Holyoke City Council Finance Committee takes $15 million step toward a new library
By Mike Plaisance, The Republican
April 22, 2010, 9:32PM
HOLYOKE – The City Council will vote on May 4 whether to approve borrowing $15 million to renovate the Holyoke Public Library under a plan councilors referred to the mayor on Thursday.
But officials said among the numerous issues to be resolved are how much control the city would have over the library, which currently is a private, nonprofit corporation.
The discussion came in a two-hour meeting of the council Finance Committee at City Hall.
The $15 million is a figure needed to trigger receipt of tax credits that will be sold to investors to help fund the library renovation. The $15 million is not necessarily the amount that the city will borrow and have to pay interest on over a 20-year loan, officials said.
Most of the project, in fact, would be paid for not with borrowing but with a state grant, funds from the library endowment and fund-raising, officials said.
The motion the council Finance Committee approved by a vote of 4-0 caps the city’s actual borrowing commitment at $5.5 million.
Still, councilors said, the city is taking on a burden of debt, however important the library project.
“Just so everyone’s clear about this: That’s an enormous payment. This is a very serious commitment on the part of the city,” committee member Kevin A. Jourdain said.
“It’s a tremendous amount of money” for a worthy project, council President Joseph M. McGiverin said.
Said Terry Plum, president of the library board of directors: “The library and the city have been partners for 100 years, so I’m looking at this as a new partnership.”
But, he said, time is tight.
The library board has a $4.5 million grant from the state Board of Library Commissioners. But the grant is contingent on library officials demonstrating by June 15 that they can raise the rest of the money and that the community supports the project. The community support includes City Council authorization for borrowing, officials said.
The 108-year-old library at 335 Maple St. has various problems. There's water damage from leaks, mold and air quality issues, cracks in the stone exterior and inadequate space for children’s services, public computers and archives.
The plan is to increase the current 25,000 square feet to 39,000 square feet. A final decision has yet to be made about whether that means building a new library or an addition to the existing one.
One of the concerns of councilors about the library project is the uncertainty about exactly how much money can be expected from investors willing to buy the tax credits. Such credits are attractive to investors because in return for the cash they pay into a project, they later get a federal tax reduction, or credit.
The larger the investment from those buying tax credits, the lower the financial burden on the city and the less the library’s board of directors must tap into the $5 million endowment, officials said.
The committee’s motion was referred to Mayor Elaine A. Pluta, who supports the project. Proposals for borrowing money must come from the mayor.
The motion also sets as a condition a requirement that the documents detailing the borrowing contain a surety, or pledge, that the library board will commit $2.5 million to the project either from fund-raising or the endowment.
The Holyoke Public Library gets a yearly appropriation from the city of more than $500,000 to cover salaries of the 21-person staff and utilities.
Discussions have included the possibility of the city taking over the library as a new department, given the city's financial commitment to the project.
But Plum and other officials, including Councilor John J. O'Neill said Thursday the preference would be for some separation to be maintained with a governance consisting of a board with a majority of members appointed by the mayor.
© 2010 masslive.com. All rights reserved.
Re-Elect Holyoke's Fiscal Watchdog!
Sunday, April 25, 2010
Updated Story on OCD Audit
Holyoke awaits audit decision
Sunday, April 25, 2010
By MIKE PLAISANCE
mplaisance@repub.com
HOLYOKE - The city is still waiting to hear whether it must repay federal grants used to build seven duplexes, but one councilor says the city should attempt to get the money from the developer if a repayment is ordered.
"It's a big problem," Ward 2 Councilor Diosdado Lopez said recently.
Lopez has filed an order to place the responsibility for $288,000, which the federal government says was overpayment on construction of seven duplexes, on the nonprofit Olde Holyoke Development.
Olde Holyoke Development received 26 of the 39 loans processed here under one of the programs audited by the Housing and Urban Development department. Olde Holyoke officials said the city and Olde Holyoke Development abided by all federal guidelines and regulations.
