Public works HQ project put off for a year in South Portland

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SOUTH PORTLAND — As South Portland Mayor Patti Smith concurred with her colleagues Monday, she found unique verbs to express herself.

“Having a year to fudge and fidget makes a lot of sense,” she said after councilors agreed now is not the time to ask voters to approve a bond for a new public works facility.

All seven councilors and City Manager James Gailey agreed a new facility is much needed and long overdue. But not so needed and overdue that waiting another year for a construction bond referendum is not the best course of action.

There was no formal vote at Monday’s council workshop to hold off pursuing the project, but plenty of shared sentiment on when to try and fit a construction bond into the city debt schedule.

“Staff does not feel this is the right year,” Gailey said. “2013 is the more financially prudent way to go.”

There was also a sense of shared relief the council would not have to convince voters of the worthiness of the project and a bond issue between now and November’s general election.

“There are just too many unknowns,” Councilor Tom Coward said about a plan to build a 65,000-square-foot facility to house the Public Works, Parks and Transportation departments near the Highland Avenue transfer station.

Also unknown is what to do with the current six-acre site in a residential area bounded by O’Neil and Pitt streets, or what kind of environmental remediation the parcel may need.

After a May workshop where Gailey presented a “placeholder” estimate of $10 million for the new facility, a more defined estimate of $16 million or $17 million presented Monday also made councilors balk.

“I have a gut feeling about the cost,” Smith said, saying she hoped it could be reduced by $2 million or $3 million.

Finance Director Greg L’Heureux projected the principal and rates of 3.25 percent or 4 percent interest on a 20-year bond will eventually cost taxpayers almost $23 million, even if the city dedicates funding to offset construction costs (as it did for South Portland High School renovations).

Projections presented by L’Heureux showed the debt service on a public works construction bond approved by voters in 2013 will be absorbed more easily in the property tax rate because of retired bond debts beginning in fiscal year 2016.

L’Heureux cited the near-term effect of the $41.5 million school bond passed in 2010 as a reason to hold off a year on a public works bond. Ultimately, the city will borrow about $39 million for the school project, and the first $30 million carries a 2.52 percent interest rate, he said.

Current municipal bond debt service will add a total of 14 cents to the city property tax rate this year, 25 cents more in fiscal year 2014 and 38 cents in fiscal year 2015.

If a 20-year, $17 million bond were approved by voters at 3.25 percent this fall, another 41 cents would be cumulatively added to property tax rates by fiscal year 2015 to pay debt service.

Because municipal debt service will begin to decrease in fiscal year 2016, L’Heureux projected a $16 million public works bond at 4 percent interest passed in 2013 would have added a cumulative 40 cents to the property tax rate, but the overall debt service for public works, schools and other bonds would be diminished.

The current bond funding replacement and renovation for sections of the high school figured in council conversations in more than financial terms. Councilors Tom Blake and Coward said an education campaign emphasizing needs and benefits of a new facility should be part of presenting the bond to voters next year.

“It’s all about the marketing,” Blake said.

Gailey said discussions about a new facility have occurred for more than a decade as officials sought to replace a 1930s-era site. In 2005, voters rejected buying the former Durastone site on Wallace Avenue near the Scarborough town line by a 506-472 vote.

The delay in seeking the bond should also allow councilors to learn more about what School Board members are thinking about replacing or consolidating the city middle schools and what will be needed to fund the work.

Those needs weighed on Councilor Jerry Jalbert, who said public works facility plans might need scaling back in all areas except those used for maintenance and repairs.

David Harry can be reached at 781-3661 ext. 110 or Follow him on Twitter: @DavidHarry8.

Portland City Hall reporter for The Forecaster. Baltimore native, lived in Maine since 1989. A journalist since 2005, covering much of Cumberland and York counties. I joined The Forecaster in 2012.