HomeMy WebLinkAboutFIN-08-097 - Central Library Funding Options and KPL Report1
KITC~~R ' •
Financial Services
Report To: Councillor Berry Vrbanovic, Chair, and Members of the
Finance and Corporate Services Committee
Date of Meeting: September 29, 2008
Submitted By: Dan Chapman, General Manager of Financial Services
Prepared By: Dan Chapman, General Manager of Financial Services
Sonia Lews, Chief Executive Officer, Kitchener Public Library
Ward(s~ Involved: ALL
Date of Report: September 1, 2008
Report No.: FIN-08-097
Subject: Central Library Funding Options
RECOMMENDATION:
For discussion
BACKGROUND:
Council has previously considered a report by the Kitchener Public Library (KPL) recommending
that the $32.5 million earmarked from the Economic Development Investment Fund (EDIF) be
allocated to the KPL's proposed renovation and expansion of the Central Library on its existing
location. In light of the significant funding shortfalls associated with two of the three options
identified by KPL, Council directed KPL staff to work with City Finance staff to report back in
September with funding scenarios to potentially fund these shortfalls.
REPORT:
Central Library Project
The Kitchener Public Library Board presented a Central Library Project update to the Finance
and Corporate Services Committee on May 12, 2008. The update included three options for
revitalizing the current Main Library. The most extensive improvement plan would renovate and
add 54,400 square feet to the existing Main Library. Two alternative options are to renovate
only or to renovate and add 30,000 square feet. In assessing the community's needs for current
and future library services, the KPL Board concluded that Option 3 which renovates and adds
54,400 square feet was the best alternative and has recommended it for Council consideration.
Council Direction
At the May 12, 2008 Finance and Corporate Services Committee, it was resolved:
"That Kitchener City Council allocate the $32.5 M previously earmarked from the
Economic Development Investment Fund towards funding the Kitchener Public
Library's (KPL) renovation and expansion of the existing Main Library on its
current location X85 Queen Street North}; and,
That Kitchener City Council direct KPL staff to work with City Finance staff to
bring back a report in September 2008 outlining a financial plan for funding
Options 2 and 3, as outlined in KPL's report dated May 12, 2008; and further,
That Kitchener City Council direct KPL staff to continue to work on a joint parking
solution with City staff and other organizations located in the Civic District area."
Financial Summary
Assuming a 2010 construction start, total project costs for the three options, including parking,
range from $30.4 million to $60.3 million. Confirmed project funding totals $32.5 million from
EDIF. Projected funding shortfalls for Options 2 and 3 in 2010 dollars are in the range of $12.1
million to $27.8 million.
Appendix "A" contains estimated project costs assuming a leased facility during construction
and Appendix "B" assumes that construction will be phased. The following adjustments have
been made to the projections:
The figure previously reported for a leased temporary location has been corrected;
Construction escalation and inflationary increases were added to the 2008 cost
estimates to reflect a 2010 construction start;
Parking annual escalation costs reflect City of Kitchener staff guidelines; and
The projected funding shortfall for Options 2 and 3 are identified.
Potential Funding Options
City and Library staff have reviewed eleven potential funding options:
1. Fundraising;
2. Issue tax-supported debt or increase contributions from current;
3. Adjust KPL's capital forecast;
4. Adjust other City capital projects;
5. Delay the Central Library project;
6. Grants;
7. Development charges;
8. Advance the operating budget increase;
9. Reduction of parking spaces;
10. Parking revenue; and
11. Modify design features to fit within available funding
An evaluation of each option follows.
2
Funding Option 1-Fundraising
A fundraising feasibility study undertaken in 2005 during the Centre Block project concluded that
there was community support, in principle, for KPL to raise funds for a new library. The
consultants indicated that fundraising would be challenging as KPL lacks a significant history of
major capital campaigns. Assuming a comprehensive marketing and communications strategy
was in place and appropriate volunteer leadership was attracted, the consultant suggested KPL
establish a preliminary campaign goal of up to $4 million net) and that the goal be reassessed
six months into the campaign.1
The feasibility study measured support for the construction of a new 130,000 square foot library.
It did not test reactions to the renovation and expansion options presented to Council in May
2008. Although option 3 renovation and 54,400 square foot addition} provides greater benefits
to the community, in terms of potential donors, the overall case for support is the same for
options 2 renovation and 30,000 square foot addition) and 3.
Any fundraising program has an element of risk or uncertainty related to the ultimate attainment
of the campaign goal. As such, it would be advisable to clearly define the parameters of the
fundraising program prior to proceeding with the tendering of the construction phase of the
project. These parameters may include considerations such as a contingency plan in the event
the campaign fails to achieve its goal (e.g., potential scope reductions, deferral of certain
elements, etc.}.
Funding Option 2 -Issue Tax-Supported Debt or Increase Contributions from Current
The City of Kitchener has an investment philosophy that ensures that any increases in debt
charges from one year to the next do not exceed assessment growth. As well, the overall
contribution from the tax base through taxes and debt charges will not increase more than
assessment growth plus inflation from one year to the next. This philosophy has ensured that
the impact on the taxpayer does not exceed inflation and that the City must prioritize projects to
fit the funding available. The impact of this policy is that the City does not have the flexibility to
issue additional debt or fund additional capital amounts from the tax base. Appendix "C"shows
the projected inflows and outflows for the capital funding pool over the next ten years. The first
two lines represent debt issuance and contribution from current amounts as outlined in the
philosophy.
Despite the overall cap on these funding sources, other funding options include adjusting other
projects in the capital forecast to provide additional library funding (refer to funding options 3
and 4 below} or delaying the Central Library Project until such time as there is capacity in the
capital funding pool prefer to funding option 5 below}.
The capital funding pool Appendix "C"} includes additional funding sources from the Hydro and
Gas Capital Investment Reserve Funds. Current projections indicate that these Reserve Funds
are fully allocated to the current capital program. As such, consideration has not been given to
increased transfers from these funds or to the monetization of the underlying investments in the
Hydro or Gas Utilities.
1 Previous reports to Council indicated a $5 million fundraising target, which was a gross figure. For
budgeting purposes the target should be net of all campaign-related expenses, which are anticipated to
be in the range of 20% of gross proceeds.
3
Funding Option 3 -Adjust KPL's Capital Forecast
A review of KPL's 2008-2017 capital forecast identified the potential of reallocating $1.15 million
to the Central Library project, $450,000 in 2012, $500,000 in 2013 and $200,000 in 2014. This
would result in delays to two other major projects, Phase 2 of the RFID project self check-in}
and the automation system replacement. However, neither delay would outweigh the impact of
delaying the Central Library project.
Based on the experience of other libraries, KPL anticipates significant increases in circulation
upon completion of the building project. Delaying self check-in will reduce KPL's capacity to
handle these increases with existing staffing levels. Potential risks are slower turnaround for
library customers and increased risk of repetitive strain injuries for staff.
Delaying the automation system replacement project would require KPL to remain with its
current vendor. While this delay would postpone the implementation of new technologies and
possibly a more robust system, the current system would provide adequate support for core
library functions. However, the server would need to be replaced in 2013 with costs being
covered by the Technology Upgrade account.
The two delayed projects will be reintroduced into the capital forecast and subject to Council's
approval, the automation system replacement in 2018-2019 to coincide with the five year
replacement cycle for the server and self check-in in 2020. The risk in this approach is there is
no assurance that either project would be approved when reintroduced into the budget process.
Some of the Central Library project expenditures associated with collections, furnishings and
equipment could be delayed until 2013-2014 to align with the funding capacity created by the
deferrals identified above. While this would reduce the size of the collection and number of PCs
on opening day, phasing ingrowth in these areas would be a workable solution.
