(1/10) It was hard not to be impressed at the January Woodsboro Town Council meeting, as the Council did their due diligence to ensure that the proposed Town Hall was "both affordable and doable."
Almost the entire meeting was dedicated to discussing how the Town would finance the cost of the Hall.
When the Town began the process several years back to build the Town’s first Town Hall, Burgess Heath Barnes and the Town Commissioners were prepared to spend $800,000. With that sum in mind, Barnes successfully secured a $400K grant from the State to help cover 50% of the cost of the construction.
The grant was approved in the FY-23 State budget, despite current State budget cutbacks affecting key priorities. Barnes told the Council that the State money was not in jeopardy, as it was the prior’s funding. "However," Barnes said, "we need to spend it by the end of 2029, or we will lose the money for good."
Commissioner Bill Rittelmeyer pressed Barnes on how ‘sure’ he was that the money was available. "Without the $400K in State money, we can’t do this, so we need to really nail the availability of the money down."
Barnes said that he had multiple e-mails and calls from State officials, and everyone has assured him that the money was available. However, Rittelmeyer said that while he believes Barnes, "I would be happier to see that in writing on a piece of paper with State letterhead."
The $800,000 estimate, which the grant was based upon, however, was blow out of the water when the initial bids to build the Town Hall came in. With the lowest bid coming in at $1.6 million, the Council has been forced to reevaluate what they want in the way of a Town Hall and how they could/should fund it.
"Unfortunately," Barnes said, "we can’t ask the State to send us the money until the Town Hall is completed. So, the longer it takes us to find a way to reduce the construction cost to a point we can afford it, the longer it will take to start actual construction, and if we delay it too long, we risk losing the grant outright."
The original funding plan, when the expected construction cost was $800K, according to Barnes, was to borrow $400K from Woodsboro Bank to cover half the cost of the construction. The Town planned to dip into its Reserve Fund to pay the remaining construction costs, which would be recovered once the Hall was built and the grant funds sent.
"To make it work given the current finances of the Town, we need to get the cost of the Hall down to $1 million, and then decide if we want to increase the loan amount to $600K or keep the original loan goals and instead dip into our Reserve funds for the extra $200K." Barnes said. "If we opt for the latter, while still doable, it would reduce the Town’s ‘rainy day fund’ to less than $400K until the grant funds are received."
"It will be a tight 12 to 15 months [until the grant funds arrive], but I think we can make it work," Barnes said. "If we opt to use $600K of Town funds, we can stick with the original loan options. If not, Woodsboro Bank has offered to loan the Town $600K under two financing options."
The first, a 15-year fix rate loan which will cost the Town $4,689/month, or a 25-year 5-year adjustable rate which will cost the Town $3,445/month. The rates are locked in until February 8, at which time the Bank can raise or lower the offered terms Barnes said.
Barnes and Rittelmeyer said they were leaning toward the 25-year adjustable loan. "Anyone listening to the news today knows that the talk is about the Federal Reserve cutting rates next year, not raising them," said Rittelmeyer. "So, we stand a good chance of being able to refinance it at a later date at a lower rate, and even locking in a long-term rate at a better rate then todays, so the 25-year gives us the most options."
Commissioner Case, however, warned that things could go in the reverse direction and the Town Council could find themselves five years down the road having to refinance at a higher rate and that he would be happier knowing for sure how much the Town would be "on the hook every month until the loan was paid off."
Barnes assured Case that the Town could convert the loan to a fixed rate loan at any time without penalty. Case agreed that given that and given the high potential the rate will be lower next year, the 25-year adjustable loan made the most sense.
While everyone eventually agreed to moving forward with the 25-year adjustable loan option, Commissioner John Cutshall threw a wet blanket on the parade by telling everyone that unless they could get the costs down for the new Town Hall the whole discussion was mute.
"All we know for sure is we can get a loan. Now we need to figure out if we can get the cost of the hall down to a point where we can afford it." Said Cutshall.
After a closed-door meeting following the December Town Council meeting, the Council signed a Memorandum of Understanding with Sanbower Builders of Myersville that if they could make recommendations for changes in the current design that would get the cost of building the Town Hall down to $1 million, the Town would sign a contract with them to build it.
Barnes said Sanbower was chosen because they are a commercial builder and turned in the most detailed proposal of all the commercial builders.
Some of the options on the Hall the Town is considering dropping included a basement. "If you eliminate the basement, and instead build the hall on a simple concrete slab you reduce building cost by $100,000." Local homebuilder Joel Rensberger told the Council last month.
At the January Council meeting, Commissioner Rittelmeyer also offered up the option of looking into purchasing a modular building and then custom enclosing it. "Let's face it, almost every home built today is brought in on the back of a tractor-trailer. If we can get what we want using modular construction, as opposed to custom construction, then we may be able to cut the cost without cutting so many options."
Barnes met with Sanbower on January 10th, and based upon that meeting, said that he was "very optimistic that we will get the building numbers down." I think we can make it work, but we will not know the final number until mid-March, so we’re going to miss the bank’s lock-in timeline, but I doubt the rates will change much. Barnes told the News-Journal.
Barnes said it looked like "we will not be starting work on the Hall until late spring or early summer, "if we can at least get the outside work done before next Winter sets in, they can finish the interior work during the cold months so it will be completed prior to the grant expiration."
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