New Library Cost Estimate, Redux

 

Now that the Shutesbury Library Trustees have submitted a building program to the MA Board of Library Commissioners (MBLC) for a 5,928 square foot library building, it is time to update my recent post estimating costs for the proposed building and its attendant increased costs to taxpayers. Let’s start with the heftiest portion: ongoing operating costs.

Ongoing Operating Costs

Our library’s operations budget will surely increase once the project is completed. As I noted in an earlier post, the Town of Erving’s library budget increased 266% between fiscal years 2017 and 2022. If Shutesbury’s library budget increases by the same percentage, taxpayers could see a permanent, annual increase in their tax bills of $122.84 and a $0.49 rise in the tax rate to accommodate a library budget of $174,628 by fiscal year 2027.

It is notable that the MN Spear Library budget increased 218% between fiscal years 2005 and 2018, from $22,663 to $72,193. If costs have skyrocketed before a new library building is a reality, it seems safe to assume that that upward trajectory will only accelerate after a new library is built.

Exploding library budgets need not be a foregone conclusion, however. Leverett built a new library in 2003 and its library budget (including building maintenance) increased by only 61% between the years 2005 and 2018, from $56,249 to $90,689.

Updated - Total Construction Cost Estimate Based on Increased Square Footage

Using the formulas presented in this blog post, I have refigured the approximate price of a 5,928 square foot library and its cost to Shutesbury taxpayers:

5,928 s.f. * $729 s.f. cost =$4,321,512 * 36% (Shutesbury’s portion of the cost) =$1,555,744 - $520,326 (public and private money saved) = $1,035,418

20-year bond for $1,035,418 at 2.5% interest = $66,419 annual payment

Total interest = $292,964

The $66,419 annual payment would add $0.29 to the tax rate and $73.61 to the average tax bill each year for 20 years.

Outdoor Structures

Not included in the above estimate are two outdoor structures described in the Trustees’ building program: a 700 s.f. pavilion and a 200 s.f. storage shed. According to New England Outdoor, a no-frills pavilion measuring 720 s.f. costs $33,309 and a simple vinyl-sided shed costs $9,729. The pavilion has myriad options that can add to the cost; the shed has a few, as well. The basic cost for both structures: $43,038 (33309+9729).

It makes sense that both the shed and the pavilion would be placed on concrete pads. estimates from Porch.com for concrete work in our area show an average price of $1,689 for an installed 200 square foot shed pad and $5,561 for the 700 square foot pavilion pad.

Remodeling expense gives a similar price tag: a range of $1,582 - $2,189 for the 200 square foot pad with installation and $5,538 - $7,661 for the larger 700 square foot pavilion pad. These estimates reflect the website’s “Better”, or mid-priced, option. 

Adding the least expensive concrete pad estimates ($1,582 +$5,538) to $43,038 gives us a new estimated total construction cost of $50,158 for both outdoor structures. This number is likely on the low side, considering the current inflationary environment and escalating building costs. 

Shutesbury will pay the full amount for each since the Pilot grant money will not cover the cost of an outdoor pavilion and shed. Still, the Trustees and Friends could fundraise the amount necessary to build these structures if the town decides to move forward with the project—and possibly give some local contractors the option to bid on the jobs, as well.

Correction: The Library Trustees have informed me that, because the pavilion will be attached to the proposed library building and the MBLC supports the kayak lending program, these structures are considered eligible costs under the Small Library Pilot program meaning that 75% of these costs would be covered by the grant.

Construction Costs are Rising

Recently, the price tag on Deerfield’s Tilton Library renovation and expansion project was revised due to higher building costs. In 2017, the project cost was set at $8 million. A recent meeting between Deerfield residents and town officials produced a new estimate of between $10 and $12 million since inflation over the past year has raised the price of building materials considerably. Since the Massachusetts Board of Library Commissioners’ grant award of $4 million is static, the town of Deerfield is forced to cover the higher costs or leave the project incomplete.

If Shutesbury approves the Small Library Pilot project, construction will likely begin sometime in 2023. Though there is no way to predict what construction costs might be like in a year and a half, it would be prudent to factor in inflationary pressures when considering what a new library building might cost Shutesbury residents.

Shutesbury’s Population is Declining

In 2009, the Shutesbury Library Trustees proposed a 5,800 s.f. library based on population forecasts of 2392 people in 2020 and 2490 in 2027. In 2020 the population was actually 1717 people, well below the forecast. The newest library plan describes a population decrease from the present 1717 to 1554 people in 2030 and 1335 by 2040. As you can see, the proposed library keeps getting bigger while the population keeps getting smaller. People are moving out of town because of the high property taxes. That means we will have significantly fewer people to share the tax burden of this bigger, new library—a scary proposition and one for which I cannot offer an estimated long-term cost.  

