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APPROPRIATION COMMITTEE PRELIMINARY REPORT TO STM2 NOVEMBER 2006 Introduction Because of potentially conflicting timing issues, the Article to allow Town Meeting to appropriate funds for a new Department of Public Works (DPW) facility is being addressed in a separate Special Town Meeting. Our preliminary analysis and recommendation are given below. Warrant Article Analysis and Recommendation Article 2: Appropriate Funds Requested Funding Committee For A DPW Source Recommendation Facility Unknown GF (see discussion Approve (9-0) only regarding debt- reasonable funding to exclusion complete bid-ready referendum) construction documents The DPW barn, where the bulk of the DPW vehicles and other equipment is stored every evening until the next morning, is over 100 years old. Virtually none of the larger DPW facility is less than 40 years old. A number of studies have consistently concluded that the facility is too small, is in terrible shape, is a very inefficient work place, and is not in compliance with many aspects of current State and Federal codes-not the least of which is accessibility. It is clear that the DPW facility is not adequate for the Town's needs and there is little argument about whether it needs to be replaced. Any debate, at this time, is about the scope of the project and other details.l Unlike construction of a new school building where there is often more limited discussion of the project scope and its impact on the operations of the school, the scope of the plans for a new DPW facility has been questioned. Many of the questions are reasonable and should be answered carefully so that Town officials and residents can be confident that any appropriation for a new facility has been thoroughly reviewed in light of the very significant costs that will be incurred. Just as the current facility has served the Town for decades, we can reasonably expect a new DPW facility to last more than 50 years. The annual operating budget of the DPW is over $8M and that total includes more than $3M in compensation for Town employees. In ballpark terms, over the life of a new facility the Town will spend more than $150M for DPW employee compensation (in 2006 dollars). In the same time period, $25M to $SOM will be spent on DPW equipment (at $SOOK to $1 M a year). Currently, the annual cost of heat and electricity for the DPW facility is roughly $SOK. The energy costs in a new facility could rise significantly (in current year rather than in inflated dollars) because the planned new facility will be much larger than the current one and it will likely be better ventilated and better lit. On the other hand, it is being designed to minimize energy use (better insulation, etc.). If we speculate that the annual energy costs remain near the current level, the total expenditure on energy over 50 years will be on the order of $SM and could be much higher if energy costs rise, as is likely. The cost of maintenance of the facility itself will be roughly $SOOK per year (using 2% of replacement value as a rule of thumb), or $25M over 50 years. Clearly, any effects of the new facility on employee productivity (as well as on that of DPW contractors), on costs of facility and equipment maintenance and replacement, and on energy usage, ought to be taken into account together with the cost of building a new facility. Therefore, this Committee is concerned with life-cycle costs. 1 Background information on the DPW facility project may be found online at <httpa/www.lexingtontmma.orglDocuments06/STMDPWPresentation1106.pd~.