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HomeMy WebLinkAbout2006 AC Rpt STM2APPROPRIATION COMMITTEE TOWN OF LEXINGTON OvS MOaN��r► V $q �w X = m o a x a 3 V a &PRI L 19 PRELIMINARY REPORT TO THE 2006 SPECIAL TOWN MEETING #2 (STM2) ON THE DEPARTMENT OF PUBLIC WORKS FACILITY REPLACEMENT PROJECT November 29, 2006 at 7:35 PM Released November 28, 2006 Appropriation Committee Members — Fiscal Year 2007 Alan M. Levine Chair • Deborah Brown Vice -Chair Robert N. Addelson (ex- officio; non - voting) • John Bartenstein • Rodney E. Cole Richard Enrich • Pam Hoffman • David G. Kanter • Michael J. Kennealy • Eric Michelson APPROPRIATION COMMITTEE PRELIMINARY REPORT TO STM2 NOVEMBER2006 APPROPRIATION COMMITTEE PRELIMINARY REPORT TO STM2 NOVEMBER2006 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 Unknown GF (see discussion Approve (94) only Facility 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.' 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 $50M will be spent on DPW equipment (at $500K to $1M a year). Currently, the annual cost of heat and electricity for the DPW facility is roughly $50K. 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 $5M and could be much higher if energy costs rise, as is likely. The cost of maintenance of the facility itself will be roughly $500K 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. Background information on the DPW facility project may be found online at < ) http:// www. lexingtont mma. or_/ Documents06 /STMDPWPresentationI106.Rdf APPROPRIATION COMMITTEE PRELIMINARY REPORT TO STM2 NOVEMBER2006 As of the writing of this report, this Committee has seen only the $30.5M cost estimate and a breakdown of the costs at a level of detail of only half -a -dozen lines in a table. Some of what we have not seen includes: • The cost estimate from the professional cost estimators based on the partial design- development drawings that the Permanent Building Committee is in the process of vetting; • Any formal pros & cons, with approximate cost impacts, of alternatives considered in reaching the current project scope; • Any quantitative analysis of future operating costs (but see the online presentation referenced above for a good qualitative analysis of the advantages and disadvantages of indoor vehicle and equipment storage); • Any quantitative analysis of the effects on future needs for DPW equipment; • Any quantitative analysis of projected energy usage; and • Any cost/benefit analysis of noise and stray light control versus their effects on nearby residents. For smaller projects, these types of analyses are often desirable. For the present project, they are imperative. In summary, while the design of the new facility, the plans for its construction, and the cost estimates appear to be proceeding in an orderly way toward reasonable goals, more information and analysis are necessary before we can make a positive recommendation on the appropriation of the large amount that would cover the full costs of construction (including "soff' costs) of a facility that will affect operating budgets for decades. It should also be noted that the degree of certainty in the project costs will be significantly higher at future stages in the design and engineering (D &E), and then the bidding process, when the design will be more detailed, when additional cost analyses will be completed, and when the time until construction will be shorter. We are aware of the generally high rate of inflation of construction costs, especially for public facilities in Massachusetts, which may be on the order of 10% per year. Thus it is not desirable to incur delays in the actual construction of the DPW facility if they can be prudently avoided. Likewise, we shouldn't interrupt the D &E team as there is great value in what they can provide to help answer the open questions and as there would be new start-up costs to bear to restart that team. We currently believe there is an appropriate way to provide time to proceed with the D &E work and the analyses that need to be done without materially delaying the actual construction schedule: Appropriate under this Article only those funds necessary to proceed with the D &E work to achieve formal, bid - ready, construction documents and require that important analyses be done on an expeditious schedule The much larger balance of the funds needed for the project could then be appropriated at the Annual Town Meeting in the spring of 2007 (if sufficient progress has been made by then with regard to additional information, including more precise cost estimates) or at a Special Town Meeting no later than the late summer or early fall of 2007. In the event that the Town's voters do not approve a debt - exclusion referendum, funds spent on the D &E work would have to come from the General Fund's non - exempt tax levy likely with Bond Anticipation Notes. If a debt exclusion is eventually passed for this project, the D &E costs can be included in that exempt tax levy. For these reasons, this Committee voted unanimously (9 -0) to "recommend to the Board of Selectmen that at the Special Town Meeting No. 2 they seek only to appropriate the remainder of the funds for D &E work reasonably necessary for completion of bid-ready construction drawings." Discussions on strategy among a number of boards and committees will continue until this Article is taken up by Town Meeting which is expected to be next month on the 6th. We will make our final recommendation at that time.