Finance & Advisory Committee Recommendation
There were two articles voted on at the November 14, 2020 Special Town Meeting related to the Town Hall project:
- ARTICLE 2020/11 2-7 Community Preservation – Town Hall Building Project
- ARTICLE 2020/11 2-8 Town Hall Building Project
Please see below for the recommendation by the Finance and Advisory Committee on each article:
ARTICLE 2020/11 2-7 Community Preservation – Town Hall Building Project
Overview: Hamilton’s Town Hall is over 122 years old and is an historic landmark for the town. It is badly in need of renovation for a variety of reasons, including:
- Safety – electrical and plumbing not up to code, lack of fire protection
- Mechanical – HVAC systems failing
- Structural deterioration in multiple areas
- Lack of ADA compliance
- Inefficient layout and working conditions.
Furthermore, any renovation must also comply with Historic Preservation requirements.
This issue has been under consideration by the Town for several years. After looking at the options between building new or renovating, the town residents decided to preserve the Town Hall. It has such cultural, historical and traditional significance they want to keep the building as a symbol of the town.
Part of the Community Preservation Committee’s (CPC) mission is to fund historical preservations and renovations. The town’s historically significant Town Hall is the quintessential CPC project. This contribution is a portion of what the Town Hall Building Committee (THBC) needs to complete the renovations. THBC is also requesting authorization to borrow additional funds in Article 2020/11 2-8. A more comprehensive discussion on the merits, cost and recommendations will be in that section.
As FINCOM supports this project, we encourage the use of CPC funds to complete the construction phase of this historic preservation.
The Finance and Advisory Committee recommends FAVORABLE ACTION (5-0) on Article 2-7.
ARTICLE 2020/11 2-8 Town Hall Building Project
The THBC is requesting that the Town accept the renovation plans presented and borrow the amount necessary to fund the construction phase of the Town Hall renovation, which at the time the warrant closed was estimated to be $5.3 million. The precise amount to be approved and borrowed may be adjusted at STM based on final bids that will be received on November 6th. This amount, along with the CPC’s $3.0 million is expected complete the renovation.
The total project cost including pre-construction cost, professional fees, management services, construction and contingencies is estimated at the time of the final warrant to be $9.5 million. The cost breakdown below includes the funding sources and uses.
The pre-construction costs were approximately $1.2 million. Up to this point, the town residents have voted and approved these development costs for the project. The final construction phase will require approximately $8.3 million, based on cost estimates available at the time of the final warrant.
It is anticipated that these costs will be funded with approximately $8.77 million of 30-year General Obligation Bonds which will include the $5.3 million under this Article, the $3.0 million borrowed by the CPC under Article 2-7 and the refinancing of approximately $468,000 in previously approved short-term borrowings. The annual principal payment varies slightly but is approximately $300,000 each year. The CPC is responsible for $100,000 of the principal payment and that payment will not impact the tax rate. Interest payments decrease each year as principal is paid down. Below is a breakdown of the bond and the estimated cost over the 30 years.
Using the 2022 principal and interest repayment costs as an example after netting out the CPC funding, the tax rate impact of the $336,067 of principal and interest will be approximately $0.22 per $1,000, or $134 on the average $613,400 home. It is also helpful to look at this bonding in the context of the other Town borrowings, which are appended to this Commentary as Exhibit A. The Town’s most significant borrowing, the Public Safety Building, will be repaid in 2026 and averages $275,000 in annual principal and interest payments over its remaining term. Likewise, the Fire Truck borrowing, will be repaid in 2027 and accounts for $70,000 in annual principal and interest payments. These two borrowings combined, upon their maturity, approximate the annual principal and interest costs of the Town Hall Building Project to the Town. Therefore, by 2027, after incorporating the incremental borrowing related to the Town Hall Building Project and absent any other significant projects, our borrowing levels and related annual expense will not be greater than they are today.
FINCOM analyzed this project in several ways: (1) Is a renovation necessary and the best option versus new construction? (2) Has the project been thoroughly researched and vetted? and (3) Does it make economic sense?
On the question of renovation vs. new construction FINCOM concluded the existing Town Hall is a town treasure. It is architecturally significant, its history is woven into the fabric of the community and its sheer presence promotes pride in the town. From a more practical standpoint, the town does not have the land to build another Town Hall. Razing the existing Town Hall and undertaking a new build would mean a longer displacement for the town employees. Therefore, renovating the existing Town Hall is the best option.
Prior Town Meetings have engaged in repeated consideration of the Town Hall renovation, and such deliberations have reflected continued support for this undertaking. The more recent continuum of positive discourse included 1) rejecting the hiring of outside consultants in favor of relying upon a grouping of citizen volunteers with relevant experience and expertise, 2) the establishment of the Town Hall Building Committee whose diligent work is reflected in this Article, and 3) the initial approval of project funding as the THBC pursued its BOS generated charge. Thus, Articles 2-7 and 2-8 reflect the culmination of careful, purposeful planning with the continued support and affirmation by prior Town Meetings.
With respect to vetting the project, design and costs, the Town Hall Building Committee has done an excellent job. It is made up of townspeople who are experts in commercial and municipal construction. Over the past 3 years they have sought citizen’s input, vetted and hired architects and an OPM, kept them challenged and focused and have scrutinized options and costs at every meeting. All along the way they have kept the BOS, FINCOM, Town Manager and others up to date and well informed. We believe they will continue to provide excellent oversight during construction.
Finally, FINCOM has looked at the economics of the project. Since the town folk preferred a renovation to new construction, no credible estimates of a new building are available. Even if new construction is less expensive, arguably the renovation should be looked at a time horizon much longer than the 30-year financing. The building has already functioned for over 122 years without a major renovation. It is reasonable to assume it will continue to function for 75 to 100 years with the current renovation. Over this longer time horizon, the difference between new construction and a renovation would be negligible.
The Finance and Advisory Committee recommends FAVORABLE ACTION (5-0) on Article 2-8.