Year	Forecast / Actual population	Library size proposed
2001	/ 1810	4000 sq ft
2009	/ 1836	5800 sq ft
2020	2392 / 1717	5928 sq ft +
2027	2490/
2030	1554 /
2040	1335 /

Can the library project be downsized to fit a dwindling population? If you think it can, let the Shutesbury Library Trustees know! They are taking comments until November 15 on this subject. Contact them via email: librarytrustees@shutesbury.org

The “How Affordable is Your Housing” poll on NextDoor is still open if you want to participate.

Weekly Factoid:

 

Between 2010 and 2020, Cape Cod and the Islands experienced the greatest population increases while the four Western Massachusetts counties of Berkshire, Hampshire, Hampden, and Franklin sustained the greatest losses.

 

Source: The Boston Globe 

 

How Shutesbury Can Promote Housing Affordability

Compared to other small towns in Western Massachusetts, Shutesbury is one of the least affordable. Our fiscal year 2021 tax rate of $22.61 ($23.37 for FY2022) is the sixth-highest out of 351 Massachusetts communities while our per capita income is the 289th highest (near the bottom). Paying the average single-family tax bill of $5,662 takes 21.1% of income, the 16th highest. Shutesbury has been among the 10 highest tax rates in Massachusetts in each of the last 10 fiscal years.

Benefits of Homeownership

Homeownership is a proven wealth-builder for middle-class families. Census surveys show that persons who own their home have much more wealth than renters— 89 times more in 2017. Home equity accounts for the lion’s share of homeowners’ wealth.

A 2018 study from Harvard’s Joint Center for Housing Studies noted that more than half of the nation’s households were headed by persons aged 50 years and older. In Shutesbury, the over-50 crowd makes up 48% of the town’s population and the majority—90%—are homeowners; only 16% of Shutesbury homes are owned by persons younger than 45 years.

Ideally, housing expenses such as mortgage payments, homeowners’ insurance, real estate taxes, and repair and maintenance costs should consume less than 30% of gross household income, according to experts. One big advantage to having a mortgage rather than paying rent is the stability of the former compared to the latter. Thirty-year mortgages also have the advantage of being paid off eventually, usually later in life, when the income reduction associated with retirement is on the horizon.

4 Ways Shutesbury Could Lower Property Taxes

How can the Town of Shutesbury be more supportive of its residents who are homeowners?  The answer lies in reducing the one area of housing costs over which the town has control: property taxes.  

Property taxes are considered regressive because the same rate must be paid regardless of income. This is a particular burden for older homeowners, especially retirees. It can also be an issue for single-parent households. Many have watched the value of their home increase far beyond the price paid, inflating their tax bills as their income has dropped. 

 

Each $1.00 reduction in the tax rate would save the owner of a home valued at $250,454 about $250 annually. Enter your home’s value in the tax calculator to see the exact savings for your situation. 

Here are a few ways Shutesbury might lower taxes on its homeowners.

Remove Extraneous Line Items from the Annual Budget

This year’s Town Meeting revealed that town officials have been keeping debt payments in the budget after the debt is retired and using the money to prop up the town’s savings. The amount in question, $112,695, remains in the budget and adds $0.50 to the tax rate and $125 to the annual average single-family tax bill. This is your money that the town is sitting on. 

Whether we build a new library or not, the $25,000 line item for the Library Building Fund could be removed from the budget. This would save taxpayers $0.11 on the tax rate and approximately $28 on their tax bill. 

Repeal the Community Preservation Tax (CPA)

In a recent blog post, I advocated for repealing the Community Preservation Act tax because great sums of money are accumulating but not being used. Each year, Shutesbury levies an additional 1.5% on the tax you would pay on the value of your home minus a $100,000 exemption. Using the average house value of $250,454 and the fiscal year 2021 tax rate the formula looks like this: :

($250,454 - $100,000) * $22.61/$1,000 of value * 1.5% = $51.03 

A non-binding poll on this question appeared on NextDoor Shutesbury recently. It is not too late if you wish to opine on this issue.

Downsize Town Government

Shutesbury’s cost of government is high compared to its population. Despite a  reduction in both taxable parcels and the number of residents, our budget continues to increase. 

As the population declines the size of town government should as well. Salaries and hours could be reconfigured once incumbents have left or retired. Some positions were made full-time, possibly with the expectation that the number of residents would increase; perhaps they could revert back to part-time. Shutesbury could look to other towns with similar populations and compare how their various positions are structured and funded.

A reduction in salaries would also decrease the cost of benefits, including health insurance—for which Shutesbury currently pays $520,000 yearly.

Cutting the General Government budget line by just 10% would net a $56,370 annual savings based on the fiscal year 2022 budget. That would shave $0.25 off the tax rate and save the average homeowner $62.

