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Windows were installed at the Town Council chambers as part of the new Town Hall
project at 8 Newmarket Road this week.
TOWN HALL PROJECT FINANCIAL OVERVIEW - Where the Project Stands to Date
Finance Plan Summary for the new Town Hall Project
As Durham moves forward with the completion of the new Town Hall project at the 8 Newmarket Road site, the project is being done with the following financial plan.
Estimated Expenses
Total Projected Costs: $ 2,906,160
Purchase of site $ 745,000
Construction project $ 2,161,160
Revenue
Bond to purchase site (April 2013): $745,000 to be paid over 20 years
Bond for initial construction (April 2014): $878,700 to be paid over 20 years
From funds reallocated in 2014 operating budget: $183,000
Funds from sale of old Town Office site @ 15 Newmarket Road: $1,099,460*
*Actual purchase and sale price is $1,300,000 contingent upon the approvals for a pharmacy at the 15 Newmarket Road location. If the approvals are not granted, the sale price will be less and the remaining revenue needed will likely be in the form of another municipal bond.
Redeveloment of 15 Newmarket Road Property
On Thursday evening, July 10, 2014, Scott Mitchell, the prospective purchaser of the old Town Office site, will be appearing before the Historic District Commission (HDC) to begin the process of discussing the redevelopment of the 15 Newmarket Road property as a pharmacy use.
Mr. Mitchell will ultimately need the approval of the HDC for both the demolition of the old Town Office site and the approval for the design of any redevelopment there.
Mitchell will also need relief from the Zoning Board of Adjustment to allow a pharmacy drive through (the Durham Zoning Ordinance only allows financial institutions to be permitted by right to have a drive through use) and possible other items. These days, pharmacies insist on the inclusion of a drive through.
Finally, Mitchell will need approval from the Planning Board for the overall plan.
One of the original goals for the new Town Hall project at 8 Newmarket Road was to maximize the revenue from the sale of the old Town Office property and cover as much of the cost of the new Town Hall through the sale of 15 Newmarket Road as possible.
That continues to be a goal of the Town so long as the design is acceptable to Durham's land use boards.
At this point in time, the sale to Mr. Mitchell for a pharmacy remains the highest and best use for the property. Mitchell owns the abutting Irving Station at the corner of Dover and Newmarket Roads and the redevelopment of 15 Newmarket Road would likely integrate the two sites.
Using municipal bonds for major capital improvements and infrastructure such as a Town Hall is a common and acceptable practice in local government. This allows the payment to be spread out over 20 years with a fixed interest rate, etc.
For residents who desire a more detailed look at the Town Hall project expenditures to date, change orders, etc., please read the next section.
A MORE DETAILED LOOK AT THE TOWN HALL PROJECT FINANCIALS AND EXPENDITURES TO DATE FOLLOWS ...
Residents can view an accounting to date of two separate capital projects but which together show the full cost to the Town associated with the purchase and later the construction/renovation of the new Town Hall at 8 Newmarket Road by clicking HERE.
The first capital project involved the acquisition of the 8 Newmarket Road site from People’s United Bank for the sum of $745,000. The Town signed a Purchase & Sale Agreement with the bank to acquire the property on June 1, 2012. Due to a bank title issue that had to be cleared up by the bank in Superior Court the closing on the former bank parcel did not occur until April 2013. It had been scheduled to close in 2012. The Town financed the $745,000 acquisition cost of 8 Newmarket Road through bonding.
The Town entered into a Purchase & Sale Agreement with Scott Mitchell in March 2013 for the sale of the existing Town Office site at 15 Newmarket Road for redevelopment as a pharmacy use. The purchase price is $1,300,000.00. The Purchase & Sale Agreement is contingent upon Mr. Mitchell being approved by the Historic District Commission, Planning Board, Zoning Board of Adjustment, and any other permitting agencies necessary to move forward with the construction of a pharmacy on the site.
Mr. Mitchell will appear before the Historic District Commission on July 10, 2014 to have an initial discussion regarding his proposed project. If a pharmacy use is not ultimately permitted by the Town’s various boards, Mr. Mitchell still desires to acquire the parcel, but at a significantly lower price – likely in the $700,000 to $800,000 range. Note that the Town purchased 8 Newmarket Road for $745,000.
The second capital project is the construction/renovation of the former People’s United Bank building at 8 Newmarket Road as Durham’s new Town Hall. The base project including architectural & associated design development services and actual construction was budgeted at $1,978,160. This includes the following components: AG Architects - $202,414.72; The Jordan Institute (commissioning & LEED) - $25,970; Resilient Building Groups, Inc. (commissioning) - $2,190; and Hutter Construction - $1,748,160.
It was decided that Durham Public Works (DPW) would directly handle the demolition and site work associated with the new Town Hall construction project versus contracting it out as a cost savings measure using primarily in house personnel and equipment. In essence, our DPW crews would devote time to the Town Hall project versus taking on other projects in town. A delay in commencing the project until late fall due to design/cost considerations created a situation in which DPW staff had to address winter conditions thereby adding cost to the scope of work.
While the department has had to expend some money for supplies and contracted services that could not be accomplished in house, labor costs associated with the DPW's staff has been absorbed in house. Rather than charging DPW purchases for the project to other areas of the municipal operation, we have endeavored to capture those project-related costs and carry them as part of the actual capital project. An attached spreadsheet shows the various costs associated with demolition/site work. The budget for demolition/site work associated with the project was $0.
There have been a series of project change orders associated with the Town Hall project to date totaling $82,000. A summary of these can be found in the web link noted above. The first change order is representative of the six items Administrator Selig had identified last year that would be added back into the project if funds were available. Rather than charging them to the 2013 Contingency account, they were charged to the 2014 Contingency account. At year end in 2013, we were running very tight with respect to the bottom line for Town operations.
In total, when all identified costs have been taken into account, the Town Hall construction project is approximately $142,195 over what was specifically budgeted for it at the outset.
To compensate for the anticipated overages, Administrator Selig has taken the following steps to ensure funds are available in cash to offset them:
$65,000 - Reserved from the Town’s general fund “Contingency" account.
$20,000 - Reserved from “Other Debt Service Charges” that will not be needed in 2014.
$51,800 - Reserved from the “Bagdad Road Sidewalk” project. The project will not occur in 2014 and will need to be discussed again as part of FY 2015 budget process.
$21,200 - Reserved from the “Culvert and Outfalls” project. The project will not occur in 2014 and will need to be discussed again as part of FY 2015 budget process.
$25,000 – Reserved from “MIS P-T Wages.” After advertising, we were unable to find a part time MIS assistant as budgeted and will seek a different solution in 2015.
$183,000 – Total reserved for overages at Town Hall project. This leaves a residual of approximately $40,000 in the event additional change orders become necessary.
The above web link showing an Expense/Revenue spreadsheet will give you a clear sense of exactly where funds are being expended and/or reserved for the project.
Business Manager Gail Jablonski and I have discussed that when the Town Hall project is complete and we have a clear tally of actual cost and offsetting revenue to cover that cost, we will bring to the Council a recommended list of budget transfers for Council action. This may include monies from other accounts as we move farther into the fiscal year instead of those identified above.
Finally, as a point of reference, a 15% contingency account for a large capital project such as this is very typical. That number would be $262,224. At this point, there should be few surprises remaining.
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