South Portland councilors put off public works garage project

SOUTH PORTLAND – Although it‘s been the city’s “No. 1 priority” for more than a decade, the South Portland City Council agreed Monday to put off construction of a new public works garage until at least 2014, citing concern that taxpayers cannot shoulder that burden on top of a $47.26 million high school renovation launched last month.

With the complex on O’Neil Street outdated, undersized and encroached on all sides by residential neighborhoods since its 1930 construction, the council has long eyed a 15-acre spot off Highland Avenue, where the transfer station is located, for a new facility that would combine the public works, parks and recreation and public transpiration departments under one roof.

City Manager Jim Gailey had included a $10 million “placeholder” in this year’s capital improvements budget for the project, with the expectation that councilors would call a referendum vote this November. However, at a workshop Monday, Gailey said that while the 97,800-square-foot building would cost $10 million, the full project, designed by Sebago Technics of Westbrook, would ring in closer to $17 million.

Finance Director Greg L’Heureux said payments on $41.5 million borrowed at 2.5 percent interest for the high school will add 14 cents per $1,000 valuation to this year’s property tax rate, lower than initial expectations due to a recent debt restructuring. Even so, that hike will climb 17 cents per $1,000 of valuation next year, when principal kicks in, assuming citywide assessments hold at $3.36 billion.

If the council had gone ahead with the pubic works project, and if it secured a 3 percent interest rate on its bond sale, combined payments for it and the high school would have jumped the tax rate 25 cents per $1,000 of valuation in 2014, with a 38-cent bump in 2015, said L’Heureux.

In other words, the owner of a $195,000 home – the median assessed value in South Portland – will pay an extra $27.30 in property tax this year just on the $41.5 million high school bond, and could have expected to shell out an additional $48.75 next year and $74.10 the following year – good for a $150.15 tax hike over three years – for it and the public works garage, regardless of any other hikes in school or city spending.

“The need is there, but we also have to be cognizant that money doesn’t grow on trees,” Gailey told the council, which seemed only too happy to stall the project.

“I’m elated,” said Councilor Tom Blake. “For months now, I’ve been thinking, we’re not ready for this.

“I agree we’re not ready to do it this year,” said Councilor Rosemarie De Angelis. “I also think $16 million-$17 million is a very scary number. We’ve been batting around $10 million for a long time, so I’m trying to swallow that and think about what it really means.”

Mayor Patti Smith, also seeming to reel from sticker shock, suggested an extra year might help councilors whittle $2 million-$3 million from the plan.

“I’m excited that we have a year to look at all angles of this project,” she said. “I would like to see the scope reconfigured to bring it down to $14 million or $15 million. I think this will be a tough sell and we may have to justify every little piece of this building, just like the high school had to justify what they were doing.”

Some on the council appeared to fault school officials for keeping public works mechanics in an outdated facility that lacks even rudimentary controls on air quality.

“There’s a terrible disappointment for me,” said Councilor Maxine Beecher. “This has been the No. 1 priority ever since I got on the council nine years ago. We’ve been so long waiting for this and put it off because the school department wanted to work on the high school.

“But, as much as I don’t like he idea of postponing this, I think for the taxpayers, we’re actually doing them a huge favor,” said Beecher.

Blake wondered aloud if the city will ever get a new public works building, given other rumblings of need within the school department. Following recent rehabilitation to all elementary schools, and now ongoing work to the high school, the next step is to deal with the middle schools. This year, the school board will form a “consolidation committee” aimed at remaking Memorial Middle School in a size large enough to house all 730 students in grades 6-8, said Blake. Part of that plan, noted Beecher, would include “gifting” Mahoney Middle School to the city for repurposing as a new city hall, creating unknown renovation and maintenance costs on the municipal side of the ledger.

Superintendent Suzanne Godin was not available for comment Tuesday. However, Gailey said he expects any middle school work to fall in line behind a new public works garage.

“At some point, there has to be the need of the city to come in,” he said. “We can’t put this off another 10 or 15 years. We’re looking at factoring in just the high school and moving forward on the public works project within the next 24 months.”

With that in mind, L’Heureux suggested a scheme that would put the project before voters in November 2013. The idea, he said, is to create a reserve account using $500,000 in greater-than-expected income this year from excise tax collections and state revenue sharing. That money rolled into the city’s $9.3 million undesignated surplus, also known as the fund balance, at the end of the fiscal year and can be taken without affecting that account’s bottom line or the tax rate, he said.

The city would then take $100,000 in taxation as part of next year’s budget, and $400,000 in the following year. That way, said L’Heureux, if voters do approve the project, the city would have $1 million set aside to mitigate the impact of bond payments when they start coming due.

The plan is similar to one used to “smooth out” repayments on the high school bond.

Transportation Director Tom Meyers said he recently received a $700,000 federal grant for facilities that can be used to further reduce the local brunt of a new garage. Should voters refuse to bond out the project, as they did in 2005 when they narrowly rejected a $4.8 million proposal to house public works in the former DuraStone building on Washington Avenue, the grant can be use to improve the public works garage, said Meyers. However, Public Works Director Doug Howard said any money put into that building amounts to little more than a “Band-Aid” fix.

If voters do give a collective nod to the project, the 6-acre O’Neil Street complex would be razed and redeveloped. Gailey said the extra year gives city staff time to decide exactly what form that redevelopment should take and how much can be made and applied to the new garage.

Neither the income, nor Meyers’ grant, is cooked into his property tax rate estimates, said L’Heureux, indicating the project may hit residents for less than predicted.

Gailey said he already has begun meeting with a marketing consultant to concoct an “education” campaign. Several councilors said the city “really needs to sell” the project to voters between now and November 2013.