Regionalize the Elementary School

A big chunk of Shutesbury’s budget is dedicated to education. The Amherst-Pelham Regional system line item is $1,611,136, a reduction from the prior year of nearly $65,000. This reduction was achieved by skillful negotiation on the part of Shutesbury’s School Committee to make our town’s portion more equitable and in line with State Statute.

The Shutesbury Elementary School line item stands at $2,238,079 for fiscal year 2022. Though the School’s website states that it serves 125 children between Preschool and Grade 6, that number has dropped to 112.

Is regionalization the answer? I am no expert on school issues, but the statistics make me think that considering the issue should be pursued. A 10% decrease in the elementary school budget would net a savings of $223,808 based on this year’s budget. That is approximately a $1.00 reduction in the tax rate and a savings of $248 annually on the average tax bill.

Assuming that regionalization does not entail making Shutesbury the new regional school location, the empty SES building—with its large parking lot and a new roof—would be a boon for the town. There is ample space for storage, community gatherings, exercise, computer, and even cooking classes. The building could be renovated to accommodate many uses—including a new library.

Incorporating all four of these proposals would take $514 off of the average tax bill.

Some of these changes will take time to implement while others could be voted on at the next annual Town Meeting—meaning we could soon take the first steps toward improving affordability for all Shutesbury residents. That’s us, folks!

Savings at-a-Glance

Are your housing costs too high? Use Cent$ible Shutesbury’s new handy-dandy Affordable Housing Calculator to find out!

Weekly Factoid:

 

Massachusetts Per Capita Income, 2020: $78,458

 

Source: Federal Reserve Bank of St. Louis

 

Shutesbury Per Capita Income, 2020: $25,299

 

Source: Massachusetts Division of Local Services

What Might a New Shutesbury Library Cost?

Many questions and concerns are swirling around the idea of a new library for Shutesbury. How big will it be? What will it cost? With the Small Library Pilot Project in full swing and the M.N. Spear Library Trustees planning to submit a Building Program later this month, these questions are more pressing than ever.

In comments made at meetings on August 3, 2021, with Shutesbury Town Officials and August 17 with Shutesbury residents, Massachusetts Board of Library Commissioners (MBLC) Building Specialists Lauren Stara and Andrea Bunker noted that Shutesbury taxpayers will be asked to vote on funding the construction of a library before we have an actual building design. A recent NextDoor thread discussed this issue and a Library Trustee Co-Chair weighed in with some helpful information.

Though she did not have a square foot estimate or a cost per square foot estimate, she did note that the Trustees’ best assessment is that the MBLC will pay 64% of all currently unknown costs, eligible and non-eligible. Voters at next year’s Town Meeting will be presented with a “not to exceed” amount, though she didn’t know what that would be.

As to when taxpayers might expect a “robust” estimate for the project, this Trustee stated that Library officials hope to deliver that information “a month or so before Town Meeting.”

Deciding that next spring is too long to wait for such important information, I gathered information from various public sources, did some math, and came up with three “estimates” of what various sized libraries might cost the citizens of Shutesbury.

Disclaimer: The following information is for educational and entertainment purposes only—though I will be interested to see how close any of these estimates come to the one the Trustees and the MBLC eventually offer.

Without further ado...three cost estimates in order of ascending building size—and cost.

Formulas and figures used:

 

I will be using a per-square-foot cost of $729 based upon the recently completed Erving Library project:

 

 

$4,933,007 project cost as of January 2018 + $550,000 added June 2019 by Erving voters because of increased costs and plugging those numbers into the Bureau of Labor Statistics Inflation Calculator for September 2021 dollar values:

 

$4,933,007 increases to $5,459,271

 

$550,000 increases to $589,008

 

Erving library project cost adjusted for inflation: $6,048,279

 

$6,048,279 /8,294 s.f. = 729.2 rounded to $729.00 cost per square foot

 

Shutesbury’s share = 36% of total project cost

Funds available today =   $520,326 ($252,700 pre-paid by taxpayers via an annual $25,000 budget line item + $267,626 fundraising)

 

An interest rate of 2.5% over 20 years for any borrowed funds

Estimate #1: A Library Sized for Shutesbury’s Population Today: 3,434 S.F.

Shutesbury’s Master Plan Executive Summary, circa 2005, speaks to a library sized to the town’s population, noting the town’s 2000 U.S. Census population as 1,810 which would require a library with “a minimum of 3,600 square feet”.

Taking Shutesbury’s most recent U.S. Census data on population, 1717, I adjusted the square footage to reflect this decline in population.

