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HomeMy WebLinkAboutKPL - Report - Central Library Funding PlanREPORT Report To: Councillor Berry Vrbanovic, Chair and Members of Finance and Corporate Services Date of Meeting: November 23, 2009 Submitted By: Kitchener Public Library Board Prepared By: Sonia Lewis, CEO, Kitchener Public Library Ward(s) Involved: All Date of Report: November 11, 2009 Subject: CENTRAL LIBRARY FUNDING PLAN ______________________________________________________________________ RECOMMENDATIONS: THAT the fundraising contribution to the Central Library renovation and expansion project be reduced from $4,000,000 to $500,000; and, THAT the reduction in fundraising be offset by an increase in the development charges allocation to the project from $528,000 to $4,028,000; and, THAT these adjustments to the central library capital project be included in the 2010-2019 capital forecast for consideration by the Finance and Corporate Services Committee as part of the 2010 budget deliberations; and, THAT $266,400 allocated to Main Library roofing in the approved 2009 capital budget be transferred to the central library project to be used for roofing; and further, THAT City Council express its intention to recover 90% of the post 2018 growth-related costs of the Central Library renovation and expansion through development charges in the future and as committed excess capacity under the Development Charges Act. BACKGROUND: At its October 6, 2008 meeting Council approved a preliminary capital budget and the following funding strategy for the central library renovation and expansion project: 1 Approved Central Library Funding Strategy Funding Source Funding Economic Development Investment Fund$32,500,000 Fundraising$4,000,000 Deferral of Other KPL Capital Projects $1,150,000 Development Charges $528,000 Province’s Investing in Ontario Grant or Other $1,634,000 Capital Dollars Total Funding $39,812,000 The funding plan was based on an analysis of eleven potential funding options outlined in FIN-08- 097. The fundraising target was established on the basis of a fundraising feasibility study undertaken in 2005. The study measured support for the construction of a new 130,000 square foot library on Centre Block, rather than the renovation of the existing library. The development charges revenue reflected a preliminary analysis done prior to the 2009 development charges background study. At its meeting held October 6, 2008 Council directed City Finance staff to include forecast growth-related expenditures for a central library in the 2009 development charges background study. The approved 2009-2018 capital budget and forecast included $270,000 in 2009 for Main Library roofing. Since it was anticipated the work would be completed in 2009, costs for this section of roofing were excluded from the central library project budget. This report proposes revisions to the approved funding strategy for the central library renovation and expansion project and the transfer of funds for roofing in the approved 2009 capital budget to the central library project. REPORT: The approved funding strategy for the central library project includes funds from a number of sources, including fundraising and development charges. The Kitchener Public Library Board proposes reducing its fundraising target and offsetting this reduction with development charges. The central library funding plan approved by Council October 6, 2008 assumed fundraising would contribute $4M to the project. This target was based on a fundraising feasibility study undertaken in 2005 during the Centre Block project. Given changes in the economy and the plan to renovate, rather than build a new facility, a second fundraising feasibility study was conducted earlier this year. This study concluded there is no evidence to support a $4M (net) campaign and recommended a target of $500,000 be raised over five years. Factors limiting KPL’s ability to fundraise at the $4M level include: - the economic climate - donors being more likely to support local charities in tough economic times - the perception that libraries are the responsibility of government and since government is paying the major portion of the cost, taxpayers should not be asked to pay twice - KPL not having a culture of fundraising or a committed major gifts donor base 2 At the direction of Council, forecast growth-related expenditures for a central library were included in the 2009 development charges background study. A second library building project, the southwest community library, was also included. The study indicated a higher funding envelope would be available for these growth-related library projects than originally projected. The maximum allowable funding envelope for 2009-2018 totals $12,711,930 in 2009 dollars. Library services are considered by the Development Charges Act to require a 10% reduction in their capital cost recovery, leaving $11,440,737 in 2009 dollars in development charges revenue for library projects. After adjustments to the development charges to reflect inflation, the Board proposes allocating $4,028,000 of this amount to the central library project. The remainder would be available for the southwest branch. The 2009 Development Charges background study identified that additional costs related to the Central Library renovation and expansion totalling $6,067,591 in 2009 dollars may be recoverable after 2018 since the project will support growth beyond the next ten year window. In order to recover these costs, Council must state its intention to recover 90% of the post 2018 growth-related costs through development charges in the future and as committed excess capacity under the Development Charges Act. The approved 2009 capital budget included $270,000 to replace the oldest sections of the Main Library roof. Based on the age and condition of these sections, KPL had been advised not to delay this roofing until the central library renovation. Earlier this year, architects working on the central library project indicated our 2009 roofing plans would present challenges in achieving LEED Gold for the renovation and expansion project. As a result, emergency patching was applied to the roof at a cost of $3,600 and the remainder of the work delayed. Further patching may be required over the course of the next couple years and any such costs will be covered by the Library’s general provision funding. Since we anticipated completing this work in 2009, costs for this section of roofing were excluded from the central library project budget. The KPL Board proposes transferring the remaining $266,400 in the 2009 capital budget for roofing to the central library project. The funds will be used for their original purpose. FINANCIAL IMPLICATIONS: No new funding is being requested. Council previously approved $270,000 for roofing in 2009 and a funding strategy totalling $39,812,000 for the central library project. A reduced fundraising target, increased development charges allocation, and transfer of the unspent 2009 capital funds for roofing result in the following revised central library project funding plan: Funding Source Original Central Adjustment Revised Central Library Plan Library Plan Economic Development Investment $32,500,000$32,500,000 Fund Fundraising $4,000,000($3,500,000)$500,000 Deferral of Other KPL Capital $1,150,000$1,150,000 Projects Development Charges $528,000$3,500,000$4,028,000 Other Capital Dollars $1,634,000$1,634,000 Unspent 2009 Capital for Roofing $0$266,400$266,400 Total Funding $39,812,000$266,400$40,078,400 The project has been budgeted on this basis in the 2010 forecast. 3 COMMUNICATIONS: KPL continues to 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 on the schematic design was conducted at the Main Library November 3 and at the Kitchener Market November 7, 2009. In addition, the plans are on display at the Main Library and on the KPL web site. Council representatives on the KPL Board 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. CONCLUSION: A viable funding strategy is critical to the success of the central library project. The original fundraising target of $4M established by the Kitchener Public Library is no longer obtainable given the current economic climate. As a result, a new target of $500,000 is proposed. The reduced fundraising target can be offset by development charges. Roofing is an important component in the Library’s plans to achieve LEED Gold for its renovation and expansion project. Transferring the unspent funding for roofing in the 2009 capital budget will help us reach the LEED Gold target. ACKNOWLEDGED BY: Sonia Lewis, Chief Executive Officer, Kitchener Public Library 4