Funding Option 4 -Adjust Other City Capital Projects
The approved capital target in Appendix "C" shows that the capital pool is fully allocated
between 2008 and 2014. If the Central Library Project were to proceed in the 2010 to 2012
timeframe as currently envisioned, Council could consider deferring or eliminating other capital
projects funded out of the capital pool. To illustrate which projects would potentially be affected,
staff has summarized all projects with capital pool funding values between 2009 and 2013 in
excess of $500,000 in Appendix "D". This list excludes all projects funded within the
accelerated infrastructure program, which has a capital out of current allocation of $4.16 million
in 2008. If this option is supported by Council, staff would require direction with respect to
specific projects for adjustment.
Funding Option 5 -Delay the Central Library Project
The approved capital target in Appendix "C" shows that there is limited capacity within the
capital funding pool in 2014, with some capacity existing in 2016 and beyond. The total amount
of capacity in the approved forecast is $15.1 million. Council could consider delaying the
Library project and funding some of the shortfall from this capacity. The following cautions are
offered with respect to this option:
Inflation will have the effect of increasing construction costs and, by extension, the
projected funding shortfall. To illustrate, if the funding shortfall for the phased option 3
4
were simply inflated at a rate of 5% to 2017 it would grow from $26.7 million to $37.6
million, representing an increase of $10.9 million. The funding solution would need to
take this into account.2
Other priorities may not yet be reflected in the capital forecast and these should be
taken into consideration before allocating current capacity. For example, the 2008
capital budget presentation identified the fact that the forecast does not currently include
funding for the development of the outdoor components of the South Kitchener Park,
construction of additional parking facilities, or costs for phase II of Williamsburg
Cemetery. In addition, the accelerated infrastructure program is currently under-funded
beyond 2008. The value of these items would exceed any available funding by a
significant margin.
In addition, the original Central Library business case and the May 12 KPL report provide the
following rationale in support of not deferring the Central Library project:
The need for an expanded central library was first identified in 1999. The current library
was built in 1962 and no longer adequately meets the needs of Kitchener's growing
resident population. The expansion and renovation are needed to adequately handle
community library support, population growth, changing demographics, emerging
technologies and the need for increased literacy, including technological literacy.
The Main Library is a 46 year old building that averages 1,000 visits a day, making it one
of the City's busiest facilities. The facility is crowded and dated. Its narrow aisles and
layout present challenges to people with disabilities. It lacks energy efficient lighting,
windows and systems. Its cabling and electrical systems are inadequate for the new
technologies people expect at a public library.
In anticipation of a capital building project, in recent years, furniture purchases and
repairs and improvements have been delayed and excluded from KPL's capital forecast.
Many of the building systems and much of the furniture earmarked for repair or
replacement have already exceeded the normal lifespan. As a result, further delays in
the Central Library project would necessitate an investment of $3 million to $4 million in
repairs, upgrades and replacements.
Funding Option 6 -Grants
Capital Grants
Staff researched potential sources of grant funding for library capital projects, contacted libraries
which have recently undertaken capital projects and explored funding sources. The four
primary capital grant funding opportunities were through the Ontario Ministry of Culture, the
Municipal Infrastructure Investment Initiative, the recently-announced Building Canada Fund
and the Investing in Ontario Act grant.
Opportunities for grant funding from the Ontario Ministry of Culture were primarily available for
program or service-based projects and not capital building initiatives.
Several approved capital library projects have received funding through the Municipal
Infrastructure Investment Initiative (M13). Funding has been in the range of $0.2 million to $3.6
million. The City of Ottawa received $20 million for a Central Archives and Library Technical
2 It is assumed that existing funding sources ~e.g., the EDIF contribution) would be inflated by the same
rate over the same time period. If this were not the case, the funding shortfall would be even greater.
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Service Facility with the bulk of the funds supporting the Central Archives rather than the Ottawa
Public Library. There is no indication at present that there will be another intake of applications
under this program as it was announced as one-time funding.
The Building Canada Fund (BCF) will total $8.8 billion over seven years and is focused on
projects that deliver economic, environmental, and social benefits. The priority funding
categories are the Core National Highway System Routes, Drinking Water, Wastewater, Public
Transit and Green Energy. Other eligible investment priority areas include environmental
projects Solid Waste Management}, projects that support economic growth and development
(Short-line Rail and Short-sea Shipping, Connectivity and Broadband, Tourism and Regional
and Local Airports), as well as projects that contribute to the ongoing development of safe and
strong communities (Disaster Mitigation, Culture, Sport, Local Roads and Bridges, and
Brownfield Redevelopment). The BCF Culture component is designed to help communities
express, preserve, develop and promote their culture and/or heritage, including facilities. While
public libraries are not specifically mentioned in the Cultural component of the BCF program,
they are not excluded. Examples provided so far include, museums, art galleries, theatres and
opera houses. The Federal government will update the eligible projects list as details of the
funding program become available. The program will operate through two components: the
Major Infrastructure Component (MIC} and the Communities Component. The MIC will target
larger, strategic projects of national and regional significance. Projects under the MIC will be
selected on the basis of merit through afederal-provincial/territorial negotiation process and all
projects will be required to meet criteria targeting environmental, economic and quality of life
objectives regardless of the category. Innovative technologies and partnerships will also be
emphasized. The Communities Component is focused on projects in communities with
populations of less than 100,000.
On August 25, the Province announced that the City of Kitchener will receive $9.8 million for
investments in municipal infrastructure to "improve roads and bridges, expand public transit and
build other municipal projects". Through the 2009 budget process, the City will prioritize the list
of unfunded infrastructure projects and allocate the funding. The City has previously quantified
the funding shortfall for roads, water and sewer infrastructure and has advocated for this type of
grant funding as a remedy to address the shortfall.
Opportunities for _. eneral capital project grant funding are limited. If the Government of Ontario
offers another intake for the Municipal Infrastructure Investment Initiative, the City of Kitchener
could consider prioritizing the Central Library project for this funding. In addition, the City could
give consideration to submitting an application through the Building Canada Fund as details
become available. Identifying the Central Library Project as a priority for grant funding would
limit the City's ability to fund other significant projects which are currently not included in the
capital forecast such as parking solutions, South Kitchener Park development, additional
infrastructure works to address the City's infrastructure deficit, etc. Approval of a construction
option contingent upon grant funding for a shortfall may also result in unacceptable delays to the
project.
Energy Efficiency/Energy Conservation
There are a number of potential sources of grant funding to assist KPL with achieving LEED
certification for the library renovation and expansion project. The primary sources of funding are
through the Federation of Canadian Municipalities ~FCM} -Green Municipal Fund, and the
Ontario Power Authority.
6
The FCM's Green Municipal Fund provides loans and grants to support municipal governments
in developing communities that are more environmentally, socially and economically
sustainable. Funding for feasibility studies is available in the form of a grant up to 50% of the
study cost. The Winnipeg Public Library's expansion and renovation project received a $50,000
grant for a study to identify opportunities to reduce annual energy consumption.
The Ontario Power Authority in co-operation with Kitchener-Wilmot Hydro and Enbridge offers
an electricity retrofit and incentive program and a new construction program for projects that
reduce electricity demand and incorporate conservation measures. The amount of the incentive
is typically based on the number of kilowatt hours saved. The High Performance New
Construction program offers up to $10,000 for energy modeling costs and $10,000 to no upper
limit for implementation of energy efficient measures identified by the energy modelling.
KPL's Central Library project would likely qualify for some energy efficiency or conservation
grant funding. Without a detailed design and energy modelling it is not possible to estimate the
level of funding. In addition, the funding may simply offset costs that are not currently
envisioned in the project budget.
