What are the Costs of a Second Library?

This is something that no one can say with any degree of authority because we have been given many numbers with large variances attached to them. In regards to the construction costs we have been given an estimate of $17.5 million plus or minus 50% to build a second Library. We have also been given operating cost estimates for a second Library between $800 Thousand and $3.1 Million per year.

Firstly; Lets examine the costs of building the Branch Library. These costs are derived from a business case that was first put forward in budget 2014 which is attached here. What really stands out here is that the construction costs are 17 million and the Library has pledged to contribute an additional $517,500 to the project for a rough total of $17.5 million to build a Branch Library. What this business case does not include is a cost for land. This was the basis for the $17.5 million included in the Borrowing Bylaw that was brought before council, however, it failed to detail the $517,500 to be donated by the Library itself towards the project or the fact that there was land to purchase which raises the cost by millions.

Secondly; Lets examine the operating costs. Council was provided with initial operating cost estimates of $800 Thousand per year. When this figure was challenged by council, it was increased to $1.3 million dollars per year. The city staff thought that this revised figure was still light and this $1.3 million dollar figure has since been increased to $1.7 million dollars per year (IR_601_-_Library_Operating_Cost) for operating costs. The current Library operates on a budget of $4.2 million as of 2016 and with a branch library there will be many additional costs not incurred by the current Library.

A library with its own stand alone building will have to pay for its own snow removal, liability insurance, janitorial costs, and building maintenance just to name a few of the additional costs that will be incurred by having a library in a stand-alone building. In addition, with a second library there will be costs related to necessary duplication of services. Book transfers between libraries, additional reception duties and duplicate equipment are just a few broad categories.

The only comprehensive estimate council has received concerning the costs of a second library come from the 2009 report in which the costs of a second library were reported to be $3.1 million annually. To date we have not received firm estimates for the costs of $1.7 million and as a result a strong case can be made that the costs of a branch library will be closer to the $3.1 million that was in the official 2009 report rather than the $1.7 million operating costs per year that were not formally substantiated.

Now let’s look at some financial numbers:

The current borrowing bylaw that council approved is for a 20 year term and the current Alberta Capital Finance Authority has rates of 3.051% for 20 years. If one were to amortize $21.9 million over 20 years at 3.051% the payments will be about $1,238,000 per year. If you then add $3.1 million dollars (operating costs for a branch library based on the 2009 report) to the $1,238,000 per year, your total will be $4,338,000 per year in Branch Library costs. This will equate to a property tax increase of about 4.42% per year.

If we use the lesser $1.7 million dollar figure for operating costs, then the costs of borrowing and operating costs will be about $2.94 million per year for a potential tax increase of 3% per year.

Loan Table

One could argue that the costs of building the Branch Library may be below $21.9 million (building and land costs) and I could calculate the figures for this scenario and of course the resulting tax increase would be less. However, since the cost estimate is plus or minus 50% and since the likelihood of a new city building costing less than the original estimate does not occur often I find this scenario very unlikely. Since the borrowing bylaw has already been reduced from its original $25 million to $21.9 million and in conjunction with the fact that the $17.5 figure does not include land costs the likelihood of the figure being below $21.9 million is remote. Councillor Heron has a motion on August 21st to spend money from capital reserves to purchase the land and to perform detailed design work on the branch library. It seems much more likely that more money will be spent than less as is often the case with municipal buildings. One only has to look at the cost increases that were associated with the 50+ building expansion as evidence of how more money is usually spent rather than less.

About the author

Cam MacKay was born in St. Albert and has lived most of his life in the community. Having lived in the Sturgeon and Braeside neighbourhoods, Cam has grown to truly appreciate the tight, friendly communities of St. Albert. Cam was schooled in St. Albert and believes his educational experiences here prepared him well and helped in his success while attending the University of Alberta. Cam received his Bachelor of Commerce, with a major in Accounting. While working towards his Certified Management Accountant’s designation, he was a Budget Officer for the Government of Alberta, where he learned the skills that led him to fulfill his entrepreneurial dream of opening his own business, called Open Spaces Doggie Daycare. He has successfully operated this business in St. Albert’s Campbell Business Park for the past six years. Cam appreciates how important community is and has been involved with many community groups. He thinks that community is what makes St. Albert strong and is honoured to be playing a role in this regard. He is looking forward to his position on St. Albert City Council. Cam is married and has one daughter. Cam's updated bio can be found on his campaign website: VoteCamMacKay.com
4 Responses
  1. Cathy England

    St. Albert does not need a library!!!. What I would like to see is a downtown that is full of life in the evenings . If we want to do something to attract young people and families give them something to enjoy a vibrant active white avenue feel to our downtown. I love books however the generation that will be paying for the library won’t be using books. They use technology.

    Beautiful park space with lots to do. I drove by Red Willow water park the other day there were so many people there it was awesome. We need more Public areas and parks with lots of food trucks!!! Get families outside.

  2. W.G. Whitney

    Councillor Heron doesn’t seem to understand how capital projects progress. The detailed engineering doesn’t run parallel with purchasing the land or even right afterward. Siting, utilities and other factors have to be considered first. Does the building shape have to be changed or downsized to fit on the site? Besides, over 10% of the population signed a petition to stop the funding for a standalone library. It would be tending toward brazen arrogance for Council to start spending money on designing a new library when a substantial percentage of the residents said they wanted to vote on it. This doesn’t look very much like respect for the benighted taxpayers.

  3. A Fulton

    2 libraries = 2 of everything. Perhaps the answer is a NEW library, still just one in St. Albert, but big enough so it will suffice. St. Albert has depleted parking downtown to a point where it is a joke, so a totally new structure would yes, incur great costs, but the annual expense would be minimized over having two libraries. The library space in St. Albert centre could then be used for other offices that the city seems to often need.

  4. Brian White

    I am still paying for Servus Place that I didn’t want because I am 80. User pay & build. I don’t need anymore tax increase.

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