Junior Warden’s Report – June 2021 Chronicle

“The building needs work. You gotta get a new roof, and all sorts of infrastructure. While those things may not sound important to some, they are the house that help
make the ministries that you do possible.

For you, the roof, and all that it represents in terms of the building, can help to make the difference…”

– Presiding Bishop Michael Curry

Discernment & Decision
I’m reading Pope Francis’s book, Let Us Dream: The Path to a Better Future. In it, he defines discernment as resisting the urge to seek the apparent relief of immediate decision and to hold different options before the Lord. I think you’ll agree the renovation project has many times required us to hold multiple options before the Lord before deciding our next step. With receipt of FORMA’s construction bid, we’re at that point once more.

Part I Bid
On June 11th, we received FORMA’s bid of $1.835 million. That’s $820,000 (81%) more than the previous estimate of $1.015 million. Add 9.4% sales tax and the
cost is $2,007,490. Here’s a price breakdown by building system:

	Orig. Estimate	Quote	$ Change	% Change
Roof	$659,000	$1,520,000	+ $861,000	+ 130%
Seismic	$356,000	$185,000	- $171,000	- 48%
Electrical*	N/A	$130,000	+$130,000	N/A
Total	$1,015,000	$1,835,000	+ $820,000	+ 81%

* The original estimate did not break out electrical separately, it was assumed in the roof estimate.

Why so much higher? How could we have been so far off?

Some context may help here. Material shortages due to the COVID economy, plus pent-up construction demand, have caused prices for building commodities to sky-rocket. Lumber, steel, and rigid insulation are up 300-500%. For example, half- inch plywood now sells for over $80 a sheet at your local big box store.

In addition, wait times for delivery of some materials exceed three months. Ongoing delays and price volatility have contractors passing on any significant (greater than 10%) commodity price increases to the client, meaning prices could go higher even after the bid is accepted and the contract signed.

Obviously, $2M is a staggering sum, almost double the total of our capital campaign pledges. Because it’s well beyond our actual or projected resources, this bid compels us to review and revise our strategy for the renovation.

As the Treasurer’s June report notes, of the $1.1 million received in pledges, $315,000 applies to project costs and fees already incurred. That leaves only $791,000 available to pay either future project expenses or debt service on a loan.

And remember, the Part II remodel we estimated at $600,000 has yet to be fully designed, then priced. KMB’s initial design fee proposal, which as is we cannot accept, tops $200,000. We’re not sure yet what that implies for construction cost.

Yet, it’s conceivable under current market conditions that the total cost of full renovation – Parts I and II combined – could approach $3 million. So, even with our $1.1 million in pledges, plus that much again from a loan, we may still face a daunting funding shortfall.

Options Being Considered
Last week, the Executive Committee and Vestry wrestled with many of these questions and discussed several options, with these receiving more consideration:

• Reject FORMA’S bid and wait until next year to rebid all of Part I.

It’s possible market conditions reverse themselves enough over time that prices fall back to more customary and affordable levels. Of course, this is speculation, and whatever reductions happen may not change our predicament substantially.

While waiting does buy us time, not proceeding with any construction this year means forfeiture of our $13,000 building permit, plus additional costs for seismic upgrades that must comply with a stricter building code adopted earlier this year.

And it may oblige us to offer to return capital pledges to donors who want them back. While the right thing to do, returning pledges effectively undoes much of our recent fund raising success. Eventually, we may decide to conduct another capital campaign in a post-pandemic market place and economy that may, or may not, yield much better pricing.

• De-scope Part I to proceed only with the seismic work under the current permit. Total cost with sales tax and contingency is $213,000.

This options offers two immediate benefits:

o Stabilizes the structure against catastrophic damage in an earthquake
o Resets the permit clock for another six months

By adding $213,000 to the already considerable amount invested to-date on the renovation, this option has potential risk too. If we eventually find
that the renovation will never be affordable, we will have lost considerably more in “sunk” facility costs than had we not done this work.

Aside from what each option would do or not do, think of them as tactical retreats to mitigate the risk of current market extremes, and to buy time to seek further guidance and possible help from the diocese.

Aside from diocesan financial support, assuming it has capacity and willingness to supplement our congregation’s sacrificial giving, we may qualify for other grants or loans from national organizations. The National Fund for Sacred Places makes construction grants to eligible houses of worship nationwide, and the Episcopal Church Building Fund offers construction loans nationally. There may be other programs as well. Having the luxury of extra time allows us to discern whether any of these programs offer benefits sufficient to warrant the time and effort of application.

We Need to Hear from You!
As you see, there’s lots to consider and discuss before we decide, then act. To help us with that, as Fawn announced on Sunday, we need to hear from you!

Please plan to attend and contribute to the Parish Budget Meeting scheduled for Thursday, June 24, at 7PM on Zoom. The agenda will focus on the renovation bid and finance options. Besides informing you, your input is vital to understanding how to discern the best path forward.

Respectfully submitted,
Lou MacMillan, Junior Warden