Funding Option 7 -Development Charges
In preparing the current X2004} Development Charges background study Staff reviewed the past
ten years of service provided by KPL in terms of square footage of libraries, hectares of land
and number of resource materials, to establish an average service level. This amounted to
$250.30 per capita. This service level was then applied to the expected ten year population
growth to arrive at the maximum amount of funding that could be applied to Library projects over
the next ten years, resulting in a total of $7.6 million. Library services are considered by the
Development Charges Act to require a 10% reduction in their capital cost recovery, which is not
included in the total above. The only growth related project that was in the capital forecast, at
the time, was the Country Hills Community Library in the amount of $1.8 million. As such, the
Library portion of the City's 2004 DC bylaw and Development Charge rates was based on
recovering only the costs related to the creation of that branch library, which were well below the
maximum amount of funding available.
Much of the justification for the expansion of the Central Library is population growth. As such,
a portion of the project cost could be funded out of development charges. Preliminary analysis
suggests that the amount of funding available from development charges for either of the
expansion options would be approximately $6.5 million. Renovations only option 1) would not
likely qualify for significant development charges funding as there is only a modest increase in
square footage associated with this option.
The 2008 capital forecast includes provision for a community library in the south end of the City
in 2015 and 2016, estimated to cost $10 million with $9 million of this amount attributed to
development charges. In light of the cap on development charges revenue for library projects
over aten-year period, the impact of allocating funding to the Central Library would be that
funding would not be available for the south end library. This would result in a delay in that
project or the need to fund growth related costs through tax-based contributions.
The City will be preparing a new background study and by-law in 2009. Forecast growth-related
expenditures for a Central Library could be included at that time, subject to Council direction
and provided they are within the funding limit prescribed by legislation.
7
Funding Option 8 -Advance the Operating Budget Increase
Projections prepared by KPL staff indicate that the increased permanent operating costs for a
renovated or expanded Central Library would be as follows in 2010 dollars (for details refer to
Appendix "E"):
Option 1- Renovation only $ 299,000 (0.3% of levy)
Option 2 - Renovation and 30,000 square foot addition $ 817,000 (0.9% of levy)
Option 3 - Renovation and 54,400 square foot addition $1,221,000 (1.4% of levy)
If the actual amount of the operating budget increase were allocated to the first year of
construction as opposed to the year of completion, the additional funding could be used to offset
the ogeratinq costs of ghasinq construction or leasing a temporary location that are currently
included in the construction estimates (column D).
Approach to Annual Funding Created Increased Balance of
Operations Operating by Advancing Operating Costs Operating Costs
During Budget Increase Permanent During During
Construction for Option at Budget Increase Construction Construction not
Completion by 2 Years Over 2 Years Funded
A B C(=Bx2) D E
Phased -
O tion 1
$299,000
$598,000
$(1,623,000)
$(1,025,000)
Phased -
O tion 2
X81 x,000
$1,634,000
$(1,966,000)
$(332,000)
Phased -
O tion 3
$1,221,000
$2,442,000
$(2,360,000)
$82,000
Relocate -
O tion 1
$299,000
$598,000
$(4,096,000)
$(3,498,000)
Relocate -
O tion 2
$81,000
$1,634,000
$(4,096,000)
$(2,462,000)
Relocate -
O tion 3
$1,221,000
$2,442,000
$(4,096,000)
$(1,654,000)
The 2008 operating budget projection anticipated an operating budget increase for a Central
Library of $1,659,000 in 2011. This figure has been refined as part of the development of the
May 12 report to Council. If the capital project were to proceed in 2010, the budget could be
advanced to provide project funding at a lower amount than originally anticipated for 2011.
It is important to note that support for this approach would result in apre-commitment to the levy
increase identified above X0.3% to 1.4% depending on the option} as of 2010.
Funding Option 9 - Reduction of Parking Spaces
To accommodate both the public and staff the KPL Board's May 12, 2008 report assumed that
200 parking spaces would be provided at the Central Library. Since this exceeds the minimum
required by City of Kitchener bylaws, project costs could be lowered by reducing the number of
spaces to the minimum legally requried. The tables below illustrate the potential savings.
8
0 Lion 1
p Option 2 Option 3
Minimum Parking Requirements
Renovation Renovation
and 30 000 sf Renovation
and 54 400 sf
Only
Addition '
Addition
Number of new spaces required 21 112 153
N u m ber of spaces ~ $40, 000/spot $840, 000 $4, 480, 000 $6,120, 000
Escalation $69,000 $365,000 $500,000
Total Minimum Parking $909,000 $4,845,000 $6,620,000
Library parking requirement $6,490, 000 $8, 653, 000 $8, 653, 000
Potential Saving $5,581,000 $3,808,000 $2,033,000
It is estimated that 16,000 to 20,000 square feet would be available for excavation in the
existing parking lot. Various factors, including the building footprint, ramping, and column
spacing will influence the number of underground parking spaces possible. An estimated 40 to
50 spaces per level of underground parking may be possible if the spaces were to be built in
conjunction with the KPL building. Underground parking was not explored in detail with the
architects. However, in an early concept the architect showed 36 underground parking spaces
on one level.
The resolution of the actual parking count and design concept is a key consideration in
proceeding with the Central Library project. The timing of other potential parking developments
within the Civic District is unclear and may not be resolved in the project timeline envisioned for
the Central Library. As a result, consideration may need to be given to maximizing the number
of parking spaces within the library expansion and holding cash-in-lieu for any parking shortfall
to be used to augment future parking developments in the vicinity. It may be possible to
construct library parking in such a way as to permit a possible future connection to a larger
parking development within the Civic District. Based on preliminary analysis, it appears that the
majority of the spaces required for option 2 could be accommodated on two levels of
underground parking within the library expansion. For option three, it is likely that a portion
would need to be accommodated in an off-site development funded through acash-in-lieu
contribution). This assumption would be evaluated as part of the detailed design phase.
In keeping with the City of Kitchener Transportation Demand Management TDM) program,
consideration should be given to strategies that encourage greater use of sustainable modes of
transportation. TDM is a wide range of policies, programs, services, and products that affect
whether, why, when, where, and how people travel. Successful, long term implementation of
TDM strategies could reduce parking demand for the Central Library. A reduction in parking,
especially for a use that generates public demand, is difficult to quantify. TDM works more
effectively, and is easier to measure, for the work trip where alternate travel modes are easier to
implement. It is also a longer term initiative as it requires a paradigm shift in people's attitudes
about travel choices.
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Funding Option 10 -Parking Revenue
The City of Kitchener's capital investment philosophy discussed in option 2 above provides for
debt financing for projects which have a business plan showing revenues generated over a
reasonable "pay back period" covering the capital cost and interest of the project.
Preliminary analysis shows that approximately 50% of parking construction costs may be
recovered through parking revenues, assuming the construction costs for parking are
debentured over a 20-year period. This level of cost recovery is not consistent with the
business case requirement for exceptions to the capital investment philosophy and as such, this
funding approach is not recommended.
Funding Option 11-Modify Design Features to Fit Within Available Funding
The final option which remains as a strategy to advance the Central Library project is to make
design modifications to bring project costs in line with available funding. If direction were to be
given in this area, the architect could develop scenarios to achieve the savings target during the
detailed design phase.
