Update for October 16, 2014
Library’s estimate grows to $3 million
By William Hoover
Hondo City Council on Monday had one question after holding a workshop of funding construction of a new Hondo Public Library for an estimated $3 million.
Are residents willing to accept a 12% property tax increase to fund the $1.6 million in Certificates of Obligation debt that would be the city’s contribution to the project?
City Manager Jeff Litchfield opened the workshop by showing council pictures of the attractively designed 12,000 square-foot metal-sided library building.
“The mayor, city manager and library manager met with the library board in July 2013,” he said. “At that time, the projected cost was $2,250,000. An agreement was entered into with AVerus Library Consulting for a needs assessment and preliminary design. The agreement included the use of Trinity Library Resources for furniture.”
Agreements were then made with engineers CDS Muery and architect Debra Dockery for site plan development and an opinion of probable cost.
“This is a metal building,” said Litchfield. “We were considering a brick building. We are finding building costs are considerably more than they have been in the past—especially for concrete site work.
“The portico, the porch that comes out, and water tower would be at the corner of 20th Street and Avenue K,” he added. “It’s right across from Memorial Park.”
The 12,000 sq. ft. floor plan includes a 2,000 sq. ft. senior activity / community center.
“The other 10,000 square feet,” said Litchfield, “is the library, which has separate areas for genealogy and local subjects. Then, you have the children’s library and a place for their arts and crafts.”
During the budget process in August, it was learned that the new estimate for the library had jumped to $3,753,719, according to the city manager.
“Since that time, we have performed our due diligence and sat down with our engineers and architect to talk about changes that can be made to reduce costs,” he said. “We are also working on the furnishings and think we can save $100,000 to $150,000 there. In addition, we found things we can do ourselves.
“Our water crew can bring in the water lines, meters and sewer lines,” he added. “That site work should help us save right at $100,000 in in-kind services.”
In July 2013, the plan was for the library board to raise $500,000 in contributions for the library fund, noted Litchfield. The city would contribute $250,000 and the sale of the current library building was estimated to bring in another $500,000. The city would have then been responsible for $1 million in COs to reach the total cost of $2,250,000.
“In October 2014, we have the same $250,000, we increased the fund raising goal to $600,000, and we still have the sale of the existing building at $500,000,” he said. “This means the city would be responsible for $1,650,000 in Certificates of Obligation to reach the new total cost of $3 million.”
The debt service on $1,650,000 for 20 years comes to about $125,000 a year, according to Litchfield.
“We also expect an increase in the annual cost for operating the library,” he said. “We don’t know that number yet, but we are predicting about $20,000 a year. That makes the total impact to the city $145,000 a year in annual costs.”
Next, the city must enter into an agreement with CDS Muery and Debra Dockery for design, development, construction documents and bidding phase services for an estimated cost of $128,962.
“Before bringing that agreement to council for approval, which we would do at the next council meeting, we wanted to ensure you are comfortable with us moving forward,” said Litchfield.
“The question is, are we willing to provide $100,000 of in-kind services and commit to issue $1,650,000 in debt to support the proposed library?” he asked. “The $125,000 a year debt service would cause an increase of about 4.9¢ cents per $100 valuation, which is a 12% increase in our tax rate (of 45.45¢).”
“I don’t know that we can answer that question tonight,” said Place 1 Councilman John McAnelly. “I suspect that all citizens are in favor of the new library. I don’t know that they are in favor of a 12% increase in the tax rate.
“The $100,000 of in-kind services would have to be budgeted in the year we build the library?” he asked. “Then would we also be looking at an extra $145,000 a year in expenses?”
“Yes,” said Litchfield. “$125,000 of that would be the debt service payments. We think we’d need $20,000 a year for operations. It’s too early to be sure. The building would be more energy efficient, but it is also a bigger building.”
Place 5 Councilman Johnny Villa asked who said the current library building can be sold for $500,000.
“No one,” said Litchfield. “That is a risk we take.”
“So we’d risk $500,000 and who is to say we are going to get $600,000 from fundraising?” asked Villa.
Litchfield said he would structure the project so that the city would only agree to participate if the library board raised the requested $600,000.
“I’d also structure this to where our limit is around $3 million,” he said. “If they need things beyond that, it would have to be through independent fundraising. We will limit our commitment to $500,000 for the building and $1,650,000 in debt plus $100,000 in in-kind services.”
The 12% tax increase would mean annual taxes on a $100,000 home would increase by $49 a year or $4.09 per month, according to Litchfield. Taxes on the average $82,980 home in Hondo would increase $40.66 per year or $3.39 per month.
“This is not an action item, so we don’t need a vote,” said Mayor Pro-tem and Place 4 Councilwoman Ann-Michelle Long. “But I would just like to thank staff, Dorothy Schorp, the library committee and all the people who have put a lot of time and effort into this.
“This is the third or fourth time a new library has been considered,” added Long.
Council will be confronted again with the tax increase question at the Oct. 27 council meeting when they consider approval of the $128,962 agreement with CDS Muery and Debra Dockery for design, development, construction documents and bidding phase services for the proposed $3 million library.
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