3,600/1810 = 1.988 or 2 square feet per person

 

1717 * 2 = 3,434 square feet

Next, I applied the per-square-foot cost to build Erving’s new library:

 

3,434 * $729 =  $2,503,386 total project cost

 

Shutesbury’s share :

 

 $2,503,386 * 36% = $901,219 - $520,326 = $380,893

 

20-year loan for $380,893 at 2.5% interest = $24,433 annual payment

 

Total interest over the life of the loan: $107,771

Plugging $24,433 into our trusty Cent$ible Tax Calculator shows an increase of $0.11 on the tax rate and an annual increase of $27.08 for the next 20 years on the tax bill of the average home valued at $250,434.

Note: The tax rate used for the Cent$ible Tax Calculator is the fiscal year 2021 rate of $22.61. The tax rate for FY 2022, scheduled to be set in a few weeks, will be $23.37.

Estimate #2: The Expanded Library Plan of 2001: 4,000 S.F.

In 2001, the Library Trustees proposed a renovation/expansion project which would have added 3,100 s.f. to the existing library, creating 4,000 s.f. of usable space. This design was based upon a future town population of 2,392 in 2020 and 2,490 in 2027.

This plan never got off the ground because of protests regarding the design’s impingement on the Town Common. As described in the MN Spear Memorial Library Building Program July 2009 document on page 4, “The Committee chose to maintain good relations between the residents and the library rather than divide the town over the location of the library.” If the project was reproduced today and we assume that the renovation costs to the original library building equaled the square foot cost of the new construction, the estimate would look something like this:

4,000 * $729 =  $2,916,000 total project cost

 

Shutesbury’s share:

 

 $2,916,000 * 36% = $1,049,760 - $520,326 = $529,434

 

20-year bond for $529,434 at 2.5% interest = $33,962 annual payment

 

Total interest over the life of the loan: $149,799

The annual payment of $33,962 will increase the tax rate by $0.15 and add an annual increase of $37.64 to the average single-family tax bill for the next 20 years.

Estimate #3: The 2011 New Library Design: 5,800 S.F.

Those who lived in Shutesbury in 2010-2011 may remember that the library project ended with the Friends of the Library taking the Town of Shutesbury to court. For estimating purposes, I will recycle Shutesbury’s new building design from 2011: 

5,800 s.f. Library x $729 = $4,228,200 * 36% = $1,522,152 - $520,326 = $1,001,826

 

20-year bond for $1,001,826 at 2.5% interest = $64,804 annual payment

 

Total interest = $283,459

An annual payment of $64,264 will add $0.28 to the tax rate and increase the average single-family tax bill by $71.21 per year for the next 20 years.

Costs At-A-Glance

Other Library-Related Expenses to Consider 

Price increases and/or cost overruns may increase the actual cost of a new library. Erving, for example, appropriated an additional $550,000 to its committed amount of $2,210,380 due to a “higher than anticipated cost of construction”. In addition, its budget for furniture and equipment was eliminated.

Although Erving saved $100,000 on its solar array re-bid and expected another $100,000 grant upon its receiving certification in Leadership in Energy & Environment Design (LEED), increases in project costs prevented the town from shaving $200,000 from its share of the build.  

As I followed the construction process through the minutes of Erving’s Board of Selectmen, I identified at least 30 “proposed change orders (PCOs)” that changed various facets of the project. Though PCOs can add or subtract from the estimated project cost, I saw only one that was a deletion—and that was only to replace an original amount with a new, much higher one. 

The Erving library project manager noted that PCOs are usually paid by the town, even when they stem from errors and oversights made by the architects. The standard is 5% of total project cost; for Erving, that would come to approximately $250,000.

Of the PCOs I was able to identify, the total came to $151,160. The amounts varied from several hundred to tens of thousands of dollars.

The annual operating budget for a new Shutesbury library will be larger than it is now. As noted in a previous post, Erving’s budget exploded from $66,004 in fiscal year 2017 to a fiscal year 2022 budget request of $175,549. The town’s insurance costs were also increased to cover the new building and its contents. Higher costs associated with a new municipal building will become a permanent budget increase, putting permanent upward pressure on the tax rate. If Shutesbury’s Library budget increases by the same percentage, we may be paying an additional $110,850 by fiscal year 2027—or a total of $174,628. At today’s tax rate, that would permanently add another $.49 to the tax rate and another $122.84 each year to the average single-family tax bill.

Supply-chain challenges continue to haunt the building industry, inflating costs. 

No one yet has an inkling of how large a new library might be, but the MBLC’s Ms. Stara has encouraged Shutesbury residents to “think big”. As taxpayers, we need to decide if we want that catchphrase to apply to our tax bills, as well.

Do you want to know what these extra costs will do to your real estate tax bill? Use the handy Cent$ible Tax Calculator to find out.

Weekly Factoid:

 

From $2.6 billion to $14.5 billion to more than $24 billion: The legacy of “The Big Dig”.

 

Sources: The Big Dig: Learning from a Mega Project

 

True cost of Big Dig exceeds $24 billion with interest, officials determine

 

 The Big Dig: Learning from a Mega Project