The Andover Finance Committee gave the toughest look to date of the plan to borrow money for $17.1 million in budget overruns at the West Elementary School and Shawsheen Preschool construction project, with members raising concerns about how the project is being managed and suggesting delaying the project until construction costs and interest rates come down.
“My real concern — and I’m not going to make any friends saying this — but my real concern is I don’t get warm fuzzy feelings about the way this project is being run,”Andy McBrien said at Wednesday’s meeting. “And I’m really concerned about anything that injects any further uncertainty into this project, because I think it could bring the whole lot down on top of us. And that’s why I’m so conflicted.”
The committee ultimately unanimously voted to recommend special town meeting approve the additional funding on Dec. 1 after ore than an hour of debate. The finance committee is one of four boards to make formal recommendations on the two articles on the Dec. 1 warrant. The select board, school committee and West Elementary School building committee all unanimously recommended approving the borrowing with little discussion.
Andover will ask special town meeting to approve up to $17.1 million in new borrowing and to transfer $463,731 left over from the $1.2 million town meeting approved in 2018 to fund the West Elementary School Feasibility Study to fill the budget shortfall, which is attributed to higher inflation and global supply chain issues. If approved, the measure would add about $74 to the average Andover taxpayer’s bill of $11,088, according to preliminary estimates.
At its meeting Monday, the Andover select board voted to forgo a special election 13 days after the Dec. 1 special town meeting for final approval, pending approval from the state Department of Revenue. Under state law, the town does not have to ask voters for approval in an election if DOR determines the budget overruns are entirely attributable to economic conditions. Town officials expect to receive that determination, meaning the borrowing only needs approval from a two-thirds majority of special town meeting.
Paul MacKay (photo, above) raised concerns about borrowing during the current period of high interest rates, noting the Federal Reserve has said it is working to get interest rates back down to 2.5 percent. A recession, he added, could bring down the cost of construction materials. MacKay said borrowing in the current interest rate environment would make “the cost of borrowing the biggest cost, not the cost of the increase in materials.”
“I’d love to see a serious analysis of what the cost of delay would be under a variety of different assumptions — modeling the cost of delay to when interest rates are 2.5 percent versus the cost of completing the project now,” MacKay said. “I know the building committee said they didn’t even want to consider a delay. I think it’s inappropriate not to consider a delay. I think it’s extremely appropriate to analyze different scenarios over different periods of time with some financial assumptions and see what the cost of that would be.”
Assistant Town Manager Patrick Lawlor said the town had negotiated with construction firms to freeze bids and that the cost of construction “goes up every year, inflation or no inflation.”
“Based on our experiences, the costs of these projects go up. That’s one issue,” Lawlor said. “The other issue is we are a partner with the Massachusetts School Building Authority. It is unclear if we’re delaying six months, a year, 18 months…I imagine there’s a risk to losing that grant.”
MSBA is paying $38.4 million for the new school, which was originally budgeted for $151.6 million.
Andy McBrien: shouldn;t base on assumption costs are go up. That $16m can be looked at is insurance. And my real concern — and I’m not going to make any friends saying this — but my real concern is I dn’t get warm fuzzy feelings about the way this project is being run. And I’m really concerned about anything that injects any further uncertainty into this project, because I think it could bring the whole lot down on top of us. And that’s why I’m so conflicted.
Kim Perry pointed to steps the building committee had taken to close an earlier budget gap. The building committee, for example, approved removing one of two elevators from the project but kept the elevator shaft in the design so the elevator could be added at a later date.
“When does it really end for West El?” Perry said. “Because I feel like every single step they took to address the deficit, they’re going to come back to the town and ask for the money. That’s concerning.”
Andover and Andover Public Schools’ officials are hosting a series of virtual and in-person sessions to preview the two articles that will be decided on Dec. 1.
Video of Oct. 26 Finance Committee meeting from Andover TV: