Report - Newton, MA

FINANCE COMMITTEE REPORT
MONDAY, APRIL 25, 2011
Page 4
recommending that the spending authority for all the CPA funds be the Director of Planning and
that all CPA funds be spent 18 months after they become available.
There are some relocation costs associated with the project for the currents residents of
61 Pearl Street. There is currently a couple and two single individuals residing at 61 Pearl Street
and CAN-DO is federally required to provide relocation services to the current tenants. The
proposal also includes $80,000 from Community Development Block Grant funds for the
deleading of the property, which should cover the full lead abatement costs. The attached
Summary Scope of Work for the Renovation at 61 Pearl Street provides specific details on the
renovation.
The Chairman inquired if there had been any consideration of demolishing the existing
building and constructing a new building on the site. The new construction may provide
additional units of housing with better accessibility and would require no lead abatement.
Josephine McNeil, Executive Director of CAN-DO, and Nancy Grissom, Chair of the
Community Preservation Committee responded that the current building is in good condition,
maintains the historic inventory and nature of the neighborhood, which corresponds with the
City’s Comprehensive Plan and the Community Preservation Committee’s requirements for the
use of funds for affordable housing. The project architect, Terry Heinlein, added that new
construction would cause the price of the project to rise significantly. In addition, there would
still be costs associated with lead abatement during the demolition of the building.
Ald. Salvucci asked why the contingency for the project was set at 10%. Mr. Heinlein
explained that the contingency is approximately $35,000. The project is a renovation, therefore,
there is likely to be unexpected issues that arise during construction. CAN-DO has consulted
with a structural engineer and the City inspector has looked at the house. Both the engineer and
inspector found no large issues to raise concerns.
Ald. Fuller stated that it was helpful to have the independent analysis for the next
affordable housing project on Dedham Street and asked why other projects do not submit the
analysis. It was explained that the Dedham Street project is a 40B project that has different
requirements than a local affordable housing project.
Ald. Fuller also raised concern regarding the 10-year operating budget projections of
revenue increases of 3% and expense increases of 4%. She pointed out that some point in the
future, approximately 14 years from now, the expenses will exceed the revenue. It was
explained that the trending on the attached proforma is standard. Ald. Danberg pointed out that
the Community Preservation Committee recommendation (attached) states “the projections are
higher than the experience of the recent past. Rather than a 3% increase in income, the
developer should consider running the numbers at 2% rather than 4% for the expenses, 2.5% is
more in line with recent expense inflation. However, revision of these underwriting assumptions
does not change the overall projection that this is a financially feasible project." The revenue
and expense lines may cross at some point but CAN-DO should have the ability to refinance at
that point. CAN-DO is not expecting to return to the City for additional funds but may have to if