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Posted on October 17, 2019 at 9:14 PM by Michael Herbert
As has been well documented now in various public meetings and media outlets, over the summer the Town received notification that state funding for our public safety building was not included in the Governor’s capital budget. Furthermore, my confidence that it would be included in future state capital budgets is significantly diminished after discussion during this same time period. To further complicate matters, policy changes at the federal level (i.e. tariffs) and the overall macroeconomic picture have in turn required us to revise our cost forecasts from a total construction cost of $25 million to now $29 million, with an anticipated 8% increase in costs for each year we wait.
Both developments are extremely disappointing, but they do not negate the increasing necessity of a new building to better equip our first responders, provide enhanced public safety services for residents, and provide pivotal redevelopment opportunities at the “old” police and fire stations downtown. Indeed, the most recent cost escalation forecasts further demonstrate that the longer we wait, the more it will cost taxpayers in the long run.
The prospect of having to fund the entire cost of a $29 million public safety building at the local level obviously presents significant challenges, but I think they can be boiled down to three important points:
Over the last two months, I along with the Public Safety Building Committee and the Finance Director have worked to develop a plan that addresses all three points above which I will review here.
If you look at the average tax bill in Ashland (approximately $7300 today), $375 of the annual tax bill goes to fund debt service on projects that have been voted to be excluded from the limits of Proposition 2.5 (debt exclusions). These projects include the Town Hall Renovation, Library Renovation and Expansion, Community Center, High School, Valentine Property purchase, Mindess School Feasibility Study, School Roof Repairs, and the Design & Engineering of the Public Safety Building. We should use that $375 figure as the baseline moving forward.
As you can see, this debt and its corresponding tax impact declines steadily and then significantly drops off in FY24. One of the reasons for this is because the town made the decision in 2014 to refund (another term for refinance) a number of the other projects mentioned above that we had previously borrowed for, and in the process shortened the term length for those allowing them to be paid off earlier. This is a good example of smart decisions made by the town in the past that provide a benefit to the town now.
With this declining debt service already in place, what would the impact be if we had to do a debt exclusion for the full amount ($29 million) for a new public safety building? In that case, over a 30 year term at conservative rates, the result of a $29 million debt exclusion amount requires an annual debt service payment of a little over A$1,500,000. This equates to an increase of $230 annually to the taxes that the average homeowner pays for debt excluded projects.
This additional impact will spike the amount of taxes that residents and business owners spend on debt excluded projects to $583, and doesn’t really drop below the $375 figure again until year 2025. This would be a significant tax burden, especially with a new/renovated Mindess School on the horizon. This is an unacceptable scenario for myself, the Public Safety Building Committee and the Select Board.
With this in mind, we focused on reducing the amount that we have to borrow through a debt exclusion. After careful analysis over the summer, we feel that we could reduce this debt excluded amount by half by taking the following actions: raising revenue from non taxpaying sources and redirecting appropriations to help pay for the building. Specifically, the actions include:
By utilizing these factors, and by structuring the debt to have less of a principal payment in the first three years in exchange for a slightly larger amount of total interest paid over the term, we can continue to stay at or below that $375 baseline number for debt excluded projects. It also provides significant capacity in years 2024 on to pay for a new/renovated Mindess School before reaching that $375 figure.
We feel that this plan is good balance between fiscal prudence and investment in our infrastructure while maintaining affordability for Ashland taxpayers.
2. Ensuring We Build the Right Facility - The Public Safety Building Committee worked closely with both our Police and Fire departments over the last couple of months to look at the programming of the building and see if there are any reductions to the building that could be done without jeopardizing the ability of the building to service the community for the next 40 to 50 years.
While the departments made a couple of changes in some areas, the impact to the size of the building and the costs to the building are negligible. Any significant changes to the size/cost of the building would reduce the longevity of service for the building exponentially. What this means is that in twenty years we would already be at a place where we needed to build another facility. This is simply repeating mistakes of the past like when the Police station was built in the 1970’s. We can’t make those same mistakes again.
3. Allowing for Future Funding Opportunities – This financing plan is structured in a way that if state funding does become available, whether through the bond bill or another state funding vehicle, we would have the opportunity to apply that assistance to further minimize the impact to Ashland taxpayers. We will continue to advocate for state funding, and know that our state delegation will continue to advocate for us as well.
What are the next steps? As mentioned towards the beginning, the construction funding for the building will need to be voted on at Town Meeting and through a ballot measure. But both of these actions will be scheduled for May 2020 at the earliest.
Both the Select Board and Finance Committee reviewed this plan within the last month and supported these actions. After the fall Special Town Meeting in November, we expect to have several public forums related to the Public Safety Building, similar to what we did in the fall of 2018. We can give an update on the plan presented here, as well as where we are with the design process and any other updates we may have. Residents will have ample opportunity to ask questions about both the building and the funding for the building.
