Unanticipated construction expenses – from hazardous material abatement to HVAC overruns – led the Town Council to authorize taking a total of $147,000 from the Town’s contingency fund to keep the Town Hall renovation project on track.
The contingency fund, money set aside for unexpected project costs, was tapped on April 28 as officials grappled with a series of budget gaps while at the same time expressing frustration regarding the project’s initial planning and budgeting.
The additional funds include $23,000 for asbestos removal; $28,000 in moving expenses; $36,000 to hire a commissioning agent; and $60,000 for increased HVAC installation costs.
The HVAC overrun totaled $120,000, a bill the council authorized the Town to split with the contractor, Charters Brothers.
To offset some of the added costs, the council approved $149,000 in cuts to the renovation budget. The landscaping plan was scaled down to save $70,000; $75,000 for solar panels was eliminated; and visual monitoring equipment in the elevator was cut, saving $4,800.
The town will seek grant opportunities for solar panels, according to Finance Director Jennifer Janelle.
The council gave approval to a proposal from Sparhawk Group of Yarmouth for $36,000 to serve as commissioning agent, an independent third party that ensures mechanical and electrical systems perform according to a project’s requirements.
Councilors questioned whether that cost could have been anticipated earlier.
According to Andy Jackson of Dovetail Consulting, hired in January as the Town owner’s representative for the project, the commissioning agent was an anticipated cost, but not factored into Charters Brothers’ guaranteed maximum price, so it must come from the owner’s contingency.
By the time Charters Brothers finishes the project, said Jackson, it will have fully drawn down the proceeds from the Town’s $6 million bond and $1.3 million from the Town’s undesignated fund.
Councilor Joel Martin questioned whether the unanticipated expenses meant the architect, Oak Point Associates, had not included the commissioning agent in the budget.
“It is safe to say that the budgets that supported the decision to issue the bond appeared to be too low compared to what we now know,” Jackson responded.
Town Manager Tim Pellerin noted the need for a commissioning agent was not communicated to the Town by Oak Point until December, and council Vice Chair Mallory Cook confirmed that the Town has initiated a formal process to address performance concerns with Oak Point.
North Ridge Contracting of Epsom, N.H., will remove asbestos-related materials from 50 windows at a cost of $23,000.
Councilor Paul Schumacher questioned why the asbestos expense was being charged to the Town’s contingency fund, saying it should not be a surprise that hazmat would be found in a building of its age.
“It was missed by Oak Point,” Pellerin said.
Charters Brothers had included an allowance of $2,500 for hazmat abatement, but that amount was “woefully inadequate,” according to Jackson.
“This is a huge miss for anybody who does this for a living,” said council Chair John James. “It’s inexcusable.”
The Town’s contingency fund balance is now just shy of $495,000, according to the Town Hall Renovation link on the municipal website, which tracks withdrawals for the project.
To get the delayed construction schedule back on track, town employees will relocate to temporary office space sooner than planned. The original construction plan had most town employees moving to the first floor once construction on that level had been completed. Now the first and second floors will be under construction at the same time.
The council approved up to $28,000 in moving costs to cover the removal, return and secure storage of the Town’s vault. The original plan would have moved the vault within the building, but the revised plan is to store the vault offsite until the project is complete.
Councilor Sam Flinkstrom, in a letter announcing his resignation from the Town Hall renovation committee sent to councilors and shared with the South Berwick Reporter, criticized the project’s financial management, writing that “voters approved $7.351 million for the project and contracts were then signed in excess of that amount.”
Flinkstrom also stated that when voters later approved a $750,000 contingency fund, it was not made clear part of that money would be used to cover costs already committed, rather than only future overruns. He described the vote for the contingency as essentially “back-filling the account,” which was why he opposed the request.
Despite stepping down from the committee, Flinkstrom said he would continue pushing for accountability and financial transparency on the project.
