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HomeMy WebLinkAbout2022-05-19 Financial Summit/DPF 20-Year Capital Plan (Part One)-min Financial Summit May 19, 2022 A remote participation Financial Summit was called to order at 7:00 p.m. on Thursday, January 13, 2022 via Zoom remote meeting services. Present for the Select Board (SB): Ms. Hai, Chair; Mr. Lucente; Vice Chair, Ms. Barry, and Mr. Sandeen were present, as well as Mr. Malloy, Town Manager; Ms. Axtell, Deputy Town Manager; Ms. Katzenback, Executive Clerk; Present for the Appropriation Committee (AC): Glenn Parker, Chair; John Bartenstein; Alan Levine; Eric Michelson; Meg Muckenhoupt; Sanjay Padaki; Lily Yan; Anil Ajuha; Present for the School Committee (SC): Sara Cuthbertson, Chair; Kathleen Lenihan; Larry Freeman; Deepika Sawhney; Dr. Julie Hackett, Superintendent of Schools; Present for the Capital Expenditures Committee (CEC): Charles Lamb, Chair; Sandhya Beebee; Mike Boudett; Rodney Cole; David Kanter, Vice Chair; and Franklin Smith. Also Present: Ms. Kosnoff, Assistant Town Manager – Finance; Mr. Cronin – Director of Public Facilities; Mr. Bouchard – Facilities Superintendent; Mr. Newell – Assistant Director of Facilities. Ms. Barry presided over the meeting on behalf of Ms. Hai. Ms. Barry stated that the meeting was being conducted via Zoom as posted, with the agenda on the Town’s website. She noted that this is the first of two summits regarding the 20-year Department of Public Facilities Capital Plan. The next summit will be held in June. ITEMS FOR INDIVIDUAL CONSIDERATION 1. Department of Public Facilities 20-Year Capital Plan (Part 1) Mr. Cronin explained that this process began with a site visit from VFA (a.k.a Accruent, Gordian) in the summer 2020. VFA reviewed every building within the DPF buildings. All systems/equipment were entered into the VFA database. This database shows the end-of-useful life dates and associated budget estimates. The replacement costs were determined for direct in-kind replacements for systems over the next 20 years. The DPF buildings in the assessment included ten school buildings and the nine Town buildings. Certain Town-owned buildings will be included in the next assessment round, including the Visitor Center, Lincoln restrooms, Center restrooms, Irving H. Mabee Town Pool Facility, Westview Cemetery, and Old Reservoir. Mr. Cronin explained that the Facilities Condition Index (FCI) of a building is calculated by taking the replacement cost of the systems that need to be replaced within the next five years compared to the total amount of replacement costs. These are then broken down by letter grades A-F. As systems are replaced, the letter grades will improve. Conversely, if systems are not replaced the letter grade will decrease. For FY 2021 there were 27 assets assessed, with a total replacement value of $744.6M. The current five-year replacement cost for these assets is $133.9M. The average FCI of these assets is 0.179, or Fair/C. The LPS Central Administration building has the highest FCI and has a letter grade of F for FY2021. The Lexington High School has the highest total cost of any of the assessed buildings at $144M, and FCI of 0.31, or letter grade of D. He acknowledged that he wants most buildings to be in the B or C categories. Mr. Cronin stated that the FCI will change from year-to-year based on replacing systems that are due in the year that they are due, not replacing/deferring systems that are due in the year that they are due, system replacements that were previously in year six are now in the five-year window, and systems in year six are now added but anything deferred remains. For FY 2022, the same 27 assets have a total replacement value of $744.7M, a current five-year replacement cost of $196.5M, and an average FCI of 0.26 or Fair. Mr. Cronin explained that it is important to examine and try to understand upcoming projects for four building in particular, the Central Administration Building, 173 Bedford Street, East Lexington Fire Station, and the Town Office buildings. The Central Administration building needs new windows and a roof. Significant investments should not be made into the 173 Bedford Street building until its future is clearer. The East Lexington Fire Station doesn't have elevators, doesn't have sprinklers, and has a leaking roof. The Town Office building needs to be upgraded in its systems to be at around a C grade at least. Mr. Cronin explained that one of the recommendations is to take the Police Station and the High School out of the FCI calculations. Those two buildings have projects totaling approximately $93M over the next five years, which is a massive capital investment. If there is a clear path forward for both of those buildings, it may make sense to pull them out of the calculations, and then rerun the calculations to get a clearer picture. Mr. Cronin explained that there is a significant amount of investment in the systems associated with HVAC equipment. There needs to be a decision made as to if the calculations are going to be run with in- kind, fossil fuel replacement items, or if these will be changed to electric. There are five main capital requests that need to be examined by the Town: flooring, roofing, paving, sidewalks, and mechanical/electrical systems. There appears to be a huge amount of funding that will be needed in 2042 due to the fact that four new buildings in Town will all come due that year. There could also be a discussion as to how to more level fund the budget, knowing