2012-03-ATM-SPTM-AC-rpt - Laserfiche WebLink

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APPROPRIATION COMMITTEE REPORT TO THE MARCH 2012 ATM & STM increased requirements for computer and telephone connectivity, systems controls, and energy efficiency the Lexington requirement to build in conformance with LEED Silver specifications. There are, undoubtedly, other factors beyond these that come into the present cost equation, and that did not fully affect the costs of building Harrington or Fiske. The Turner Construction Cost Index shows that construction costs have typically, on a national average basis, risen by 32% or so from 2003 (about the time when the construction started on the new Harrington School) and by 15% or so from 2005 to the 4 th quarter of 2011. It is possible that local costs have risen more sharply (but this Committee does not have ready access to local construction cost indices). The new Estabrook School is being designed for a capacity of 540 students, and the latest drawings comprise a gross floor area of about 91,500 square feet, whereas the gross floor area of the new Harrington School is about 75,000 square feet and that of the new Fiske School is about 78,800 square feet. Although the task of fully explaining the increase in costs by analysis is beyond our capability, it is possible to do one simple rough calculation for purposes of illustration. When the factors of general cost escalation and building size given above are applied to the $18M cost of building the new Fiske School, the result is $24M to $29M. Given this range, and the above list of factors that tend to lead to higher costs, one can begin to understand why the total cost may be about $40M. Another assurance that the cost is not unreasonably high comes from the MSBA approval of the cost; the MSBA is a professionally - staffed organization that has an interest in holding down costs so as to hold down the amounts that it reimburses to individual communities, and that would not approve the project if the cost were unreasonably high. Indeed, we understand that as part of the MSBA process, a firm acting as a representative of the Town estimated the entire project cost, and the architect was required to hire an independent party to make a similar estimate. The two parties then sat down together and reviewed the two sets of estimates in detail and came to a consensus on the final estimate. We also note that the estimated cost of the new Estabrook School is comparable to the costs of other MSBA elementary school projects in Andover, Belmont, Hopkinton, Billerica, and Woburn. The full MSBA reimbursement to the Town will be made soon after the project commences. The funds for the balance of the project will be borrowed and repaid over 20 years as 20 equal principal payments plus interest payments which decline from one year to the next. The interest rate will not be known until the bonds are issued, but the Town has been obtaining favorable interest rates in the last few years. Table 1 shows the Town's estimated debt service payments for the first 10 years of a 20 -year term assuming, we believe very conservatively, a 4% interest rate. The following table shows the estimated impact of the exempt debt for a "tax bill on a residence of average value" over the first 10 years of the 20 -year term. The dollar amounts are the component of a residential property tax bill that could be attributed to the exempt debt for a resident whose property was assessed at $697,000 in FY2011. The total tax bill in FY2011 for this "average taxpayer" was $9,936. Approximate Exempt Debt Service and Tax Impact — new Estabrook School Fiscal Year Debt Service Tax Impact 2014 $2,432,000 $188 2015 $2,378,000 $184 2016 $2,324,000 $180 2017 $2,270,000 $176 2018 $2,216,000 $171 2019 $2,162,000 $167 2020 $2,107,000 $163