A bond order in the amount of $61.2 million to be used for the construction of a new elementary school is likely to clear the City Council in early January after being recommended 3-0 last month by the council’s Long-Range Financial Overview Committee and forwarded to the Legislative and Ordinance Committee to prepare the bond order and resolution. The new school will replace the Franklin Avenue and Abner Gibbs elementary schools. It would be built adjacent to the current Franklin Avenue building, but on a parcel facing Franklin Street.
Ward 3 Councilor Bridget Matthews-Kane, who serves on Long-Range Financing, reported to the City Council at a special meeting on Nov. 23 that the city will have to borrow the full cost of construction, then be reimbursed periodically for invoices by the Massachusetts School Building Authority (MSBA) for up to $30.5 million, a figure the state board approved on Oct. 27.
Matthews-Kane said Ward 2 Councilor Ralph J. Figy, the school liaison for the council, stressed to the committee the importance of approving the financing plan before the MSBA deadline, which is 120 days from the Oct. 27 vote, minus 20 days for an appeal period. He said Westfield will already be paying more for the school because of skyrocketing construction costs. While the state technically approved a reimbursement rate of 72 percent, MSBA’s actual contribution to the project will be lower, as its reimbursement is capped at $365 per square foot, and actual costs are coming in at $525 per square foot.
L&O Chair William Onyski said the schedule for passage of the bond resolution, depending on how the committee and the council decide to proceed, could see the project voted at City Council meetings on Dec. 16 and on Jan. 6, 2022. It requires votes at two separate meetings to pass.
Matthews-Kane said the plan chosen by the School Building Committee was one of six plans studied, and was the least expensive. Another plan to keep the current Franklin Avenue Elementary School and renovate it with an addition would have cost more.
“The current plan that was chosen is the most economical model, and closing the two elementary schools will result in cost savings due to the age of the schools and deferred maintenance,” she said.
The council voted to refer the plan to the Legislative and Ordinance Committee with no discussion.
In a second recommendation from Long-Range Finance, committee Chair Dave Flaherty endorsed a proposal by city Treasurer-Collector Matthew Barnes to issue bonds in stages, in order to lock in better interest rates, and to set up a $2.2 million debt decline stabilization fund, so that the city has enough funding to implement an early bonding payment schedule.
Barnes said he would like to put the bonds for the elementary school, estimated at $62 million, and a new police station, estimated at $24 million not including land, on an early schedule to lock in the current 3 percent interest rate, before rates start climbing. He said there is no guarantee that the 3 percent rate will continue until the day they sell, and every 1 percent difference is $53,000 in debt service per year for the 28-year term of the bonds.
Barnes also said the police station project is currently undergoing a feasibility study, and there are no solid costs, but the $24 million is an estimate based on the $800 per square foot that other recent police station projects in Massachusetts have cost.
Flaherty said that Barnes’ proposal would allow the city to reserve funds in advance to avoid spikes in annual debt payment costs in the future.
“As a committee, we thought that was an appropriate path, and I give the treasurer credit for coming up with a creative solution that might lock in some significant savings,” he told the council.
The $2.2 million would come from free cash, which is unspent money left over from previous budget years, or stabilization, the city’s savings account.
“The city generally reserves $7.2 million per year in the annual budget for debt payments (about 5 percent of the operating budget). Due to the costs of the school and police station projects, on top of all the other already bonded projects, the annual costs would approach $8.6 million per year in [fiscal 20]25 and [fiscal 20]26. By using the debt decline stabilization account, the city can save money in advance, and then draw $1.4 million in those peak years to bring the annual budget obligation back down to the $7.2 million range,” Flaherty further explained following the Long-Range Finance meeting.
Council President Brent B. Bean II said he is also on Long-Range Finance, and he agreed 100 percent with Flaherty. He said he was looking ahead to further future projects, such as a proposed replacement of Westfield High School.
“For me, if we don’t pay attention to debt decline, we are not going to be able to do the projects we want going forward. The police station is probably okay, but the high school (would be) set way back. If we don’t do this, those projects won’t happen, and we all know they need to happen,” Bean said, adding, “This will allow us to pay for it and move forward and keep these projects on task. It’s scary that we would not be able to build a high school for another 10 or 15 years.”
Bean said he believes the elementary school will pass the council with no problem.
“That’s an easy one, 10 to 12 years in the making,” he said, adding that the police station, is another one. The current police headquarters on Washington Street is widely viewed as inadequate to modern needs and potentially unhealthy, with mold and air quality problems.
“I strongly recommend this. Please support this motion,” Bean said about the proposed early bonding schedule and $2.2 million transfer from free cash, which the council then voted to refer to the Finance Committee, the treasurer and the mayor.