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FINANCIAL IMPLICATIONS:
The following table summarizes the feasible options available to fund the shortfall on the Central
Library project:
Fundin 0 Lion
g p Option 2 - 30,000 sq ft
expansion Option 3 - 54,400 sq ft
expansion
LOW HIGH LOW HIGH
Fundraising $2, 000, 000 $4, 000, 000 $2, 000, 000 $4, 000, 000
Tax-supported debt orincrease c/c - - - -
Adjust KPL's capital forecast $1,150,000 $1,150,000 $1,150,000 $1,150,000
Adjust other City capital projects - - - -
Delaythe Central Library project - - - -
Grants - - - -
Development charges $0 $6,500,000 $0 $6,500,000
Advance operating budget increase $1,634,000 $1,634,000 $2,442,000 $2,442,000
Reduction of parking spaces $3, 808, 000 $3, 808, 000 $2, 033, 000 $2, 033, 000
Parking revenue - - - -
Modify Design Features TBD TBD TBD TBD
Potential Funding $8,592,000 $17,092,000 $7,625,000 $16,125,000
When these potential funding ranges are applied to the original shortfalls for the two
construction options, a projected residual shortfall can be calculated as shown in the final
column below:
Construction
Approach to
Ori final Pro~ect
g ~
Range of
Amount of Projected
Residual
Option Operations
~
Funding Shortfall Potential Potential
Shortfall)
purin Pro
ect
g ~ Fundin
g Fundin
g (Surplus)
Low $8,592,000 $5,656,000
L $14
248
000
0 tion 2 -
p ease ,
, High $17,092,000 $(2,844,000
ft
30
000
,
sq
expansion
Ph
$12
120
000 Low $8,592,000 $3,528,000
ase ,
,
High $17,092,000 $(4,972,000
Low $7, 625, 000 $20,192,000
L $27
817
000
0 tion 3 -
p ease ,
, High $16,125,000 $11,692,000
54
400
ft
,
sq
expansion
Ph
131
$26
000 Low $7,625,000 $18,506,000
ase ,
,
High $16,125,000 $10,006,000
This summary indicates that there are likely scenarios under which option 2 may be funded, but
a significant shortfall remains for option 3 under any scenario. The KPL Board, by way of
separate report, has proposed a financial plan for Council's consideration utilizing this analysis.
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COMMUNICATIONS:
City and KPL staff met on multiple occasions to discuss funding options and formulate this
report. KPL staff discussed funding options with the Facilities Planning and Building Committee
of the KPL Board on August 14 and with the KPL Board on August 20. This report was provided
to the KPL Board for review in advance of the September 17 Board meeting.
ATTACHMENTS:
Appendix A -Central Library Project Estimated Costs -Leased Facility During Construction
Appendix B -Central Library Project Estimated Costs -Phased Construction
Appendix C -Approved 2008 Capital Target
Appendix D -Capital Projects in Excess of $500,000 (2009-2013)
Appendix E -Projected Operating Budget Increases
Dan Chapman, CA MPA Sonia Lewis
General Manager of Financial Services CEO, Kitchener Public Library
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APPENDIX A
CENTRAL LIBRARY PROJECT ESTIMATED COSTS
LEASED FACILITY DURING CONSTRUCTION (CONSTRUCTION START 2010)
Total Project Costs Option 1
Renovation Only Option 2
Renovation and
30,000 sf Addition Option 3
Renovation and
54,400 sf Addition
Library Construction and Contingency Costs * $ 14,139,000 $ 21,000,000 $ 28,878,000
LEED Gold * $ 1,060,000 $ 1,575,000 $ 2,166,000
Site and Contingency Costs * $ 649,000 $ 911,000 $ 983,000
Subtotal Building Costs $ 15,848,000 $ 23,486,000 $ 32,027,000
Professional and Design Fees * $ 1,414,000 $ 2,100,000 $ 2,888,000
Project Manager * $ 283,000 $ 420,000 $ 578,000
LEED Registration and Certification ° $ 50,000 $ 50,000 $ 50,000
LEED Consulting Fees ° $ 85,000 $ 85,000 $ 85,000
Public Art $ 300,000 $ 300,000 $ 300,000
Furnishin slE ui ment/Technolo $ 1,414,000 $ 2,786,000 $ 4,357,000
Library Collection Growth ° $ 400,000 $ 1,000,000 $ 2,100,000
Subtotal Fees, Equipment, Collections $ 3,946,000 $ 6,741,000 $ 10,358,000
Leased Temporary Location ° $ 1,260,000 $ 1,260,000 $ 1,260,000
Leasehold Improvements and Contingency Costs ° $ 1,920,000 $ 1,920,000 $ 1,920,000
Storage Costs ° $ 516,000 $ 516,000 $ 516,000
Moving Costs ° $ 400,000 $ 400,000 $ 400,000
Subtotal Operations during Construction $ 4,096,000 $ 4,096,000 $ 4,096,000
* Construction Escalation $ 2,345,000 $ 3,561,000 $ 4,927,000
° Inflationary Increase $ 187,000 $ 211,000 $ 256,000
Subtotal Escalation and Inflation $ 2,532,000 $ 3,772,000 $ 5,183,000
Parking and Contingency Costs ~ $ 6,000,000 $ 8,000,000 $ 8,000,000
Parking Escalation ~ $ 490,000 $ 653,000 $ 653,000
Subtotal Parking Costs $ 6,490,0 $ 8,653,000 $ 8,653,000
Total Estimated Project Cost $ 32,912,0 $ 46,748,000 $ 60,317,000
Possible Range
Low - 20% $ 26,329,600 $ 37,398,000 $ 48,254,000
High +20% $ 39,494,400 $ 56,098,000 $ 72,380,000
* Construction Escalation: 6% per year escalation applied to construction costs and reflected in costs expressed as a percentage of
construction costs.
° Inflationary Increase: 2% per year applied for inflation.
~ Parking: Cost per space reflects city staff parking guidelines and includes a 4% escalation per year.
Central Library Project Funding Shortfall -Leased Facility During Construction
Option 1 Option 2 Option 3
Costs/Funding Sources
Renovation Only Renovation and Renovation and
30,000 sf Addition 54,400 sf Addition
Total Estimated Project Cost $ 32,912,000 $ 46,748,000 $ 60,317,000
ED IF $ 32,500,000 $ 32,500,000 $ 32,500,000
Funding Shortfall $412,000 $ 14,248,000 $ 27,817,000
13
APPENDIX B
CENTRAL LIBRARY PROJECT ESTIMATED COSTS
PHASED CONSTRUCTION (CONSTRUCTION START 2010)
Total Project Costs Option 1
Renovation Only Option 2
Renovation and
30,000 sf Addition Option 3
Renovation and
54,400 sf Addition
Library Construction and Contingency Costs * $ 14,139,000 $ 21,000,000 $ 28,878,000
LEED Gold * $ 1,060,000 $ 1,575,000 $ 2,166,000
Site and Contingency Costs * $ 649,000 $ 911,000 $ 983,000
Subtotal Building Costs $ 15,848,000 $ 23,486,000 $ 32,027,000
Professional and Desi n Fees * $ 1,414,000 $ 2,100,000 $ 2,888,000
Project Manager * $ 283,000 $ 420,000 $ 578,000
LEED Registration and Certification ° $ 50,000 $ 50,000 $ 50,000
LEED Consulting Fees ° $ 85,000 $ 85,000 $ 85,000
Public Art $ 300,000 $ 300,000 $ 300,000
Furnishings/Equipment/Technology * $ 1,414,000 $ 2,786,000 $ 4,357,000
Library Collection Growth ° $ 400,000 $ 1,000,000 $ 2,100,000
Subtotal Fees, Equipment, Collections $ 3,946,0 $ 6,741,000 $ 10,358,000
Project Phasing * $ 707,000 $ 1,050,000 $ 1,444,000
Storage Costs ° $ 516,000 $ 516,000 $ 516,000
Moving Costs ° $ 400,000 $ 400,000 $ 400,000
Subtotal Operations during Construction $ 1,623,000 $ 1,966,000 $ 2,360,000
* Construction Escalation $ 2,432,000 $ 3,691,000 $ 5,105,000
° In lationary Increase $ 59,000 $ 83,000 $ 128,000
Subtotal Escalation and Inflation $ 2,491,000 $ 3,774,000 $ 5,233,000
Parking and Contingency Costs ~ $ 6,000,000 $ 8,000,000 $ 8,000,000
Parking Escalation ~ $ 490,000 $ 653,000 $ 653,000
Subtotal Parking Costs $ 6,490,0 $ 8,653,000 $ 8,653,000
Total Estimated Project Cost $ 30,398,0 $ 44,620,000 $ 58,631,000
Possible Range
Low - 20%
High +20%
24,318,000 $ 35,696,000 $ 46,905,000
36,478,000 $ 53,544,000 $ 70,357,000
* Construction Escalation: 6% per year escalation applied to construction costs and reflected in costs expressed as a percentage of
construction costs.
