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20240226 Special City Council Meeting Minutes Y OF City of Beverly RECEIVED ED AND tRE(CORDED ,r- Special City Council Meeting CITY CLERK'S OFFICE Public Meeting Minutes Monday, February 26, 2024, 7:OOpm 210 MAY - I P 3' 4 0 City Council Chambers, 191 Cabot St. Julie Flowers, City Council President, called the meeting to order at 7:OOpm. City Clerk, Lisa Kent, took attendance by roll call. Members Present: Hannah Bowen, Steven Crowley, Kathleen Feldman, Danielle Spang, Todd Rotondo, Brendan Sweeney, Julie Flowers Members Absent: Scott Houseman, Matthew St. Hilaire Rotondo led the pledge of allegiance. Presentations, Awards and Memorials City Hall Project Team Presentation Mayor Michael Cahill introduced presenters from the project. Cahill stated the hope is that the project will be before the Council in early fall and the start of the project would be next spring. This had to be slowed down because of cost escalations. Cahill stated the project was revisited. The design team walked through the design changes and modifications. The target for the project is $18 million, and it would utilize the current footprint of city hall and the former police building. Some of the proposed savings from the previous study included a reduction in square footage and in the amount of interior work, windows, corridor walls, interior doors, terrazzo flooring, new service windows, 25 geothermal wells, demolition, and miscellaneous AV equipment. The team also presented a shift in the project schedule. The goal would be to vacate city hall by April 2025 with an 18-19 month construction schedule starting in May 2025 and returning to city hall by the end of 2026. Cahill clarified that there is a construction cost and a total project cost. The construction cost would be $18 million, plus soft costs, so the total project cost will come in around$24-25 million. The goals of this project are to get both the staff and the public a space that serves all of them. The building will be gaining higher quality, cleaner air. We spent the last several months working with the state to get to the point where we know we can use the dollar store building for our needs; our use is appropriately seen as temporary which does not trigger the new building code. Feldman asked how a reduction in parking spaces with more departments in the building would impact employees. Feldman asked if the current parking lot is even adequate and what a reduction would mean. Cahill stated the plan is to bring back to the building two departments that have vehicle fleets. We could see eight to ten city vehicles, so we will need to look to other city-owned parking for overnight charging and for the morning when staff come in. Most parking that is here now will still be here. There is street parking and parking around the corner as needed. Bowen stated she thinks the reduction in space looks reasonable and she would want it to be a flexible space for hybrid work. Bowen stated she still has questions around how the timeline adjustments may impact the use of the Family Dollar property as well as how to ensure that space is in good shape or an activated part of downtown between now and April 2025 and how this affects the plans for recouping funds. Cahill stated there are some key decisions to be made. We want to move out as soon as we can but also want staff and operations outside this building for as little time as possible. Finance Director Bryant Ayles stated in terms of financing,this works in the city's favor. We try to stagger debt and can layer this in a way that maintains a level debt budget and does not spike the debt. This timeline actually lines up preferably. Rotondo asked for consideration regarding climate control storage for the clerk's office records and order documents. Cahill stated both off site and in the building storage are still being considered for vital records. Spang stated she receives a lot of calls asking about the future of Family Dollar and asked if there are any plans to make it more vibrant until city hall moves in. Cahill stated there will be some artwork on the outside and activity to spruce it up. If the City moves forward with the library project, we are looking at the Rent-A-Center space for satellite library capabilities. That would be sooner than we are looking to occupy for city offices. Then we may be looking for RFP development rights for the area over the parking lot behind it for affordable housing, and eventually there will be an RFP for the building after the city hall has been renovated. Public Hearings Order#017-7:45pm-A request that the City appropriates the sum of Fourteen Million Four Hundred Sixteen Thousand Seven Hundred Ten Dollars ($14,416,710)to pay costs of building and systems construction, renovations or improvements at the Beverly Public Library main branch, including site improvements and the payment of any other costs incidental or related thereto, and that to meet said appropriation,the Treasurer, with the approval of the Mayor, is authorized to borrow$14,416,710 under and pursuant to G.L. c.44, §7(1) or any other enabling authority, and to issue bonds or notes of the City therefore. The Mayor is authorized to take any other action necessary to carry out this project, including,but not limited to, applying for, accepting and expending any and all grants that may be available to the City to defray costs of this project. The amount authorized to be borrowed by this order shall be reduced to the extent the city receives any grant payments on account of such projects prior to the issuance of any bonds for related project. The public hearing was opened and the order was read. A motion for a recess was made and seconded. A vote