A few days after the city council unanimously approved a nearly
$100,000 contract with a design firm to finish plans for the new
library
– and to estimate how much
”
greening
”
the new building may add to its cost
– the city received stellar credit ratings from two national
agencies ahead of its first round of bond issuance, according to
e-mails from city officials.
A few days after the city council unanimously approved a nearly $100,000 contract with a design firm to finish plans for the new library – and to estimate how much “greening” the new building may add to its cost – the city received stellar credit ratings from two national agencies ahead of its first round of bond issuance, according to e-mails from city officials.
S&P gave Gilroy a AA grade and Fitch put up an A+ in advance of the city’s $37 million library bond sale, the first round of which will occur later this month after voters approved the debt issuance last November. Ratings are set up along a scale from ‘AAA’ to ‘D,’ and while city officials worried after hearing from the Santa Clara County Tax Assessor last week that Gilroy should brace for an expected 11 percent, or $1.1 million, drop in property tax revenues next fiscal year, the rating agencies appreciated Gilroy’s proactive attitude when it came to recent budget repairs.
“(The rating agencies’) decision was largely based on your ability to maintain a large fund balance and your willingness to continue cutting expenditures. Combined, the (agencies are) confident that you are managing the City’s financial resources in a responsive and responsible manner,” Alisa Mendribil of San Rafael-based Northcross Hill Ach, a financial firm that advises California governments and school districts, wrote to Finance Director Christina Turner Tuesday afternoon.
The expected $1.1 million decline in secured property tax revenues will only apply to next year’s budget, which begins July 1, and will likely lower revenues from $9.9 million to $8.8 million, according to budgeted figures. This could mean higher bond payments from residents who were told to expect payments of about $11 per $100,000 in assessed value for the library. Yet Turner said earlier this week that Gilroy will try to honor that prediction. Construction of the new library will likely begin spring 2010 after the second issuance of notes.
For the rest of this fiscal year, however, falling sales tax revenues and a standstill in fee-generating development, which officials expect to last throughout next fiscal year, have practically erased more than $8 million in general fund cuts City Administrator Tom Haglund made since he came on board in May 2008 – a month before the council passed the current budget. This year’s deficit will likely top $3.8 million – which will have to come out of the city’s dwindling $21.9 million reserve fund along with other uncovered developer-linked expenses estimated to total about $8.4 million, according to February projections. Still, Haglund and council members have vowed to deliver a balanced 2009-’10 budget by June 30.
“The bond ratings issued here, in this economy, are very good and a testament to the fact the council and staff have been proactive in addressing the city’s overall financial issues,” Haglund wrote in an e-mail to council members Tuesday evening, adding that Fitch also upgraded its outlook from negative to stable for the $46 million worth of bonds the city issued in 2003 to build the Sunrise Fire Station, the new police station, the sports complex and improvements at the corporation yard. S&P maintained its stable rating on those securities, the remaining $43 million of which the city may repurchase and refinance ahead of schedule depending on how interest rates behave. That money would come from the city’s much larger investment portfolio of more than $60 million, according to city figures.
Monday, the council penned a $94,850 agreement – which will come from library bond proceeds, not the city’s general fund – with a firm that already designed 90 percent of the new building between January 2001 and December 2005. Los Angeles-based Harley Ellis Devereaux, Architects and Engineers, received hefty payments for that work, but Turner could not immediately provide an exact figure Wednesday morning.
City Engineer Rick Smelser wrote in a memo to Haglund Monday that Harley Ellis Devereaux will make sure its designs conform to modern codes and also provide cost-benefit analyses for bringing the new building into compliance with the standards of Leadership in Energy & Environmental Design, a national nonprofit that certifies eco-friendly buildings as LEED Silver, Gold or Platinum.
In February, Gilroy became one of the last cities in Santa Clara County to adopt a green building policy for spacious public buildings, but the city council also approved a loophole in its ordinance that exempts green compliance if it’s too expensive, and council members have said they don’t want to tax property owners more than they promised.
Building the 53,500 square-foot library in accordance with silver LEED standards could tack on between $270,000 to $740,000 to the total construction cost of $37 million, but the additional upfront expenses could result in a “life cycle savings” of 20 percent – or $7.4 million – over the course of the building’s operation, according to calculations the council received from the Santa Clara County Cities Association Green Building Collaborative. Knowing this, the council has directed Harley Ellis Devereaux to incorporate as many cost-neutral changes into the building’s nearly complete design plans as they can. The council will hear updates May 4 and final design approval is set for July, according to Smelser’s memo.
“This doesn’t mean the library won’t be built to that same high standard, but it means we’re not committing to doing that because the project is already 90 percent designed, and the taxpayers have already allocated $37 million to build it,” Councilman Perry Woodward said in February.
The new library will replace the 12,5000 square-foot building at the corner of Sixth and Rosanna streets, and city officials said they expect the project to go out to bid by the fall. At that point, the library will operate out of a temporary structure that city officials have yet to identify.