° Inflationary Increase: 2% per year applied for inflation.
~ Parking: Cost per space reflects city staff parking guidelines and includes a 4% escalation per year.
Central Library Project Funding Shortfall -Phased Construction
Option 1 Option 2 Option 3
Costs/Funding Sources
Renovation Only Renovation and Renovation and
30,000 sf Addition 54,400 sf Addition
Total Estimated Project Cost $ 30,398,000 $ 44,620,000 $ 58,631,000
ED IF $ 32,500,000 $ 32,500,000 $ 32,500,000
Funding Shortfalll~Surplus} (-$2,102,000) $ 12,120,000 $ 26,131,000
14
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T
APPENDIX D
CAPITAL PROJECTS IN EXCESS OF $500,000 (2009-2013)
Note: The following represents the "capital out of current" balance only ~i.e., excludes other
funding sources}
PROJECT # PROJECT NAME 2009 2010 2011 2012 2013 TOTAL
a7010104a ECONOMIC DEVELOPMENT INVESTMENT FUND 10,954,x00 11,121,aa0 11,329,OOa 11,586,000 12,014,000 57,0x4,000
5x0201016 CONSOLIDATED MAINTENANCE FACILITY 5,231,49a 5,x51,380 7,871,570 2,771,290 (380) 2x,925,350
4x0101007 FIRE- MAJOR EQUIPMENTIFLEET 1,7a8,0aa 1,743,aa0 1,777,aa0 1,813,000 1,849,000 8,89x,000
6x0901001 NEW INDOOR POOL 2,089,340 2,281,931 4,371,271
8x0404019 GRAND RIVER -EROSION CONTROL 2,292,Oaa 2,a38,aa0 4,33x,000
7x1201008 ENVIRONMENTAL REMEDIATION 32a,0aa 32a,00a 1,OOa,00a 1,2aa,000 1,200,000 4,040,000
620304007 KINGSDALE CC 2,881,x00 2,881,000
6x1101016 COMMUNITY CENTRE 2,565,373 2,565,373
8x0501002 DUKE/ONTARIOGARAGEREPAIRS-DT 1,07a,00a 1,1aa,000 2,170,000
8a040400a KOLB DRAIN/SMETANA TO ROTNSAY 1,86a,30a 1,86x,300
6x0609001 GENERAL PARK DEVELOPMENT 3a4,0aa 352,aaa 359,aaa 349,000 352,000 1,716,000
8x0404018 SCNNEIDER CREEK CHANNEL 825,60a 845,000 1,670,600
8a040600a STREET LIGHTING 309,x00 315,aa0 324,OOa 33x,000 337,000 1,615,000
8x0405012 WABANAKI DR/WILSON TO FAIRWAY RD 1,545,2x2 1,545,202
5x0201011 ROOF -GENERAL PROVISION 315,165 176,015 62x,115 231,865 134,415 1,477,575
2x0201002 COMPUTER INFRASTRUCTURE PROVISION 27a,2aa 275,1x0 2$2,4x0 2$$,160 293,889 1,4x9,749
6a060900a COMMUNITY TRAILS 252,Oaa 282,OOa 287,OOa 277,000 27$,000 1,376,000
3x0501005 ENHANCEMENTS TO TAXIUTILITY SYSTEM 255,Oaa 255,aa0 255,aa0 255,000 255,000 1,275,000
150501001 BROWNFIELD CI PROGRAM TIF 254,812 254,812 254,812 254,812 254,812 1,274,060
x90102021 RADIO FREQUENCYTECNNOLOGY 24a,0aa 23a,aaa 23a,aaa 45x,000 1,150,000
5x0201041 COMMUNITY CENTRES -MAINTENANCE 167,059 305,524 162,756 167,446 172,309 975,094
6x0609002 MAJOR PARK DEVELOPMENT 189,Oaa 189,OOa 194,OOa 197,000 20x,000 969,000
5x0203005 CITY HALL COMPLEX -MICE 185,34a 189,055 192,846 196,715 200,663 964,619
2a0201aaa SOFTWARE 229,800 233,aa0 149,aaa 152,000 154,000 917,800
620910004 NATURAL AREA STEWARDSHIPICONSERV 169,Oaa 18a,aa0 181,aa0 187,000 188,000 9x5,000
5a020102a AUDITORIUM -MTCE 167,26$ 17x,614 174,026 177,506 1$1,056 870,470
a7010100a GENERAL CAPITAL CONTINGENCY 164,3aa 167,20a 171,10a 174,000 177,900 854,500
x90102003 TECNNOLOGYUPGRADE 17a,0aa 196,OOa 152,OOa 155,040 15$,141 831,181
3x0701001 WREPNET FIBRE PROJECT 13$,$$7 142,167 145,422 14$,420 25x,937 825,833
6x0609005 PLAYGROUND FEATURES 145,Oaa 154,OOa 172,OOa 175,000 179,000 825,000
5a040100a EQUIP ACQUISITIONS & UPGRADES 154,682 157,$65 160,911 160,910 163,922 798,290
5x0201012 CITYNALL RENOSIGENERAL PROVISION 155,22a 157,243 159,4x8 161,616 163,768 797,255
7x0101022 DOWNTOWN INCENTIVES FUNDING - DT 139,6aa 99,6x0 99,6x0 314,600 99,600 753,000
8x0405001 RECONSTRUCT VARIOUS CITY STREETS 133,Oaa 135,aa0 138,aa0 14x,000 143,000 689,000
x70101046 DELTA PROJECT 639,915 639,915
35060100a CITS -GENERAL PROVISION 122,039 124,48a 126,969 129,509 132,099 635,096
7x1205059 SLURRY SEAL 120,x00 122,aa0 124,OOa 127,000 13x,000 623,000
7x1204009 WARDS POND & STRASBURG CREEK 3aa,0aa 30a,00a 600,000
6x1303016 MCLENNAN PARK SITE DEVELOPMENT 596,6aa 596,600
5x0201013 MARKET -MTCE - DT 11 a,4a8 112,616 114,$68 117,166 119,509 574,567
7x0201005 URBAN DESIGN IMPROVEMENTS 1 a8,0aa 11 a,00a 113,OOa 115,000 117,000 563,000
62091201 a SKATEBOARD PARKS 50,aa0 5a0,aa0 55x,000
x70101035 CAPITAL PROJECT COSTING FUND 1a5,0aa 106,90a 109,80a 111,800 113,700 547,200
4x0101009 FIRE CAPITAL EQUIPMENTINALLS 99,1aa 101,10a 103,OOa 1x5,360 127,000 535,560
7x1206002 TRAFFIC CALMING 103,x00 1a5,aa0 107,OOa 1x9,000 111,000 535,000
7x1205093 JUBILEE DR - PARK TO COURTLAND SR 33,5aa 50a,aa0 533,500
5a020100a E N ERGY MA NAG E MEN T 1 aa, 814 102, $31 104, $$7 1x6,985 109,125 524,642
7x1204007 HURON BUSINESS POND 2 RETROFIT 523,20a 523,200
8x0405003 MAJOR SIDEWALK REPAIRIREPLACE 89,Oaa 101,OOa 103,OOa 1x6,000 108,000 507,000
x90102027 AUTOMATION SYSTEM REPLACEMENT 50x,000 5aa,000
16
APPENDIX E
PROJECTED OPERATING BUDGET INCREASES
Additional Operating Costs 0 tion 1
p
Renovation
Only Option 2
Renovation
and 30,000 sf
Addition Option 3
Renovation
and 54,400 sf
Addition
Central Librar Staffin Costs $ 189,000 $ 501,000 $ 703,000
2 FTE 8 FTE 12.5 FTE
Subtotal Staffin Costs $ 189,000 $ 501,000 $ 703,000
Ener Costs - $ 60,000 $ 109,000
Buildin Maintenance Costs $ 38,000 $ 116,000 $ 180,000
Com uter/Network Costs $ 34,000 $ 68,000 $ 96,000
Administration/Business Expenses $ 18,000 $ 22,000 $ 25,000
Subtotal Building Operating/Maintenance
Costs
$
90,000
$
266,000
$
410,000
Collection Maintenance Costs $ 20,000 $ 50,000 $ 108,000
Subtotal Collection Costs $ 20,000 $ 50,000 $ 108,000
Net Impact $ 299,000 $ 817,000 $ 1,221,000
All costs are expressed in 2010 dollars and include a 3% annual inflationary factor.
