The Finance Committee met 11/22/2021. Alderperson William Siebers (District 1) who in the committee chair opened the meeting up with a moment of silence for the victims at the Waukesha parade.
The bulk of the 40 minute meeting was taken up by an update on the ongoing Library Project.
Director of Parks, Recreation, and Facilities Dean Gazza told the committee that they wanted to keep everybody informed about the project, but they were definitely early in the process of schematic design. They were getting preliminary numbers and performing value engineering.
They put together the memo that was provided to the Finance Committee as a way to share the process with everybody because they understand there’s a lot of interest in the library.
There were a number of design phases with conceptual design moving to schematic design and then ending up in design development. The library project was moving out of the schematic design phase which is where things like dimensions and square footage were finalized and moving into the design development phase in which they went into specifications with more details.
As they completed the schematic design, one of the things they asked both the construction manager and the architect to do was create a budget estimate based on the schematic design drawings. Those drawings are pretty basic, but they do include all the input from stakeholders and feedback groups. There was a wide variety of desires voiced by those groups including sustainability, various things regarding technology, and parking. Using all of that, they put together a budget estimate, and the initial estimate is that it the entire project will cost $39 million.
He wanted to share a breakdown of that number so that people didn’t misunderstand what it represents. He listed a number of items included in that figure.
- Construction of the facility
- Architectural fees and engineering
- Furniture fixtures and equipment
- Costs associated with the move
- Contingency for construction and cost escalation (He noted that they had seen roughly 27% escalation since the project started.)
He stated, “When we started establishing this budget, the city had always remained unchanged that we would be putting forward $26.4 million towards the project, and that number is still the number that we’re holding to today. The difference in the money of the $26.4 and the projected cost of the library then would come from grants, donations, and things like that. I think we’ve all known that there’s significant interest in the library as it’s gonna be really spectacular for the community.”
He finished up by saying, “So, the question is: does the 39 surprise me? The [answer] is ‘not at all’. We all—we knew that it would be in the [30 millions] at some point. Didn’t know exactly where it would exactly be, but we knew that there would be the base budget that the city could provide and then we knew that there would be moneys that would be coming from donations, and then we knew that we would be fighting some escalation. And then on top of that then you have to add all your architectural fees and so forth and that’s how you end up coming up with a total project cost of $39 million—not a total construction cost of $39 million.”
Alderperson Siebers asked Mayor Woodford and Library Director Colleen Rortvedt if they had anything they wanted to add, but neither of them did.
Some members of the public attended the meeting, so Alderperson Siebers asked them if they wanted to speak.
Walter Blank, a member of Appleton Concerned Taxpayers said he was pretty shocked by the $39 million estimated budget. He had followed the process from early on and had been involved community advisory committee. He had also talked with both Mayor Woodford and Director Rortvedt about the project. Overall, he was satisfied with the effort made to inform the community and get them involved. At the same time, he was dissatisfied with how the project had changed and the increase from the $26.4 million to the $39 million. “This seems to be again a pipe dream. Can we do this?”
It reminded him of the Expo Center and how he was told by then Mayor Hanna that it would not cost the citizens a dime, but then the city ended up having to pay $5 million. He said that the alderpersons were the guardians and gatekeepers here and he was trusting them to draw a line at $26.4 million and hold to that.
He finished by saying that the library was beautiful but “you’re gonna have to sell this. And what you say has to be believable, and I trust the mayor when he tells me this. I trust Colleen. I trust Dean. I think you’re probably correct on the numbers, but I trust you guys to look out, because we do need to look out. Our general obligation debt and our addiction to large capital projects sometimes gets us in trouble.”
Mike Thomas, also from Appleton Concerned Taxpayers, was also a little shocked at the $39 million. He served on the Finance Committee of the Outagamie County Board of Supervisors. He understood the difficult finance committees faced when they grappled with what to pay for with taxpayer dollars and what to pay for with grant funding.
He was also treasurer and building/grounds chairman of a project called Wisconsin Veterans Village. They were going through the same process as the city was with a new capital campaign for new buildings, so he was familiar with the design and development process and also construction which was the most expensive part. They were putting out an RFP for the design part of their project, and he said that once it’s designed, they may put it on the shelf because of the cost to construct it.
He suggested the possibility of holding off on library construction for 18 months out of concern that, if they were not able to make up the difference through donations, that they may have to make some cuts that they really didn’t want to make. He understood that Mayor Woodford had a different position on that, but “our” [I took that to be Appleton Concerned Taxpayers’] position was that if they waited 18 months, the supply chain and other things may change. He himself was going to be recommending to Wisconsin Veterans Village that they wait until after 2022 to take on construction.
No other members of the public wanted to speak, so Alderperson Siebers opened the discussion up to committee members and non-committee alderpersons in attendance.
Alderperson Matt Reed (District 8) said thought that they should seriously consider all the options although he wasn’t necessarily advocating for putting the brakes on. America is experiencing inflation that is unprecedented for the last 40 years as well as supply chain problems and unusual issues that are affecting every segment of the construction industry. At the same time, he knew inflation tended to only go one way and never back, and prices always tend to go up and never down. He was open to discussing timelines and when it would be best to start construction.
Alderperson Vered Meltzer (District 2) wanted to hear from Mayor Woodford and get a fuller picture on why he disagreed with Mike Thomas’ view that construction should be held off.
Mayor Woodford said his disagreement with delaying the start of construction was related to what Alderperson Reed had just said about inflation tending to only go in one direction.
He then went on to address some of the other concerns that had been raised. “I can understand the shock of the number that came out in terms of the cost estimate, and I can also understand the questions about whether we’ll be able to get there. Will we be able to close this gap as a community, and will we be able to accomplish this project in a way that lives up to our shared vision of what we want this library to be for our community? [I] completely understand those questions.
