Library Trustees Trim Budget and Reduce Contingency Funds To Contain Library Project Costs

By Toni Cunningham

The financial aspects of the Jones Library expansion project were the focus of an extended Finance Committee discussion on March 16th, centering on an updated “total project budget analysis,” provided to the Finance Committee two days prior. 

At the meeting, the option for the project given the most attention was the full renovation/expansion approach that has been advocated by the Trustees from the start, the total cost of which is now estimated at $36.3 million. The state is expected to pay roughly $13.9 million of this cost and the Trustees are committing to raise $6.6 million, leaving a cost to the town of approximately $15.8 million (not including interest). A lower-cost renovation-only approach was asked about by Councilor Cathy Schoen, and Finance Director Sean Mangano was instructed to generate a cash flow projection for a shorter, single-phase repair. 

Ken Guyette, the Owner’s Project Manager from the firm Colliers that was hired by the Library Trustees, created the latest project budget, which includes cuts to contingency funds, which are common in construction budgets as protection against unanticipated costs. Schoen estimated that the contingencies now amount to only 6% of the project costs ($2.1 million), which is significantly lower than the 11.5% for construction contingency plus 10% for owner’s project contingency (a total of $3.2 million) that had been included in the 2016 budget submitted to the Massachusetts Board of Library Commissioners (MBLC). “Construction contingency” funds cover unexpected costs that arise during construction while “Owner’s project” contingency funds cover unforeseen changes in furniture, fixtures, and equipment (FF&E), professional services fees and expenses. 

When asked if the 6% construction and owner’s project contingency was sufficient at this stage of the project, Guyette said it was “ample” and that he typically would carry a construction contingency of between 3-5% of the total budget.

Clarification was also sought on cost escalations due to inflation or increased costs of labor or materials. The 2016 budget included escalation of 5% annually on construction costs and 4% on “soft costs” of FF&E, fees and expenses, based on a project start of July 2019. The latest budget includes 4% annual escalation of construction costs with a start date of March 2022, but no escalation was identified for “soft costs.” In response to questions about this, Guyette said the soft cost figures are generated by a formula as a percentage of construction costs and hence escalation for these costs was included. However, when pressed, Guyette acknowledged that “in order to make the budget work within our constraints, we had to reduce certain items to account for the additional escalation that came into the project looking at a 2022 start.” These reductions amounted to $1.8 million of the overall budget “to ensure we didn’t go over the originally-intended budget,” he said. 

Schoen noted one area where cuts were apparent: “loose furnishings” had been reduced by more than $400,000. Committee Chair Andy Steinberg asked if the cuts to furnishings and equipment satisfy the expectations of the library and “bring us the project that we and the MBLC had anticipated.” Guyette replied that he believes the Trustees “fully understand the sacrifice that had to be made here and we’re going to work within that budget to ensure the proper FF&E is included in the project.”

Trustee Alex Lefebvre said she and Library Director Sharon Sharry went “line by line through every item” and approved the $1.8 million of reductions, although she did not detail where the reductions were made. 

Construction costs, which account for $26.9 million of the $36.3 million budget, were held to approximately the same level as the 2016 budget, primarily by reducing the building size by 4,364 square feet to 61,296 square feet. 

Architect Jim Alexander said two more cost estimates will be made within seven months, although the Town Council is set to vote on the project within a month, so it is unclear how these additional estimates will factor into future decision-making. At the meeting, Schoen expressed concern that further cuts to the budget to keep the total cost stable could result in sub-standard construction, which has been tagged as one reason the roof of the 1993 library addition has had continual problems.

Councilor Lynn Griesemer emphasized the need for the project to remain on-budget. “Even if inflation happens, this is the budget we have to work with,” she said. “You build to the budget and don’t go beyond it. This is not a blank check.” However, the MBLC may not allow a significant scaling back of the project to avoid cost overruns.

Resident Rudy Perkins, who was involved in developing Amherst’s Net Zero Energy Buildings bylaw, asked whether the current budget accounts for the switch to electric HVAC systems and other improvements to reduce the energy use of the building. Perkins said he could not find any estimates of those costs in the new budget. Alexander replied that the estimate did account for the switch to electric and improved building envelope, and Lefebvre clarified that the recommendations of the Sustainability Committee were included in the updated schematic drawings which were the basis of the June 2020 cost estimate.

An Indy analysis of the two cost estimates could not find any additional costs related to advanced energy saving measures. (Perkins had previously served on the Fort River Feasibility Study where it was estimated that meeting the Net Zero requirements would add nearly $4 million to the budget, not accounting for on-site renewables to power the building.)

Resident Hilda Greenbaum asked about liability if the Strong House next door to the Jones Library was damaged by the construction, to which George Barnes of Collier’s replied that there would be components in the contract with the general contractor to ensure protection of neighboring buildings.

In response to a question from Councilor Dorothy Pam about who would be responsible if costs were to exceed the budget, Griesemer replied that there would be a Memorandum of Understanding between the Town and Jones Library Inc. to define all issues of payments, fundraising, and the Jones’ endowment. 

“None of us wants to bankrupt the endowment or jeopardize the operating funds of the library,” she said. In addition, Griesemer noted that the Town is in discussion with the Town Attorney about “how to protect the town’s interest with regard to the significant amount of money the Town would be investing in the library building.” The building is currently owned by Jones Library Inc. and not the Town.

Discussion on the financial aspects of the library project will continue on March 30th and the issue is expected to be brought to the full Council on April 5th.