Staffing Costs:
Include costs for growth in staffing levels to handle increased service demands, enhanced
program and service delivery, expanded resources, including computer resources, and
improved building security.
Building Operating/Maintenance Costs:
Include increased costs associated with building contracts, building supplies, cleaning
services, building repairs and computer network charges in a renovated and/or expanded
library building.
Collection Maintenance Costs:
The Main Library collection budget is currently allocated at 40% of the total library system
collection budget. To allow for continued collection growth and development at the Main
Library, and to ensure adequate collection budget allocation to the community libraries, an
increase in the ongoing operational costs for Main Library collections is required.
17
KITCHENER Pl1BLIC LIBRARY
Report To: Councillor Berry Vrbanovic, Chair and Members of Finance and
Corporate Services
Date of Meeting: September 29, 2008
Submitted By: Kitchener Public Library Board
Prepared By: Sonia Lewis, CEO, Kitchener Public Library
Ward(s) Involved: All
Date of Report: September 17, 2008
Subject: CENTRAL LIBRARY FUNDING OPTIONS
RECOMMENDATIONS:
In light of the analysis of funding options for the central library project developed by City Finance
and Kitchener Public Library (KPL) staff as outlined in FIN-08-097, the Kitchener Public Library
Board recommends:
That a preliminary capital budget of $39,812,000 be approved for a modified "option 2 (phased}"
Central Library project, funded as follows:
Cost Reduction Strategies
Reduction in Parkin Costs $3,808,000
Modification of Desi n Features $1,000,000
Total Cost Reductions $4,808,000
Revised Project Costs after Reductions
Ori final Project Costs in 2010 dollars $44,620,000
Cost Reductions $4,808,000
Revised Project Costs $39,812,000
Funding Sources
Economic Develo meet Investment Fund $32,500,000
Fundraisin $4,000,000
Deferral of Other KPL Capital Projects $1,150,000
Develo meet Char es $528,000
Advancement of KPL Operating Budget
total for 2 ears $1,634,000
Total Funding $39,812,000
That the approved capital forecast be adjusted by reallocating $1.15 million to the central library
project, $450,000 in 2012 from phase 2 of the Radio Frequency Identification Technology
project, and $500,000 in 2013 and $200,000 in 2014 from the Library Automation System
Replacement project; and,
That an addition of $500,000 for the Library Automation System Replacement be referred to the
2009 capital budget process for inclusion in KPL's 2018 capital forecast; and,
That Council direct City Finance staff to include forecast growth related expenditures for a
central library in the 2009 Development Charges background study; and,
That $817,000 be allocated to KPL's base budget in the 2010 operating budget projection to
offset phasing costs during construction; and,
That Council approve an advancement of $1.1 million from the Economic Development
Investment Fund from 2010 to 2009 for pre-construction funding; and,
That, working with City Purchasing staff, KPL be authorized to issue separate Requests for
Proposals for architectural services and project management consulting, and seek Council's
pre-approval of these expenditures prior to awarding the contracts, and,
That KPL propose a final construction budget to Council when cost estimates have been further
refined during the design phase; and further,
That KPL keep Council and the public advised of progress with the project through established
channels of communication.
BACKGROUND:
In an update to the Finance and Corporate Services Committee on May 12, 2008, the Kitchener
Public Library Board outlined three options for renovating and expanding the central library.
Costs for Option 2, a renovation and 30,000 square foot addition, and Option 3, a renovation
and 54,400 square foot addition, exceeded the $32.5 million allocated to the project from the
Economic Development Investment Fund. Council directed City and KPL staff to report in
September 2008 with funding scenarios to potentially address these shortfalls.
FIN-08-097 was prepared in response to Council's direction. It identifies and evaluates eleven
potential funding options for the Central Library project. This companion report is based on that
2
analysis and outlines the KPL Board's recommended funding strategy and anticipated timelines
for the project.
REPORT:
Fundina Oations
The analysis of funding options undertaken by City Finance and KPL staff concluded that there
were likely scenarios under which Option 2 could be funded, but a significant shortfall remained
for Option 3 under any scenario. The KPL Board supports this conclusion and recommends
that six of the eleven funding options be considered. A seventh option, phasing construction,
rather than leasing temporary space during construction is also recommended by the Board.
Fundraising
The Board is committed to raising $5 million gross for the project. Assuming administrative
costs of 20%, this will provide $4 million towards project costs. KPL has recently hired a
Development Manager who will focus on planning the capital campaign, including volunteer
recruitment.
The Board recognizes it lacks a significant history of major fundraising. Prior to issuing the
construction tender, the Board will develop parameters for the fundraising program, including a
contingency plan to deal with any potential shortfall.
Adjust KPL's Capital Forecast
Renovating and expanding the central library is a higher priority than implementing self check-in
or replacing the library's automation system. In anticipation that these two projects will be
reintroduced into the capital forecast at a later date, the central library will be designed to
accommodate the future implementation of these technologies.
To coincide with the five year replacement of the server the Board proposes reintroducing the
system replacement in the 2018-2019 capital forecast. To handle anticipated growth at the
central library self check-in will be proposed for inclusion in the 2020 capital forecast.
Development Charges
For a number of years the KPL Board's capital forecast and strategic plan have identified the
need for a both an expanded Main Library and a new southwest Kitchener community library.
The need for both projects is driven by population growth. The Board proposes allocating
$528,000 in development charges to the central library project, leaving the bulk of the projected
development charges for the southwest branch.
Following completion of the City's new Development Charges background study and by-law in
2009, the KPL Board will review the preliminary funding plan for the southwest branch as part of
the 2010 budget process.
3
Advance the Operating Budget Increase
To operate the renovated and expanded central library KPL will require an operating budget
increase of $817,000. The Board is seeking Council's approval to advance this funding to 2010
(currently shown for 2011 in the ten-year tax rate projection) to offset the additional operating
costs that will be incurred to accommodate phased construction. Over the two years of
construction this will contribute $1,634,000 to the additional operating costs associated with
phasing construction of the central library project. Following construction, this funding will be
allocated to staffing, resources and building costs associated with the larger facility.
Reduction of Parking Spaces
The number of parking spaces included in the May 2008 cost summary presented to Council
exceeds the number required under City bylaws. As a means of reducing costs, the KPL Board
proposes budgeting for 112, rather than 200 parking spaces. This would more than double the
amount of parking currently provided on site and meet City requirements.
As directed by Council's May 21, 2008 resolution, KPL staff continues to work on a joint parking
solution with City staff and other organizations located in the Civic District area. The KPL Board
recognizes that a joint parking solution may need to be phased, with the library's needs being
addressed first. In that case, consideration will be given to designing parking to permit a future
connection to a larger parking development within the Civic District.
Modify Design Features to Fit Within Available Funding
To address the funding shortfall the KPL Board proposes modifying Option 2 during the design
phase to reduce construction costs by $1 million. Although other options will be explored with
the architect, this could result in reducing the size of the expansion by 5,000 square feet,
resulting in a 25,000 square foot addition.