“I’m of the belief that when we as a community talk about the challenges in front of us, we rise to the occasion. I’m a big believer in that. And so that’s why we’re talking about this right now. That’s why we’re sharing the cost estimate this early in the process before we’ve gone through a significant process of reducing project scope. That’s exactly why we’re talking about it right now—is to be up front about the challenge that’s in front of us.
“No question it’s a challenge. But we also believe that we have pathways to accomplish this task, but it’s gonna be about us coming together as a community and getting the work done together whether it’s raising the funds or putting together grant applications and advocating for this project.
“Because, as we’ve said, our commitment is $26.4 million and we’re gonna hold to that. And that puts a lot of pressure on us then to get the other work done, but I’m a believer that if we talk about our challenges as a community and we share it, that people rise to the occasion. And I think that we will as a community. And in the end, we may have to and we will very likely have to cut aspects of this project to make it work, but we want to give our community a chance to help us all accomplish this vision together.”
He reiterated that they would continue to have conversations as the project progresses and continue to keep the community updated
He finished up bey saying, “I guess my ask of the committee and the Council and the community is to give us the chance to keep doing this work. We will come back—if we feel we’re at a point where we need to stop before we cut something—we cut too far on this project, we lose something that’s special about this project or we’re worried we’re going to compromise in a way that would mean this building doesn’t last as long as we need it to last for our community, we will come back. If we think there’s another path we need to take, we will come back and have that conversation with the committee, with the Council, you have my commitment on that.”
Alderperson Brad Firkus (District 3) appreciated the candor and openness in making all this information available. As the project moved forward, he definitely wanted to know where the choices where being made and what the tradeoffs were. He personally didn’t want to sacrifice things that were going to affect the library operationally in the future such as power, lighting, and heating. He didn’t want to make cuts up front that would make it more expensive to run the building for the next several decades. He definitely wanted to know where cuts would be made if it turned out they were not able to raise enough money in donations and grants to cover the full cost of the project as currently envisioned.
Alderperson Katie Van Zeeland (District 5) had a lot of experience through the church funding projects only with donations. She wanted to caution the committee members that no one reached full funding if the organizers say that they’re going to put the project off if they don’t get the money. “In order to make sure that we get the community involved, we have to say that this is going to be a project that’s going to likely move forward, even if it’s in phases. Otherwise, we’re really shooting ourselves in the foot.”
Alderperson Meltzer appreciated how engaged the community had been. “I think as we move forward and we have to make very difficult decisions about scope and things to cut, I think it’s very, very important to continue to take community input and let the community guide that and, like Alderperson Firkus was saying, it might look really easy to just cut some operational things so that you can look good on paper with the amount that you’re cutting, but we really need to make sure that our decisions are made with the community’s input and with the community priorities in mind. And I just want to say I really appreciate all of the transparency in this process. I think that it certainly is a surprising and unexpected situation that we’re put in but, like Jake was saying, I believe in our community and I believe that we’ll be able to work together and figure out a solution to keep this project going.”
Director Gazza said that it almost seemed like some of the conversation was coming from a place that assumed that enough donations and grants would not be raised, but he thought the city was in a good position. “We filed for a grant that we should be a great candidate for, and from the standpoint of people being donating money there’s significant interested and excitement around the library.”
He wanted to make sure they understood that they understood that numbers estimated during the schematic design phase “are pretty wild numbers” and still needed to be refined. He thought they were trying to be very conservative with the numbers they gave now so that as they got refined they would end up decreasing instead of growing.
He also pointed out that a lot of businesses and individuals were spending money on projects right now because interest rates are low. Interest rates were sometime they had to watch because sometime they go up and that depletes any savings that they might otherwise experience.
He finished up by saying, “I would say very optimistically right now we’re in a position that maybe we won’t have to cut anything.”
Alderperson Siebers recalled the Performing Arts Center project and how when the figures first came out for that project there were concerns that it wouldn’t be able to go forward. But then Thrivent (at the time named AAL) came forward with a big donation and all of a sudden the project took off. There was always that possibility in regards to the library project. “So I have a great deal of optimism that we’re gonna be going forward with this project.”
Alderperson Siebers asked Director Rortvedt if she wanted to speak.
Director Rortvedt said, “I’ll just give a little bit of historical context about cost and what the previous versions of this project entailed. In 2009, we were looking at a 149,000 square foot building that would have been $26 million. In 2015 we were looking at 120,000 square foot building that would have been $36 million, and that we were looking at a $30 million city contribution and a $6 million private fundraising campaign. So, to kind of put it into perspective of where this has gone in the over a decade we’ve been working on it, there’s never been a scenario where the costs have gone down.
“And I do understand, because we committed to a community engagement process, that we’ve got the unavoidable frustration of this ambiguity right now. So, we’re doing our best to take all of that input that the community gave us, which is different this time around than it was in past. The amount of passion around sustainability features—can we have a library that isn’t LEED certified? Yes, we can. We can run a library, we can have book stacks, we can do all of that, but if we want to meet some of the goals that we’ve heard in our community feedback, the priorities of sustainability, that’s what the result—you know, that’s one of the components of where this cost is coming from.
“So, I just—I’m grateful. It seems like there’s a clear understanding that there’s not this false sense that we’re at a decision point right now. We’re gonna do the work and we’re gonna bring you back I think a result that hopefully you’ll be pleased with.”
No one had any further comments.
View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=892641&GUID=F6225B01-046A-4AA3-AABD-77ED5BA2D9B9
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