BUCKHANNON – Buckhannon City Council has scheduled a meeting to discuss potentially altering the approved design for the new Stockert Youth and Community Center multipurpose building to make it more affordable.
Council decided to organize a meeting between the SYCC board, city council, the building commission and any other interested parties to discuss the design of the building and the city’s budget for the project Oct. 2 at 6 p.m.
Bond counsel Thomas Aman attended the Sept. 21 city council meeting to discuss the city’s progress in obtaining a U.S. Department of Agriculture loan and what their next steps should be.
“You had the public hearing that was required by USDA, so you have checked another box, and I sense you are getting pretty close to probably getting a letter of conditions from them pretty soon, which is good because they lock in an interest rate,” Aman said. “They will tell you at that point the rate is good for a period of time, it’s usually 18 months, but if you’re going to go that route, it would be good to get that fairly soon because I’d say in November, when the FOMC meets again, there’s a chance you can see another 25-basis point rate increase.”
Aman said USDA loans are very long-term financing and will give the city a 20, 25 or 30-year repayment term at a subsidized rate.
“If you can complete the remaining hurdles to jump through, it’s going to be hard for you guys to beat that, but they are going to require interim financing,” Aman said. “For a borrower like you or a community like this, you’re typically looking to your local banks to make a commitment, say two years to make that construction loan, but they will have a solid, guaranteed takeout commitment from USDA to pay them off if the building gets built.”
Aman said the city needs to make sure timing for the bid and financing line up.
“Timing starts to become important with respect to bidding the project, versus availability of funds, so if you wait until you’ve open bids, and then you’ve decided it doesn’t work from a financial standpoint, then you have to engage in some value engineering, trying to work with your architect to see if you can make it affordable and get it within your budget,” Aman said. “That takes a little time, but if you if you wait, typically when you open those bids you have a 60-day bid max in today’s environment. With material prices, contractors are skittish about holding those prices out for long periods of time, so assume you have a 60-day bid hold, and that’s the period that you must get your financing in place.”
He advised council to estimate the cost of the project before sending out bids.
“I would suggest you get a cost estimate as best you can from your architect, and then if you think that’s something you feel you can move forward with, you can approach banks for construction financing,” Aman said. “Hopefully in the interim, you get a letter of conditions from USDA, then you open those bids and then hopefully everything lines up at that point.”
Mayor Robbie Skinner said they have received one estimate for the design that was approved by council last year, and it was higher than they expected.
“Our architect initiated with a third-party estimator and based on cost of square footage, the materials and the look of that particular drawing, he estimated it would cost us roughly $6.5 million,” Skinner said. “Then another meeting came about where he scaled it down quite a bit and excluded a lot of things that were included and would require fundraising on the back end if we wanted to add bleachers, if you wanted to add a certain kind of floor, if you wanted that add storage space and that brought us down to around $5.6 million.”
Skinner said that estimate did not come from a local construction company, so the actual bid could be different once that happens.
During the Sept. 21, 2022 city council meeting, council had committed to borrow up to $4 million for the project that would be combined with other funds on-hand, giving them about $4.5 million to work with. City councilmen CJ Rylands and Jack Reger said council should come up with a plan to stay within their budget.
“We have to get our act together before we initiate, because right now we’re going into this thing and it’s a $6.5 million project or $5.5 million, and I think that’s still more than I personally would like to commit,” Rylands said.
Reger concurred, saying, “It’s in the minutes that we agreed on $4 million or $4.5 million and that’s where I’m drawing the line. Period. We can’t afford $5 or $6 million.”
City recorder Randy Sanders said he doesn’t think they will know the real cost until they send the project out to bid locally, since construction costs in other parts of the country could be far different than in Buckhannon.
“Even the architect thinks that estimate from the third party came in high, so until we bid it to real contractors, can we say we’re a million over budget from what we feel we can afford?” Sanders said. “I think we need to get it off to bid as soon as possible so we can see what the real people on the ground, building these kinds of buildings will come back with number wise, otherwise we’re just imagining things.”
Stacy Karickhoff, a representative with the U.S. Department of Agriculture, said the city’s proposal has already gone to the national office for review.
“This right now purely an estimate based off of your financials, I did write it for a maximum of $4.5 million and that is based on your financials — it came back that you could afford that,” Karickhoff said. “The USDA will authorize bidding once you get your letter of conditions, then we can look at scaling back the project. Fingers crossed that the bids come in under, if they are too high, that’s something else we would have to look at, but for now that’s where we are, so I’m just waiting on approval from national office.”
She said it typically takes the national office two to four weeks to issue a letter of conditions. At that point, Skinner noted that any changes would also have to be approved.
“Let’s just say it is $4.5 million, we’d have to come to an agreement on what that would look like, we would have to bring the drawing back and show what the scaled down version looks like for it to be approved,” Skinner said.
City council member Dave McCauley made the motion to organize a meeting between all the groups involved with the project to collaborate on a more affordable design, sooner rather than later. The meeting is set for Oct. 2 at 6 p.m.