Phasing Construction vs. Leasing Temporary Facility
Previous reports to Council have identified two approaches to delivering services during
construction. Costs for the phased construction approach are lower than the leased facility
option. As part of its funding strategy, the Board proposes to phase construction and deliver
services from the existing facility.
Project Timelines and Process
Assuming the funding strategy is approved by early October 2008, the project is anticipated to
proceed as outlined below. Construction time is estimated to range from 2-2.5 years. We have
assumed the upper limit below. These are preliminary timelines that will be revised as the
project progresses.
Architect and project management selection activities, prequalification of contractors and tender
award will be undertaken in consultation with City Purchasing staff and in accordance with
established purchasing policies. Council approval will be sought on financial matters.
4
Activity Projected Timelines
Pre are RFP and select ro'ect many er October -December 2008
Pre are RFP and select architect October -December 2008
Seek Board approval of selection and Council
approval of funding December 2008
Award contracts Januar 2009
Develop schematic design/detailed design January -September 2009
Prepare contract documents; permit
drawings/application October 2009 -April 2010
Pre calif contractors and subcontractors Februar - A ril 2010
Issue and evaluate tender Ma -June 2010
Seek Board and Council a royal June 2010
Award contract Jul 2010
Construct buildin Jul 2010 -December 2012
Commission facilit Januar -Februar 2013
FINANCIAL IMPLICATIONS:
Capital Costs
When adjusted for inflation, projected costs for the May 2008 version of Option 2 total
$44,620,000 if construction is phased. This projection includes all anticipated capital costs, as
well as additional operating costs during construction, and assumes a construction start of 2010.
The KPL Board's strategy for funding the project includes cost reduction measures and new
sources of funding, in addition to the Economic Development Investment Fund.
Cost Reduction Strategies
Reduction in Parkin Costs $3,808,000
Modification of Design Features $1,000,000
Total Cost Reductions $4,808,000
Revised Project Costs after Reductions
Ori final Project Costs in 2010 dollars $44,620,000
Cost Reductions $4,808,000
Revised Project Costs $39,812,000
Funding Sources
Economic Develo meet Investment Fund $32,500,000
Fundraising $4,000,000
Deferral of Other KPL Ca ital Pro'ects $1,150,000
Develo meet Char es $528,000
Advancement of KPL Operating Budget
total for 2 ears $1,634,000
Total Funding $39,812,000
5
Advancing Funding for Architectural and Project Management Services
In order to start construction in 2010, an estimated $1.1 million will be required for architectural
and project management services in 2009. This will require Council's approval to advance $1.1
million from the Economic Development Investment Fund from 2010 to 2009 for pre-
constructionfunding. Prior to awarding the contracts for these services, KPL will update the
estimate based on responses to the Requests for Proposal and seek Council's approval of the
funding.
Adjusting KPL's Capital Forecast
Deferring two projects in KPL's capital forecast contributes $1.15 million to the project. Some of
the Central Library project expenditures associated with collections, furnishings and equipment
would be delayed until 2013-2014 to align with the funding capacity created by these deferrals.
Operating Budget
Advancing KPL's operating budget increase of $817,000 in 2010 represents an approximate
0.9% increase to the City's levy. Over the two years of construction this will contribute
$1,634,000 to the costs of the central library project.
COMMUNICATIONS:
KPL will keep stakeholders informed of the progress of the project using various communication
tools, including the KPL web site, In Touch magazine, electronic and print newsletters, displays,
and public meetings. Public consultation will be conducted during the design phase.
Council representatives onthe KPL Board will receive monthly progress reports on the project.
The KPL Board will report formally to Council when decisions regarding financial matters are
required, such as contract and tender awards, and finalizing the project budget.
CONCLUSION:
In May 2008 the KPL Board presented Council with three options for renovating and expanding
the central library. After detailed financial review, it is apparent that the preferred option is not
affordable. However, funding a renovation and 25,000 square foot addition appears to be
feasible. While smaller than the model originally proposed by the KPL Board, this option will
nonetheless vastly improve the central library. This revitalized and enlarged facility will serve as
a city-wide resource and a neighbourhood branch for the growing downtown. Equally important,
it will support branch libraries distributed throughout the community.
Renovating and expanding the central library is an investment in the health of the Kitchener
community. It aligns directly with several key City of Kitchener strategies. Now used by over
1,000 people each day, the central library contributes to the development of literacy and job
skills, settlement of new Canadians, and economic well-being of the community. The KPL
Board urges Council to approve the funding strategy outlined in this report and allow the project
to proceed to the design stage.
Sonia Lewis
Chief Executive Officer, Kitchener Public Library
6
KITCHENER Pl1BLIC LIBRARY
Report To: Councillor Berry Vrbanovic, Chair and Members of Finance and
Corporate Services
Date of Meeting: September 29, 2008
Submitted By: Kitchener Public Library Board
Prepared By: Sonia Lewis, CEO, Kitchener Public Library
Ward(s) Involved: All
Date of Report: September 17, 2008
Subject: CENTRAL LIBRARY FUNDING OPTIONS
RECOMMENDATIONS:
In light of the analysis of funding options for the central library project developed by City Finance
and Kitchener Public Library (KPL) staff as outlined in FIN-08-097, the Kitchener Public Library
Board recommends:
That a preliminary capital budget of $39,812,000 be approved for a modified "option 2 (phased}"
Central Library project, funded as follows:
Cost Reduction Strategies
Reduction in Parkin Costs $3,808,000
Modification of Desi n Features $1,000,000
Total Cost Reductions $4,808,000
Revised Project Costs after Reductions
Ori final Project Costs in 2010 dollars $44,620,000
Cost Reductions $4,808,000
Revised Project Costs $39,812,000
Funding Sources
Economic Develo meet Investment Fund $32,500,000
Fundraisin $4,000,000
Deferral of Other KPL Capital Projects $1,150,000
Develo meet Char es $528,000
Advancement of KPL Operating Budget
total for 2 ears $1,634,000
Total Funding $39,812,000
That the approved capital forecast be adjusted by reallocating $1.15 million to the central library
project, $450,000 in 2012 from phase 2 of the Radio Frequency Identification Technology
project, and $500,000 in 2013 and $200,000 in 2014 from the Library Automation System
Replacement project; and,
That an addition of $500,000 for the Library Automation System Replacement be referred to the
2009 capital budget process for inclusion in KPL's 2018 capital forecast; and,
That Council direct City Finance staff to include forecast growth related expenditures for a
central library in the 2009 Development Charges background study; and,
That $817,000 be allocated to KPL's base budget in the 2010 operating budget projection to
offset phasing costs during construction; and,
That Council approve an advancement of $1.1 million from the Economic Development
Investment Fund from 2010 to 2009 for pre-construction funding; and,
That, working with City Purchasing staff, KPL be authorized to issue separate Requests for
Proposals for architectural services and project management consulting, and seek Council's
pre-approval of these expenditures prior to awarding the contracts, and,
That KPL propose a final construction budget to Council when cost estimates have been further
refined during the design phase; and further,
That KPL keep Council and the public advised of progress with the project through established
channels of communication.
BACKGROUND:
In an update to the Finance and Corporate Services Committee on May 12, 2008, the Kitchener
Public Library Board outlined three options for renovating and expanding the central library.
Costs for Option 2, a renovation and 30,000 square foot addition, and Option 3, a renovation
and 54,400 square foot addition, exceeded the $32.5 million allocated to the project from the
Economic Development Investment Fund. Council directed City and KPL staff to report in
September 2008 with funding scenarios to potentially address these shortfalls.
FIN-08-097 was prepared in response to Council's direction. It identifies and evaluates eleven
potential funding options for the Central Library project. This companion report is based on that
2
analysis and outlines the KPL Board's recommended funding strategy and anticipated timelines
for the project.
