly, the increase is primarily explained by the need to make significantly larger short term borrowings ($20.1 million rather than the previously anticipated $2.7 million) during construction, as well as higher interest rates.
These figures do not include the $1 million from CPA and associated interest of $239,400. The cash flow figures also assume the best case scenario of the Trustees’ fundraisers raising the full multi-million dollar shortfall.
[Source of figures: https://www.amherstma.gov/DocumentCenter/View/63372/8b-Debt-Projections—Jones-Library—September-19-2022%5D
Of particular concern is the debt service in years 2026 ($1,859,762) and 2027 ($1,683,212). This debt for the library project would encumber a significant portion of the capital budget in those years, leaving far less for roads, sidewalks, building repairs, vehicles, equipment, etc.