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06/21/2021 12:00 AMOn June 15, a lengthy discussion answered some, but not all, questions for the Branford Board of Finance (BOF) on whether – and how -- to support a $1.7 million cost increase to the Branford/North Branford animal shelter expansion project. As a result, the BOF voted unanimously to table acting on a resolution to increase the Town’s September, 2020 approved appropriation and bond for the project from $2,895,000 to $4,595,000.
The board members indicated that they wanted to review more information to be provided following the June 15 meeting; and that they expected to vote on the matter at the next BOF meeting, June 28. An agenda for the June 28 meeting was not available at press time. The request to approve the additional $1.7 million cost increase was orginally brought before the BOF at its May 24 meeting.
The Town of Branford owns the shelter building at 749 East Main Street and is responsible for the animal control officers staffing the department, which also provides services to the Town of North Branford. North Branford currently has an agreement with the Town of Branford which assigns approximately 30 percent of the shelter’s municipal operating expenses to North Branford.
In September, 2020, the Branford Representative Town Meeting (RTM) approved bonding $2,895,000 to renovate and expand the shelter, which will double in size to become a 6,350 square-foot facility. The RTM approved the bonding with the knowledge that $1 million of the cost was expected to be covered by a shelter campaign fundraiser. To date, the shelter campaign has raised over $1.25. million in pledges, donations and grants, with $700,000 currently deposited and additional monies coming in the forms of grants or other pending contributions. One question the BOF wants answered before its next meeting is whether any grants or other promised monies could expire if the project is not completed in its projected timeline.
As also noted during the June 15 BOF meeting, all project contractors’ bids, opened by the Town May 17, include a resolution that contractors will be honor their bid price for a period of 90 days after bids are opened.
On June 15, BOF chair Joe Mooney first opened the floor to public comments on the matter. Community members Wayne Cooke and John Hartwell and RTM member Marc Riccio (R, District 6) raised a number of points to the BOF. They ranged from considering delaying approval of additional funding until spiking market costs for labor and materials decline, to questions on the project process and other project decisions under the purview of the Dan Cosgrove Animal Shelter Commission; the potential additional costs caused by energy-saving additions to the building; the need for details itemizing the 60 percent cost increase vs. the original appropriated project expense, and questions regarding one suggested pathway to financing the overrun being presented that night by Branford Finance Director Jim Finch. A fourth member of the public, Bob Regal, told the BOF he was a builder in Branford who just completed three projects where building costs were at least 50 percent over normal costs.
The BOF then received an overview from the project’s construction management team, Enterprise Builders Inc. (Newington) and Town Engineer John Hoefferle; heard comments from First Selectman Jamie Cosgrove, and reviewed with Finch one possible pathway to financing the additional $1.7 million involving stakeholders (Town of Branford, Town of North Branford and project donors).
Finch provided a suggested approach for the BOF to consider which he described as a “shared framework of the various stakeholders” to generate the needed $1.7 million. It calls for using $650,000 from the Town’s General Fund balance (currently, the balance is over $28 million); financing $306,000 in additional borrowing (bonds), raising $529,500 in donations, and asking North Branford to match, at roughly 33 percent, what the Town of Branford takes from its fund balance, by committing to provide $214,500 toward the project-- using terms provided by Branford which would allow the expense to be paid out over five years. Finch said he met with North Branford Finance Director Anthony Esposito to discuss the expense and suggested terms and have him forward it to the town’s Finance Committee. Finch said the two towns have made past agreements which are similar, such as the sewer use agreement North Branford has with Branford.
“This situation has happened before (where we’ve) offered North Branford terms paying back over five years,” said Finch, adding that, at this point, Esposito’s “...biggest concern was fact North Branford is going out to bid, within the month, on a high school renovation and the police station. They are concerned with 135% increase in lumber [and] some of the other things Enterprise talks about.”
With regard to how the suggested pathway to provide $1.7 million will be felt by Branford taxpayers, the net debt cost to Branford would be $245,000 over 15 years; or approximately $16,000 a year, said Finch.
“Is that a lot of money?” asked Finch. “If I counted it out in $50 bills on the kitchen table; [but] if looked at in context of a $121 million-plus [2021-22 Town of Branford] budget, it seems to be tolerable, manageable, doable.”