was taken, and the motion carried(7-0). The public hearing and meeting was recessed at 7:48pm. The meeting and public hearing were called back to order at 7:53pm. Cahill stated there is a lot of complexity to this project. The original building was built in 1913, and an addition was built in 1993 that has not held up as well as the original part of the building. This building needs a lot of attention. There is a lot of scope to this project that is beyond the HVAC system out of necessity. There is a significant tax credit to earn for this clean energy project through the federal Inflation Reduction Act(IRA). Our range of award could be$3.9-4.9 million. Cahill handed the presentation over to some of the companies who have been involved in the process. A representative from B2Q Associates stated that B2Q began speaking with Mike Collins in 2020 about the need to upgrade the HVAC system in the library. In 2021 a feasibility study Beverly City Council Meeting Minutes—February 26,2024 page 2 of 5 overview was done by B2Q which determined the need for the project. The study was only a scoping level comparison of options to upgrade the HVAC system. It was not done with the intent of securing utility incentives and was done even before some of those incentives were developed. It was completed before the unprecedented escalation of construction costs and did not contemplate the extent of the city's necessary building and system upgrades. When beginning the schematic design,the first step was to hold four to six meetings with the library staff, engineering staff, and mayor to determine what the city wanted from the project. The project manager reviewed some of the goals for the project. The high priority goals were to replace failing mechanical equipment, have the project completed by the end of 2024, minimize energy use and operating costs, improve air quality and dehumidification, and minimize disruption to library operations and to the nearby community. There was a big cost premium to a phased construction approach to be able to keep the library open, so that goal was removed and the building would be unoccupied during construction. The medium priority goals were to make building envelope improvements, maximize the existing floor space, ensure resiliency to allow the library to operate with a generator as a heating and cooling center in a power outage, have redundancy in order to minimize downtime during maintenance, and improve accessibility to the building. The project manager reviewed existing HVAC issues such as ice damming at library entrance and cold temperatures at the lower level and mezzanine offices. This building is extremely leaky,there is a lack of dehumidification capability, and the existing mechanical equipment is at the end of its useful life. Both RTUs cannot be used simultaneously during the summer months. There are connection issues with the system and a lot of equipment noise at the mezzanine level where offices are located. The current HVAC system is inadequate for collections storage, which is not good for the materials. Presenters detailed the existing condition assessments that were completed including a geothermal test well, a 3D building modeling, a building envelope assessment, a building air pressure test, an electrical system capacity analysis, an archive material conditions assessment, and an Americans with Disabilities Act (ADA) analysis. Assistant Director of Finance Amit Chhayani spoke about the incentives and grant funding available for the project. The project manager spoke to the financial comparison of different types of replacement HVAC systems. Ayles spoke to the overall net cost. Even though the total estimated project cost is about$18 million,the net cost is significantly less. When factoring in the grants, incentives and National Grid credits,the net cost to the City would be $10.275 million. For that amount, we will employ two strategies. One strategy is to look to cash appropriations and other types of transfers, and the other component is authorizing debt and bringing on debt. We do that with larger projects, and most municipalities do. Projects that are larger in scale typically can't fit into an operating budget, so the cost of those needs to be drawn out over multiple years. In terms of our cash appropriations and transfers for this project, of$5 million,the City Council has already appropriated$2 million, which was the seed money to get a lot of this work to date done. That was a cash transfer from free cash. In addition to that, we plan to come to the City Council to request another$1.5 million appropriation from this year's available free cash funds,then we will also likely come to the City Council with a request to authorize $1 million from a debt reduction stabilization fund. This fund was established about a decade ago and has been available to offset debt for some of these larger projects. For the debt side, there would be about Beverly City Council Meeting Minutes—February 26,2024 page 3 of 5 $5.7-5.8 million. That would be in two parts, an initial principal reduction payment in FY25 and then the remainder of that would be issued in a permanent bond or borrowing. There has been a lot of conversation around capital projects. There is $4.8 million in remaining costs to the dollar store purchase. We anticipate closing that gap with a free cash allocation of$2.5 million, a principal paydown of$359,000 and then a bond anticipation note for $2 million that would be paid once the building is sold. It is reasonable to anticipate roughly $2 million from the sale of that building. The other major project is the youth center which is funded primarily through ARPA funds. There may be a modest free cash ask of around$335,000 next fiscal