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Date: 4/26/2022
WILLIAMSBURG – On April 21, the Board of Selectman authorized the signing of contracts for the dismantling of the Helen E. James School and the construction of a new public safety complex on the site.
According to Town Administrator Nick Caccamo, the project is on budget at $5.1 million. $1 million of the needed monies was moved over from the town’s stabilization fund two years ago, after a vote of Town Meeting. Demolition, abatement of toxic materials at the James School, and fees for architectural services, project management and construction are covered by that total figure.
“The Public Safety Complex Building Committee has been meeting every two weeks, almost for the last year, to get to this phase,” Caccamo said. The financial details remain as anticipated. “In totality, the project is on budget, given all the factors. We gained a little here and lost a little there.”
Construction costs, Caccamo said, bumped up from $3.6 million to a little over $3.7 million. Demolition, estimated at $750,000, came in with a contracted cost of $394,000, “a pretty significant differential.”
“That allowed us to move construction contingency to a higher amount, 9 percent,” Caccamo said, “rather than the original budget, which I think was 5 percent.” Contingency funds cover unanticipated costs and are usually refunded if they go unspent.
Much of the discussion concerned strategies for financing the project and the impact that choice will have on taxes. The board was presented with a variety of options, including 20- and 30-year borrowing and taking a loan reduced by $500,000.
“Two of them include only borrowing $3.6 million, which was the request of Paul Wetzel,” Caccamo told the board. Wetzel is a member of the Finance Committee. “His rationale is, what does it look like if you borrow less and appropriate American Rescue Plan (ARPA) money to those things? What’s the savings to the town?”
A 20- or 30-year note would also have implications for the total interest costs of the borrowing, Caccamo said, and how to structure it.
“Do we want a … varied interest payment, or just have a level payment for both interest and principal?” Caccamo said. “Those might have different impacts on the tax rate as it relates to the override the town voted on.”
One strategy for interest payments would be to delay them until later in the term of the loan. The justification is that interest rates will be lower and the balance can be refinanced. A lower rate would save money on financing the remaining debt and reduce the overall cost of the building.
“I’m not sure the 3.62 [percent] is gonna get much lower,” said board member William Sayre. “It may not be the final interest rate anyway. Long-term interest rates may go up.”
Caccamo informed the board the Finance Committee recommended a longer term note with interest payments weighted toward the front, the beginning of repayment. Board Chair David Mathers commented that residents have let him know their preferences, in general, and may not prefer a bigger initial increase in taxes.
“The FinCom was leaning toward frontloading,” Mathers said. “I myself am concerned about what frontloading does to the tax rate. The people are already complaining that our tax rate is too high, so there’s a lot of things there to decide.”
Mathers and Sayre voiced the desire to hear from the Finance Committee, and fellow member Denise Banister echoed their concerns. “I want to hear why the Finance Committee feels their way,” Banister said. “We don’t know [what to do] until we know what they’re feeling.”
The consensus was that a decision on loan terms should wait until the input from all relevant boards and committees can be considered. Caccamo began the discussion by telling the board that just one piece of the financial picture was in place: the town will make an interest payment in fiscal year 2023, which begins on July 1.
Sayre had also responded to the challenge of acting while the puzzle was still mostly in pieces.
“I have a hard time signing contracts that are going to be filled in after we put a signature on them,” Sayre said. “Sometimes it’s unavoidable – but when we get into a contract of this size I start to get concerned.”
Caccamo anticipated that demolition of the Helen James School will be completed this fall, with construction of the new public safety complex finished in about 18 months.