The borrowing would not impact the Branford’s AAA bond rating or negatively impact the General Fund balance, he said. Finch also spoke to the third set of stakeholders, the project donors, who “...it’s fair to say, have concerns that a project they feel is viable and has public support is in jeopardy.”
“I don’t have specific examples, but I would love to find a community that raised these kind of funds in a pandemic,” said Finch of the over $1.25 million the CosgroveSavingLives campaign has raised, to date. “I think that’s nothing short of remarkable; and from my conversation with [Shelter Director] Laura [Burban], they’re willing to step up to the plate.”
Finch also encouraged the BOF to consider options other than this scenario, which he reiterated “...captures elements of a shared framework [but is] not the only plan.”
“You can look at variables and come up with your own iterations,” said Finch. “You can do a two variable solution, a one variable solution... but I know the appropriating bodies are in a difficult spot because of the optics of a 60 percent increase.”
“The question the community has to ask, in spite of all this, is ‘Is this a project worth pursuing in Branford?’ And if it is, what pathway has least impact on taxpayers going forward? And those are the things I tried to take into consideration in this model.”
Enterprise’s Brian P. Baril, AIA Director of Estimating, together with Enterprise Operations representative Wayne Czarnecki, gave the BOF a description of the process utilized to establish the current construction costs. Baril also provided an overview of the original project’s budgeted appropriation of $2.895 million, which was developed and accepted by the Town before Enterprise Builders was awarded the bid for project Construction Manager on February 16, 2021.
Among all bids received for construction manager, Enterprise was short-listed among 11-12 other competitive bidders, then interviewed among 3 - 4 finalists, said Cosgrove. Enterprise’s fee is 3.5 percent of the total of construction cost.
Baril said the first item of business for Enterprise was to review the project’s original $2.895 million budget appropriation, which was based on estimated costs using the architect’s design concept for the building. Using its construction management budgeting process, Enterprise developed a baseline budget (70 percent of construction cost) of $3.5 million.
“Obviously, that was over budget from the $2.895 million, so we came to the table with value engineering,” or VE, said Baril of the suggested changes that could be considered to help lower costs.
Out of approximately $600,000 VE ideas presented, between $200,000 to $300,000 was accepted by the Town to be realized in savings, paving the way to receive a green light for 100 percent construction cost documents to be developed by Enterprise. The documents were published for competitive bidding on April 22, 2021 with a $3.8 million project construction cost as a result of that public process.
Enterprise also provided a document to BOE with a summary of price increases being experienced in the market currently. The document stated that, in a "normal construction market," a 2.38 percentage of escalation would be typcial to expect between September 2020 and July of 2021. "We are currently seeing a significant level of labor and material escalation across all trades on all of our projects which far exceed 2.38 percent," the document noted, in part, together with providing a select list of material cost increase notifications the company has seen from September 2020 through June 2021; including the following: Lumber and Plywood – 135% - Windows and Patio Doors – 5-10% - Steel joists and steel deck 10% - Drywall Increases 20% - Metal Studs 10% - Pre-hung doors 5-7% - Insulation 8-12% - Wood door frames 12%.
While the scope and scale of building plans have not changed, in addition to having the project impacted by escalating market prices, the Enterprise team was tasked with incorporating some items not figured in the original estimated budget, Baril also noted. Most notably, an additional $311,000 is needed for site work, as Hoefferle explained to the BOF June 15.
“The original estimate that the original appropriation was granted through; that was kind of a conceptual budget through the architect at the time; looking at the project based on what the needs were of the animal shelter. As we started looking closer and closer through the 70 percent [construction budget process] we identified some areas [that] may have been missed,” said Hoefferle.
He said the change in site work scope would give the Town the opportunity to widen and pave the long, narrow driveway that leads to the shelter, creating a safer approach to the shelter parking lot, which would be reconfigured as part of the widening process. Additionally, some $81,000 needed to be added into the budget for building masonry work (outside the kennel area and masonry on the building facade) not been figured into the original estimate, possibly due to miscoding the item, Baril noted. Similarly, possibly due to a miscode, $500,000 for thermo-moisture protection did not appear to be in the original project coding for roofing/siding/insulation; although it may have been accounted for as “special construction” costs in the original document, he said.