REPORT:
Fundina Oations
The analysis of funding options undertaken by City Finance and KPL staff concluded that there
were likely scenarios under which Option 2 could be funded, but a significant shortfall remained
for Option 3 under any scenario. The KPL Board supports this conclusion and recommends
that six of the eleven funding options be considered. A seventh option, phasing construction,
rather than leasing temporary space during construction is also recommended by the Board.
Fundraising
The Board is committed to raising $5 million gross for the project. Assuming administrative
costs of 20%, this will provide $4 million towards project costs. KPL has recently hired a
Development Manager who will focus on planning the capital campaign, including volunteer
recruitment.
The Board recognizes it lacks a significant history of major fundraising. Prior to issuing the
construction tender, the Board will develop parameters for the fundraising program, including a
contingency plan to deal with any potential shortfall.
Adjust KPL's Capital Forecast
Renovating and expanding the central library is a higher priority than implementing self check-in
or replacing the library's automation system. In anticipation that these two projects will be
reintroduced into the capital forecast at a later date, the central library will be designed to
accommodate the future implementation of these technologies.
To coincide with the five year replacement of the server the Board proposes reintroducing the
system replacement in the 2018-2019 capital forecast. To handle anticipated growth at the
central library self check-in will be proposed for inclusion in the 2020 capital forecast.
Development Charges
For a number of years the KPL Board's capital forecast and strategic plan have identified the
need for a both an expanded Main Library and a new southwest Kitchener community library.
The need for both projects is driven by population growth. The Board proposes allocating
$528,000 in development charges to the central library project, leaving the bulk of the projected
development charges for the southwest branch.
Following completion of the City's new Development Charges background study and by-law in
2009, the KPL Board will review the preliminary funding plan for the southwest branch as part of
the 2010 budget process.
3
Advance the Operating Budget Increase
To operate the renovated and expanded central library KPL will require an operating budget
increase of $817,000. The Board is seeking Council's approval to advance this funding to 2010
(currently shown for 2011 in the ten-year tax rate projection) to offset the additional operating
costs that will be incurred to accommodate phased construction. Over the two years of
construction this will contribute $1,634,000 to the additional operating costs associated with
phasing construction of the central library project. Following construction, this funding will be
allocated to staffing, resources and building costs associated with the larger facility.
Reduction of Parking Spaces
The number of parking spaces included in the May 2008 cost summary presented to Council
exceeds the number required under City bylaws. As a means of reducing costs, the KPL Board
proposes budgeting for 112, rather than 200 parking spaces. This would more than double the
amount of parking currently provided on site and meet City requirements.
As directed by Council's May 21, 2008 resolution, KPL staff continues to work on a joint parking
solution with City staff and other organizations located in the Civic District area. The KPL Board
recognizes that a joint parking solution may need to be phased, with the library's needs being
addressed first. In that case, consideration will be given to designing parking to permit a future
connection to a larger parking development within the Civic District.
Modify Design Features to Fit Within Available Funding
To address the funding shortfall the KPL Board proposes modifying Option 2 during the design
phase to reduce construction costs by $1 million. Although other options will be explored with
the architect, this could result in reducing the size of the expansion by 5,000 square feet,
resulting in a 25,000 square foot addition.
Phasing Construction vs. Leasing Temporary Facility
Previous reports to Council have identified two approaches to delivering services during
construction. Costs for the phased construction approach are lower than the leased facility
option. As part of its funding strategy, the Board proposes to phase construction and deliver
services from the existing facility.
Project Timelines and Process
Assuming the funding strategy is approved by early October 2008, the project is anticipated to
proceed as outlined below. Construction time is estimated to range from 2-2.5 years. We have
assumed the upper limit below. These are preliminary timelines that will be revised as the
project progresses.
Architect and project management selection activities, prequalification of contractors and tender
award will be undertaken in consultation with City Purchasing staff and in accordance with
established purchasing policies. Council approval will be sought on financial matters.
4
Activity Projected Timelines
Pre are RFP and select ro'ect many er October -December 2008
Pre are RFP and select architect October -December 2008
Seek Board approval of selection and Council
approval of funding December 2008
Award contracts Januar 2009
Develop schematic design/detailed design January -September 2009
Prepare contract documents; permit
drawings/application October 2009 -April 2010
Pre calif contractors and subcontractors Februar - A ril 2010
Issue and evaluate tender Ma -June 2010
Seek Board and Council a royal June 2010
Award contract Jul 2010
Construct buildin Jul 2010 -December 2012
Commission facilit Januar -Februar 2013
FINANCIAL IMPLICATIONS:
Capital Costs
When adjusted for inflation, projected costs for the May 2008 version of Option 2 total
$44,620,000 if construction is phased. This projection includes all anticipated capital costs, as
well as additional operating costs during construction, and assumes a construction start of 2010.
The KPL Board's strategy for funding the project includes cost reduction measures and new
sources of funding, in addition to the Economic Development Investment Fund.
Cost Reduction Strategies
Reduction in Parkin Costs $3,808,000
Modification of Design Features $1,000,000
Total Cost Reductions $4,808,000
Revised Project Costs after Reductions
Ori final Project Costs in 2010 dollars $44,620,000
Cost Reductions $4,808,000
Revised Project Costs $39,812,000
Funding Sources
Economic Develo meet Investment Fund $32,500,000
Fundraising $4,000,000
Deferral of Other KPL Ca ital Pro'ects $1,150,000
Develo meet Char es $528,000
Advancement of KPL Operating Budget
total for 2 ears $1,634,000
Total Funding $39,812,000
5
Advancing Funding for Architectural and Project Management Services
In order to start construction in 2010, an estimated $1.1 million will be required for architectural
and project management services in 2009. This will require Council's approval to advance $1.1
million from the Economic Development Investment Fund from 2010 to 2009 for pre-
constructionfunding. Prior to awarding the contracts for these services, KPL will update the
estimate based on responses to the Requests for Proposal and seek Council's approval of the
funding.
Adjusting KPL's Capital Forecast
Deferring two projects in KPL's capital forecast contributes $1.15 million to the project. Some of
the Central Library project expenditures associated with collections, furnishings and equipment
would be delayed until 2013-2014 to align with the funding capacity created by these deferrals.
Operating Budget
Advancing KPL's operating budget increase of $817,000 in 2010 represents an approximate
0.9% increase to the City's levy. Over the two years of construction this will contribute
$1,634,000 to the costs of the central library project.
COMMUNICATIONS:
KPL will keep stakeholders informed of the progress of the project using various communication
tools, including the KPL web site, In Touch magazine, electronic and print newsletters, displays,
and public meetings. Public consultation will be conducted during the design phase.
Council representatives onthe KPL Board will receive monthly progress reports on the project.
The KPL Board will report formally to Council when decisions regarding financial matters are
required, such as contract and tender awards, and finalizing the project budget.
CONCLUSION:
In May 2008 the KPL Board presented Council with three options for renovating and expanding
the central library. After detailed financial review, it is apparent that the preferred option is not
affordable. However, funding a renovation and 25,000 square foot addition appears to be
feasible. While smaller than the model originally proposed by the KPL Board, this option will
nonetheless vastly improve the central library. This revitalized and enlarged facility will serve as
a city-wide resource and a neighbourhood branch for the growing downtown. Equally important,
it will support branch libraries distributed throughout the community.
Renovating and expanding the central library is an investment in the health of the Kitchener
community. It aligns directly with several key City of Kitchener strategies. Now used by over
1,000 people each day, the central library contributes to the development of literacy and job
skills, settlement of new Canadians, and economic well-being of the community. The KPL
Board urges Council to approve the funding strategy outlined in this report and allow the project
to proceed to the design stage.
Sonia Lewis
Chief Executive Officer, Kitchener Public Library
6
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