that this is upcoming. Ms. Barry noted that Ms. Hai has requested that the fossil fuel/electrification item not be taken up this evening, as it is likely a deeper discussion item. Mr. Cole (CEC) noted that, if the High School and Police Station buildings are removed from the calculation, the average FCI will only improve. Mr. Parker (AC) noted that all numbers included will be tracking up, due to inflation over time. He explained that the FCI metric, as presented, does not take inflation into account, and does not take into account the Town’s capital budget that may be consumed by a certain project. Ms. Lenihan (SC) asked about the issue of air quality and monitoring for it in the buildings. Mr. Cronin noted that this is taken into consideration and embedded in the design specs for HVAC equipment. In response to a question from Mr. Kanter (CEC), Mr. Cronin stated that the system has the ability to keep track of the equipment that staff has determined doesn’t yet actually need to be replaced, and keep it identified into the future, in case these choices need to be altered. In response to a question from Mr. Kanter (CEC), Mr. Cronin stated that the FY23 budget proposed was informed using this information. Mr. Kanter noted that he would like to review if some of the program allocations might need to be adjusted to make room for other project related aspects. In response to a question from Mr. Padaki (AC), Mr. Cronin agreed that he is working with VFA to figure out how to include the information from FY 21 and FY22 into the overall FCI calculation. Mr. Padaki (AC) noted that the Town usually funds school projects in conjunction with the MSBA. He stated that there seem to be three schools all coming up with large projects within the next few years. The Town may want to consider how to better level fund these. In response to a question from Mr. Rhodes, Sustainable Lexington Committee, Mr. Cronin explained that there is a second database that deals with performance metrics for items such as air filtration, energy efficiency, etc. He will follow-up to see if there is information on lifecycle costing and operational costs added into these calculations. Mr. Sandeen (SB) stated that this presentation seemed focused on capital investments, but he would like to see if these can be considered in conjunction with ongoing operations and maintenance costs. He would also like to see any synergistic benefits that would come out of making these changes. Ms. Muckenhoupt (AC) noted that there are three Town-owned buildings not included in this presentation: the Stone Building, the Muzzey condos, and the Munroe Center. Mr. Cronin noted that the Town does not have a regular capital investment and is not maintaining the Munroe Center currently. He believes the Stone Building will wind up being a project versus maintenance. There is not yet a plan for the Muzzey condos, as they are not owned by the Town. Mr. Himmel, Permanent Building Committee, stated that he believes all the costs in the presentation should be footnoted as to what bid period they are anticipated in. Mr. Parker (AC) asked about comprehensive numeric metrics for each building that show the current state of the building’s quality. Mr. Cronin stated that he would look into this item. In response to a question from Ms. Barry (SB), Mr. Cronin stated that the programmatic component of this project has not yet been addressed. Though he has not yet done so, he is happy to sit down with the building users to discuss their thoughts on these buildings and potential future programming for each. Ms. Barry (SB) noted that there are three buildings in Town, the public safety facilities, that are essentially lived in 24/7/365. She is concerned about the East Lexington Fire Station and believes a discussion on this building needs to be had. Ms. Kosnoff noted that her department is already starting to plan for the FY24 budget. In July, the database will be open for departments to start requesting capital expenditure projects. The total level of investment for the future needs to be understood in order to also look at it on an annual basis. The groups discussed their thoughts on removing the High School and Police Station from the calculation. Mr. Cronin stated that he would rerun the calculations based on different scenarios and present that information at the next Summit meeting. Mr. Michaelson (AC)suggested that the groups use the FCI calculation as a guide, but not necessarily as a requirement. Dr. Hackett (SC) noted that the database does not understand policy issues and does not take into account for the potential grant dollars for a new high school. She believes the High School should be removed from the calculation. Ms. Hai (SB) stated that she believes there should be two lines kept in this tool for the high school. One, which is how much would be be spent on maintenance over the coming years if a new school is not built. A second line that assumes there is a new high school built and covers the expenditures that would reasonably be expected. Mr. Lucente (SB) stated that he would like to see certain historic, or Town-owned buildings, that are not currently included on the list, be added. The next Summit meeting will be held on Wednesday, June 15, 2022, at 7:00 p.m. DOCUMENTS: Presentation ADJOURN Upon a motion duly made and seconded, by roll call, the Select Board voted 5-0 to adjourn the meeting at 8:41 p.m. The other committees followed suit. A true record; Attest: Kristan Patenaude Recording Secretary