BOF member Charles Shelton Jr. asked Baril about “green energy savings” in the project design.
“There are definitely some aspects of green construction that are in the design [and] there are cost premiums that are being realized in this project based on green construction,” Baril answered. “In my opinion, I think paying an 8 percent premium for HVAC -- for a very high efficiency electric heat pump, for what’s called energy recovery – 8 percent on the apparent low bid is about $28,000 vs. a conventional system. Also, the insulation package has quite a bit of spray foam insulation on the roof. That is expensive; we’re seeing escalation there too,” of approximately 20% or $16,000 more than conventional insulation.
However, Baril noted, the project’s use of solar panels are not part of the overall project cost.
“We understand those are a lease,” he said. “They’re not being accounted for in our numbers. My understanding is it’s a minimal cost to owner directly.”
Cosgrove also addressed the question of green energy incorporated into the building as well as questions on the project’s potential use of solar power.
“In the project is solar hot water heaters, which were received through a donation through the Connecticut Green Bank that Town applied for and received. That will be installed with the project; however, the material is donated. The solar that is said to be feeding this [$1.7 million] bill; that will be a decision that will come at a later date,” Cosgrove said, adding, “...The Town of Branford has, on a number of occasions, evaluated the use of solar [power] on our buildings.”
He said the BOF may be aware that the Town is having solar installations added at two elementary schools this summer though a power purchase agreement.
However, “...it’s not incorporated in this project,” Cosgrove said of solar power. “It’s not part of the $1.7 million or the $3-plus million [construction cost]. We will evaluate, as we have at other times, and if it’s feasible; if it meets the demand and is financially feasible as a benefit to the project, then we’ll entertain it at that time. But to be clear, solar, other than the hot water heaters, is not in this project. And to be clear, the green measures that are being incorporated into this project [heat pump and insulation spray foam] amount to a premium of about $44,000.”
Cosgrove also said that, during the night’s meeting on June 15, he was “...hearing some of the questions from some of the members asking about comparison, and getting into more detail and also going through variances and showing maybe some things not included or seen [in the original budget]. And I think it’s important to recognize the process that the architect presenting for the initial appropriation went through. I think it was just a general per square foot price working with another firm to develop those numbers. I think certainly the building itself has not changed much, if any really, as I said, in scope or scale [except] some changes within driveway paving and configuration site work; but the building remained largely intact.”
Branford architect Joseph Sepot developed the conceptual design for the shelter commission’s plans to renovate and expand the Dan Cosgrove Animal Shelter.
Cosgrove also emphasized that, despite cost increases, the project has shown it has the support of the Town and community at large.
“As I said a couple of weeks ago to this board, there were a number of factors that were attributable to the increase. Certainly escalation in construction costs is certainly one. Going back to last August when we came before this body and the design team presented an estimate based off the level of design they were at; that number, I think it’s safe to say, could have been a little bit low to begin with. We’ve seen that in other projects...you’re basing that number on information that you have at that time; and we’re basing our decision on whether to proceed with a project on the information. However, I just want to point out, this body, as well as well as the RTM, approved the project unanimously. The community at large has responded in support of this project -- I think greater than we ‘ve seen in any town project certainly that I can recall, in terms of amount of donations and direct donors -- individual, unique donors within the towns of Branford and North Branford.”
With regard to why the appropriation was not increased at the point when Enterprise had come to the table with VE ideas, “... keep in mind that was still as 70 percent design,” said Cosgrove. “That number still would have been $500,000 short of where we ultimately landed when it went to street. So the decision was made to proceed with the bidding process, so then we could make a decision based on real numbers, whether to proceed with project. I think the need is there; I think we spoke to project and I think it’s been stated and confirmed that the project hasn’t changed significantly from what was approved previously. It’s looking at those numbers. But I just want the board and the public and the RTM members to realize the decision was made to proceed, so you had all the information to make a decision. As stated, those contractors now have to hold [bid pricing] for 90 days; this is protecting us from any further volatility that may occur in market.”
Cosgrove recognized the BOF wasn’t obligated to make a decision on June 15 and that it should take time to “...consider, and as you said, chairman Mooney, do your due diligence and homework, as the board always does in evaluating these projects.”