Changing Economic Conditions Result In Revision Of Capital Plan 

Report On The Meeting Of The Amherst Finance Committee July 19, 2022

This meeting was held over Zoom and was recorded.

Finance Director Sean Mangano presented updated models for the four planned large capital projects in town: the Jones Library, a new elementary school, the Department of Public Works, and a new fire station. Mangano said that changes in economic conditions since the original plan was developed in February, 2021 has necessitated a reappraisal of the projects, and “it is not a pretty picture.”

He cited the greatly increased construction costs over the past year, leading to the town being

responsible for a larger share of costs. Also, interest rates have increased. The previous model put interest rates at 2.78%, but the current municipal rate is about 4%, higher than the 10-year average, In addition, the town’s operating costs have increased with the addition of two new departments (CRESS and the Department of Equity and Inclusion) and 4 new firefighters on top of annual increases due to inflation.

The Jones library project has already been approved at a cost of $15.8 million to the town. The town also approved spending on a ladder truck and a $2 million stabilization fund for reparations for residents of African heritage. In order to complete all projects expeditiously, there will need to be a debt exclusion (override vote) for the elementary school. The increase in property taxes from the override is in addition to the 2.5% increase allowed by state law.

Mangano presented two new models. In the first, construction of the fire station is delayed until 2032. This results in an increased total cost of the four projects and the use of about $14 million in reserves out of the current value of $21.5 million. A second model completes all projects by FY26. This places greater stress on the reserves in the first few years, but ultimately allows all projects to be completed using $5 million in reserves.

Town Manager Paul Bockelman noted that the situation at the DPW is dire. The 1928 building needs a new roof to deal with water problems in the building. Also, conditions at the central fire station are unsafe. Fixing these problems seems unwise if new structures are built in the near future.

Councilors and Finance Committee members expressed concerns about being able to meet the operating budget and other capital expenses, such as for roads and sidewalks and maintenance while completing the four projects. Elementary School Building Committee Chair Cathy Schoen worried about the fate of the debt exclusion vote for the school, and hoped the amount required could be reduced by allocating funds from elsewhere.

Mangano stressed the need for new economic growth in the town and the need to remain flexible with changing economic conditions. He will bring the models back to the council in September, when there will be more information on the costs of the school. If there will be an override ballot in March, a decision will need to be made in December.