The audit issued on Nov. 23 found that there was "ineligible, unreasonable or unnecessary" use of $3.87 million in federal funds in relation to construction and demolition. The audit covered July 2006 to June 2009.
City officials say the Community Development Office has abided by federal rules and that some of the disagreements are due to the city and the federal agency using different calculation formulas.
Lopez' order to have Olde Holyoke Development be responsible if a repayment is ordered is being studied in the Redevelopment Committee.
William H. Murphy, administrator of the city Community Development Office, told councilors a few weeks ago that it would be about a month before the city learns whether it must repay any money.
Spokeswoman Rhonda M. Siciliano said the federal agency is continuing the review of the Holyoke audit and doesn't have a time frame for when that will be done.
The audit said building the duplexes should have cost about $1.75 million, based on the calculations of "a specialist with expertise in estimating construction costs," but the city paid more than $2 million.
The audit said the federal appraiser in determining what the seven duplexes should have cost used the "universal standards" of data from the Marshall & Swift company, of Los Angeles, Calif. The company's Web site says it provides the most current and accurate building cost data available.
Murphy, Deputy Administrator Linda B. McQuade and Richard P. Courchesne, Olde Holyoke Development president, said construction costs for the duplexes were based on the real costs of home construction in this area. The costs also included Energy Star upgrades, which consist of guidelines for energy efficiency set by the U.S. Environmental Protection Agency, they said.
The auditor said the appraiser's determinations included the maximum allowable calculations for energy efficiencies.
In response to Lopez' order about repayment being the obligation of Olde Holyoke Development, Courchesne said everything was done properly. Every home his organization built has a mortgage and a promissory note, he said.
"In the 30 years we've been working with the city, they've never paid anything back to HUD and my opinion is they won't have to this time, either," Courchesne said.
Between 1975 and 2009, Olde Holyoke Development built 158 homes, mostly duplexes, that have a total assessed value of nearly $21 million, he said.
McQuade declined to comment specifically on Lopez' order. But she said the city and Olde Holyoke Development abided by all regulations, despite the audit's findings, and she was eager for a resolution to the 16-month-long review.
"I'd like it to be over with. They walked into the office in December 2008, so, yes, I'll be happy when it's over with," McQuade said.
Chairman Kevin A. Jourdain said the Redevelopment Committee will deal with the issue again once federal officials determine the finalized audit.
Lopez' proposal to have Olde Holyoke Development pay the bill if money must be returned could be an option, Jourdain said, but that will depend on what the federal government ultimately decides was done wrong.
"If it's something Olde Holyoke did, then that's a reasonable request," but not if the fault lies with the city, Jourdain said.
Councilor at Large Aaron M. Vega said he was concerned about the questions the audit raises about how federal money is used.
"And you don't know, is it just the tip of the iceberg, is there more out there?" Vega said.
The dispute between city and federal officials over how funding was used leaves councilors confused, Ward 1 Councilor Donald R. Welch said.
"It's an interpretation of words, and I'm not an auditor, so it's hard to say," Welch said.
Another dispute between the federal auditor and the city again lies with the seven duplexes Olde Holyoke Development built using city-issued Community Development Block Grants. The auditor said the city exceeded by nearly $1 million the allowed subsidies to Olde Holyoke Development.
But McQuade said the auditor failed to account for the approximately $700,000 that the eventual owners of the properties paid to buy them.
The remaining $332,105 was devoted to demolition costs, a use which a 1979 amendment to regulations allowed despite the auditor's assertion that use of the money to raze buildings was prohibited, McQuade said.
The Community Development Office is adamant they did things right and monitored Olde Holyoke Development, she said.
"The $330,000 was for demolition," McQuade.
Sunday, April 25, 2010
By MIKE PLAISANCE
mplaisance@repub.com
HOLYOKE - The city is still waiting to hear whether it must repay federal grants used to build seven duplexes, but one councilor says the city should attempt to get the money from the developer if a repayment is ordered.
"It's a big problem," Ward 2 Councilor Diosdado Lopez said recently.