In conclusion, while the absence of state funding makes constructing this building more difficult, waiting to construct it until we are forced to construct one because of building code and compliance issues will only make it more expensive for taxpayers. Furthermore, the construction of a new public safety facility is important not just for our public safety personnel, but it is also important to the community at large to improve response times for medical/fire personnel, and it also provides an opportunity to vacate the current police and fire facilities is important for our downtown revitalization efforts. I anticipate having more conversation about the future use of the police and fire station in the next few months.
While we cannot do anything about the cost of the facility or lack of state funding, we can find a way to make this as least impactful on taxpayers as possible. I hope you find this plan both responsible and creative on a number of levels. We have secured the land through a donation and we are in the process of design and engineering. The last step is the appropriation of the funding to construct this long-awaited and long-needed facility. If you have any questions or comments please feel free to contact me at firstname.lastname@example.org
Posted on July 25, 2019 at 7:56 AM by Michael Herbert
I wanted to give you a number of updates regarding our public safety departments, and the public safety building in particular.
First, many of you have probably had the opportunity to meet our interim Chief of Police, Vincent Alfano. Since his appointment as interim Chief, Vin has become a fixture in the community and has been a big proponent of addressing neighborhood issues, traffic enforcement, and a variety of other law enforcement-related items. Based on his community and departmental leadership, I have asked Chief Alfano if he would be willing to come out of retirement to serve as our permanent Chief of Police. I am pleased to say that he has accepted, and therefore I have appointed Vincent Alfano as our new Chief of Police last night. I want to thank him and his wife Christine for their willingness to put their retirement on hold for this important role.
Regarding the Public Safety building, I unfortunately have less positive news. Recent cost estimates for the new building have come in higher than projected. Pending our targeted July 2020 construction start date, a Public Safety Building at 44,000 square feet, and its related “soft costs” is anticipated to cost $29,000,000 as opposed to the $25,000,000 originally anticipated. Supply and demand, and policy developments such as international steel tariffs, are the root cause of this increase. More importantly, annual cost escalators have jumped from approximately 3% per year to 7.5% per year, and it is only projected to get higher as time goes on for the foreseeable future.
The most disappointing news I must share with you is larger in magnitude. In June, we came to find out that funding for our new Public Safety Building was not included in the Governor’s Capital Plan for this coming year, (in fact no municipal public safety projects were included). This was not surprising and was in fact expected, as design and engineering for the building has not been completed (that is currently in process) and this was generally considered a prerequisite for any state construction funding for our project to be released. But more importantly, at this point both the timing of the release and amount of any funding released is unclear. The fact is that the release of these funds are largely outside of our control. Ultimately the Governor must include it in the appropriate capital plan. Last fall we felt highly confident that our combined state and local efforts would be successful in getting this funding released in the near future. That confidence was reflected in the message that we put out. In hindsight this confidence, and the resulting message, was premature on my part.
Where exactly does that leave us? No one can dispute the dire need for a new facility. Combined with the aforementioned rapid cost escalations, it means that construction still needs to commence in July 2020. It makes the most sense from an operational standpoint and also a cost efficiency standpoint. But the uncertainty of it being included in capital plans in the near future mean Ashland will be responsible for funding the project - at least initially - until and if other funding comes through. And the project cost means that we will need to fund this at least partially through a debt exclusion, likely anticipated to be this time next year if we are going to take advantage of the next construction season. Although this is twelve months away, it is important that we put the notice out now.
We are committed to putting together a plan ensuring that through cost saving measures, non-taxpayer revenue enhancements, and hopefully other state and federal funding, we will be able to minimize the impact to Ashland taxpayers. I am positive that Senator Spilka and her staff will continue to strongly advocate on our behalf to get funding from the bond bill released. If they are successful this funding of course would be applied strictly for the public safety building, reducing the impact to Ashland’s taxpayers.
I can’t reinforce enough that while the funding mechanism for the building has to change, the need for the building has not diminished. Therefore we are moving forward with a target construction start date of July 2020. The Select Board, Public Safety Building Committee, Town Management, and our Fire and Police departments are united in both message and commitment to start building this facility next year. The Ashland community in general, and our Public Safety first responders in particular, deserve to have a safe, efficient, and professional work environment. We know that this sentiment is echoed throughout the Ashland community as well, and are grateful.
And finally, not all of the news is bad: Through continuing negotiations with Fafard Real Estate, we have been able to secure an additional 5 acres of land on the property, giving us flexibility for site work related to the construction of the Public Safety Building, and potentially using the property for other purposes as well. This brings the total acreage donated to close to 10 acres. With land values in Ashland continually rising, this acquisition is a true benefit to both the project and the community.
Writing this has not been easy. Disappointing news never is. We thought our road to completion of this much needed project would be less steep. However, we are all committed to seeing this project through, and delivering a facility that will provide decades of service to our community. With your understanding and support, and the hard work and dedication of all involved in this project, this building will most certainly become a reality that Ashland will be proud of.
Posted on April 10, 2019 at 1:16 PM by Michael Herbert