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Committee reviews wide range of project cost estimates; staff to return with financing scenarios
Summary
Project estimators presented a range of construction and project-cost estimates for different schematic options. Staff and city finance representatives discussed likely MSBA reimbursement (staff estimated roughly 50% as an initial expectation) and said they will present detailed financing scenarios at the next meeting.
Project cost estimates presented to the Salem High School Building Committee showed a wide range depending on the selected scheme and the degree of renovation versus new construction. Project staff emphasized the estimates are preliminary and intended to provide a relative cost comparison at the PDP stage.
An independent estimator produced construction-cost lines for several schematic options (repair-only, renovation, ad-reno/mirror, loop/new construction, radial/wrapped, S-scheme). Staff explained that the construction-cost line feeds into a project-cost figure after adding professional fees, contingency and other soft costs; the team used a planning rule-of-thumb of about 25% to convert construction cost to project cost at this level of development.
Project staff noted that renovation options can carry higher budget risk due to unknowns that commonly arise in working with existing structures; the committee heard that renovation phasing, logistics and potential hazardous-material abatement typically increase both schedule and contingency. One committee member and a consultant observed that renovation risk frequently drives higher contingencies and can erode initial apparent cost advantages.
On reimbursement, staff said MSBA and DESE rules determine what elements are eligible for state reimbursement. A project staff member said an experience-based expectation for the Salem project is that MSBA reimbursement could be "around 50% of the project cost," but she also cautioned the exact rate depends on programmatic decisions and further MSBA review. Staff and the city's finance representative agreed to present a detailed municipal financing approach at the March 20 meeting that would include debt-service scenarios and how reimbursements would apply.
Presenters also discussed options for on-site photovoltaic arrays and the implications of ownership versus third-party procurement. They said photovoltaic installations and other external grants may be pursued separately and that MSBA's treatment of such funding has evolved; solar or geothermal grant funds could reduce net municipal cost depending on how they are structured, but they may fall outside the MSBA construction-cost reimbursement cap.
The committee did not make a cost-related decision at the meeting. Members asked staff to return with more detailed reimbursement modeling, scenario-based municipal financing plans and updated estimates as the team moves into the PSR phase.