year. For the city hall project, we would need to cover $24.5 million for the project total. With this library HVAC project of$18 million, $2.5 million have already been covered. Some of the remaining project cost of$15.5 million can be funded by earmarks, incentive payments from utility companies, grants, and direct payment from the IRA program. We tend to under spend the owner's contingency. After all those are factored in,the remaining balance to figure out is around$5.7 million. The library HVAC at$5.7-5.8 million combined with the city hall project of $24.5 million totals $30.3 million that we would propose bonding for. In any municipality debt is a necessary tool to plan at a level course over time. Debt is layered in to maintain a consistent debt budget and debt ratios. Director of Sustainability Erina Keefe revisited the Resilience Together Climate Action and Resilience Plan,which was developed in 2021 with the City of Salem through a community process. Keefe spoke to how this project aligns with the plan. Cahill stated,with all the different revenue streams that have been brought to this project, there is about a$600,000 difference between a gas replacement and a geothermal system and all the benefits it brings. The plan before the Council now has almost$4 million in contingencies with $2 million in construction contingencies and$2 million in owner's contingency. We intend to turn back as much of that as possible. Flowers opened the floor to the public. Beatrice Heinze, 17 Conant Street, spoke highly about geothermal options and also expressed concerns about the price of the project and the cost to taxpayers. Bonnie Jansson, 140 Rantoul Street, stated she thought the parking at city hall should not be reduced. It is already difficult to find parking. George Stairs, 4 Lawnbank Road, stated if equipment is being taken off the roof, adding solar should be considered. Stairs stated he is a member of the Jubilee Yacht Club and solar is being added there. Peter Johnson, 677 Hale Street, asked why the Family Dollar building was taken for$8 million and it looks like it is expected to be sold for$2 million. Rich Donlan, 9 Oakmont Road, expressed appreciation for the presentation tonight. Flowers asked as a follow up to the presentation if it is possible to have these slides available on the city website. Flowers asked councilors for a top question or comment since this will be continued. Cahill stated absolutely it can be added to the project website. Rotondo asked why the Council was not presented with a whole picture at the beginning and why the soft costs and ADA costs were not included in the original presentation. Director of Public Services Michael Collins stated what was presented was a relative cost Beverly City Council Meeting Minutes—February 26,2024 page 4 of 5 comparison of three different technologies. The full scope of the project was not developed at the time. We asked for money to pursue developing the selected option to its fullest extent in order to come back to the Council with a fully developed project. Feldman asked for confirmation that over 50% of the cost would travel between any of the options for roof, ADA compliance and envelope needs. Even with the same kind of HVAC system, it looks like almost 60% of the cost of the project is work that needs to be done with the building envelope and roof, which would need to be done with any option. The project manager confirmed. There are a number of things included no matter which type of system. All of the options are above the 30% assessed value of the building and would require that the building be brought into compliance with building accessibility codes. Feldman stated the Council did not really know about those items, so the sticker shock was a lot. Feldman stated she feels geothermal still makes the most sense long term for the city and that she appreciated the clarification that these are costs that will need to be put into the library whether replacing the system with fossil fuels or geothermal. Sweeney asked what the various payback periods are or if those have been calculated. The project manager stated those periods can be calculated but are not in presentation. They can be provided. Sweeney stated he would appreciate those metrics and also asked for the expected life of the different systems and how much of the system would need to be replaced down the road. Bowen noted that there was a lot of technical jargon in the presentation and asked if it would be possible when releasing it to the public to add the full language where there were abbreviations. The project manager confirmed it would be broadened. Spang stated she wanted to understand a little more about the maintenance costs and savings. Spang asked what the city is looking at for maintenance costs for each of the options. The project manager stated that for all the options there is an estimate of the maintenance including labor and materials. Costs were estimated higher than the library sees today but that breakdown can be provided. Flowers stated it seems like a lot of what we saw tonight spoke to problems at the library that are not just about the HVAC but also about the envelope and issues like the ice dams where the roof does not meet. Flowers stated she is assuming we are so beyond that renovation that there is no opportunity to recoup any cost but said she is curious if there has been any conversation about that. A motion to continue the public hearing to 8:00pm on March 18 was made and seconded. A vote was taken, and the motion carried (7-0). A motion to adjourn was made and seconded. A vote was taken, and the motion carried(7-0). The meeting adjourned at 10:09pm. Beverly City Council Meeting Minutes—February 26,2024 page 5 of 5