Hightstown Borough Hall Status Update

The year’s first full Hightstown Borough Council meeting on January 6, 2014 featured a detailed presentation on the status of the Borough Hall project.  I didn’t notice anyone from the local press at the meeting, so I thought it would be helpful to describe what was presented here on the Patch so that those who did not attend the meeting had an account.  I would like to offer my summary of what was presented first and follow that with my personal thoughts on what this means for our community.

The Presented Information:

Mr. Eli Goldstein of The Goldstein Partnership shared an update with the room with the notable news that an in depth meeting had taken place with representatives from FEMA on the topic of the possible funds Hightstown could receive from FEMA for the reconstruction of Borough Hall.  It was also reported publicly that the level of insurance money available to Hightstown will be a maximum of $2.5 Million (the policy pays $3 Million, but there is a $500,000 deductible payable by the Borough which reduces the net outlay).

Mr. Goldstein, whose firm was hired by the Borough last year to draw up plans for a new Borough Hall building to be built in the same location as the flooded complex, described the criteria that FEMA will weigh in its determination of what level of funds will be made available to the Borough.  The central variable at play is whether or not FEMA determines that repairing the damage to the complex will cost more than 51% of the total value of the property at the time of the flood.  If the repair costs more than 51%, then the entire complex will be considered a total loss and FEMA will fund repair/replacement at a higher rate than it would if the loss was not “total”.  FEMA has a strict set of requirements for the way this analysis must be run and Mr. Goldstein seemed to have a good understanding of that criteria and how the analysis would need to be conducted.

Mr. Goldstein reported that their current informal estimate of the ratio between the costs and the value is close to 51% and that a formal review is required before we present the numbers to FEMA.  That formal review will cost Hightstown an estimated $75,000 - $100,000 once payments are made to all the firms and engineers required for the study.  This estimate was made by Mayor Kirson.

In the event that FEMA determines the ratio exceeds 51%, Mr. Goldstein estimated that Hightstown would be entitled to approximately $1 Million from FEMA.  When added to the $2.5 Million from the insurance settlement, that gives the Borough $3.5 Million for the project.  The budget for the project as presented by Mr. Goldstein’s firm is $6 Million (and it was reported to be as high as $7M last fall).

Mr. Goldstein recommends that the Borough spend the aforementioned $75,000 - $100,000 to complete a formal analysis of the situation in hopes that the numbers can be presented to and approved by FEMA and that the critical ratio will be above the target of 51%.  If the Borough wants to continue discussions with FEMA, this new analysis, with the attached additional price tag, must be completed.

If I have included any errors or missed anything above, please use the comments section to offer corrections, thank you.

My Personal Thoughts:

I felt Mr. Goldstein did an admirable job explaining the situation and laying out the rationale for the need for further study/analysis.  The Mayor, Council members, and the Borough Engineer, Attorney and CFO asked good questions and contributed solid information to the discussion.  The floor was opened to questions from the public and everyone was afforded a chance to participate in the discourse.

After that was completed, it is clear to me that these facts are now the Borough’s reality:

1) If we rebuild, the insurance company will pay us $2.5 Million.  It is not clear if Hightstown can collect this money regardless of whether we rebuild or choose not to rebuild (note to Council and the Mayor: please ask this question of the insurance company!).

2) If we decide to further pursue FEMA money, we will need to commit to another expenditure of $75,000 - $100,000 for professional services.  It is not clear if FEMA will reimburse us for any of this outlay.

3) If we spend that money, the calculations may or may not show that the repair costs hit the 51% threshold and it is unclear whether or not FEMA will approve our math.

4) If we do reach the 51% target and FEMA approves our math, the estimated return is $1 Million in FEMA funds.  If we don’t reach that target, the FEMA money is far less.  The $75,000 - $100,000 must be paid regardless of the outcome.

5) The maximum amount of insurance and FEMA money is an estimated $3.5 Million.  The price tag on the current rebuilding proposal is $6 Million to $7 Million.  If we were to maximize the insurance/FEMA money, the Borough would still need to take on between $2.5 Million and $3.5 Million of new debt to build the new complex as proposed.

6) Borough Council now faces this immediate question:  Should Council commit to spending an additional $75,000 to $100,000 right now in service of further exploring how much FEMA money we can collect for a project that, as proposed, would eventually cost the community $2.5 Million to $3.5 Million in new debt?

My personal answer to that last question is “no, this project is not worth spending another dime on.” 

Over the last few years the community has debated the feasibility of rebuilding Borough Hall in the same location and proponents of that rebuild have long argued that insurance and FEMA money would cover nearly all of the costs with the Borough taxpayer only having a small sliver of the costs added to our tax burden.  The information presented on January 6th clearly shows that this argument is false.  The burden on the taxpayer would be enormous.

So what do we do now? 

One option would be to spend more money in pursuit of the full rebuild even though it is clear that taxpayer money will definitely need to cover a vast amount of the costs of the proposed project.

A second option would be to spend the money to run the FEMA analysis in hopes of getting the extra $1 Million and then scale back the rebuild to cost no more than $3.5 Million.

A third option would be to skip the FEMA money and scale back the rebuild to cost no more than the $2.5 Million from the insurer.  The obvious thorny detail to this plan and the previous one would be the determination of what kind of scaled back facility is built and what it contains.

A fourth option would be to explore whether or not we are entitled to the insurance company’s $2.5 Million payment regardless of rebuilding.  If we are, we could take the payment, put it in the bank and then use it to fund the demolition of the old flooded building and fund new places to house our government employees.

I would love to have a community conversation about these options and whichever others may be feasible.  I hope the Council debates this and weighs all the pros and cons attached to the possible paths the lie ahead.  There was indication that it would be added to the agenda for the next full meeting on Tuesday, January 21.

My personal preference is to choose a plan that both saves taxpayer money and puts Hightstown in the best position to begin the hard work of forging sustainable shared services arrangements and consolidation of government functions.

Perhaps those of you reading this could use the comments section to offer your views.  Thanks.