Lopez has filed an order to place the responsibility for $288,000, which the federal government says was overpayment on construction of seven duplexes, on the nonprofit Olde Holyoke Development.
Olde Holyoke Development received 26 of the 39 loans processed here under one of the programs audited by the Housing and Urban Development department. Olde Holyoke officials said the city and Olde Holyoke Development abided by all federal guidelines and regulations.
The audit issued on Nov. 23 found that there was "ineligible, unreasonable or unnecessary" use of $3.87 million in federal funds in relation to construction and demolition. The audit covered July 2006 to June 2009.
City officials say the Community Development Office has abided by federal rules and that some of the disagreements are due to the city and the federal agency using different calculation formulas.
Lopez' order to have Olde Holyoke Development be responsible if a repayment is ordered is being studied in the Redevelopment Committee.
William H. Murphy, administrator of the city Community Development Office, told councilors a few weeks ago that it would be about a month before the city learns whether it must repay any money.
Spokeswoman Rhonda M. Siciliano said the federal agency is continuing the review of the Holyoke audit and doesn't have a time frame for when that will be done.
The audit said building the duplexes should have cost about $1.75 million, based on the calculations of "a specialist with expertise in estimating construction costs," but the city paid more than $2 million.
The audit said the federal appraiser in determining what the seven duplexes should have cost used the "universal standards" of data from the Marshall & Swift company, of Los Angeles, Calif. The company's Web site says it provides the most current and accurate building cost data available.
Murphy, Deputy Administrator Linda B. McQuade and Richard P. Courchesne, Olde Holyoke Development president, said construction costs for the duplexes were based on the real costs of home construction in this area. The costs also included Energy Star upgrades, which consist of guidelines for energy efficiency set by the U.S. Environmental Protection Agency, they said.
The auditor said the appraiser's determinations included the maximum allowable calculations for energy efficiencies.
In response to Lopez' order about repayment being the obligation of Olde Holyoke Development, Courchesne said everything was done properly. Every home his organization built has a mortgage and a promissory note, he said.
"In the 30 years we've been working with the city, they've never paid anything back to HUD and my opinion is they won't have to this time, either," Courchesne said.
Between 1975 and 2009, Olde Holyoke Development built 158 homes, mostly duplexes, that have a total assessed value of nearly $21 million, he said.
McQuade declined to comment specifically on Lopez' order. But she said the city and Olde Holyoke Development abided by all regulations, despite the audit's findings, and she was eager for a resolution to the 16-month-long review.
"I'd like it to be over with. They walked into the office in December 2008, so, yes, I'll be happy when it's over with," McQuade said.
Chairman Kevin A. Jourdain said the Redevelopment Committee will deal with the issue again once federal officials determine the finalized audit.
Lopez' proposal to have Olde Holyoke Development pay the bill if money must be returned could be an option, Jourdain said, but that will depend on what the federal government ultimately decides was done wrong.
"If it's something Olde Holyoke did, then that's a reasonable request," but not if the fault lies with the city, Jourdain said.
Councilor at Large Aaron M. Vega said he was concerned about the questions the audit raises about how federal money is used.
"And you don't know, is it just the tip of the iceberg, is there more out there?" Vega said.
The dispute between city and federal officials over how funding was used leaves councilors confused, Ward 1 Councilor Donald R. Welch said.
"It's an interpretation of words, and I'm not an auditor, so it's hard to say," Welch said.
Another dispute between the federal auditor and the city again lies with the seven duplexes Olde Holyoke Development built using city-issued Community Development Block Grants. The auditor said the city exceeded by nearly $1 million the allowed subsidies to Olde Holyoke Development.
But McQuade said the auditor failed to account for the approximately $700,000 that the eventual owners of the properties paid to buy them.
The remaining $332,105 was devoted to demolition costs, a use which a 1979 amendment to regulations allowed despite the auditor's assertion that use of the money to raze buildings was prohibited, McQuade said.
The Community Development Office is adamant they did things right and monitored Olde Holyoke Development, she said.
"The $330,000 was for demolition," McQuade.
Subscribe to:
Posts (Atom)