Dissecting the Keene downtown project's $14M+ price estimates
Last week, Keene officials announced that the planned three-year project to replace outdated downtown infrastructure and possibly reshape the city’s core is now estimated to cost more than $14 million.
That’s about twice as much as originally projected. And how much of that expense taxpayers would bear is still unclear.
“The impact on the Tax Rate will be [dependent] on the financing plan, how much is funded by Tax Increment Funding, bonding, appropriations, and grants,” City Manager Elizabeth Dragon wrote in an email Wednesday. “Without making specific assumption on these funding resources the final impact is difficult to determine at this point in the process.”
But she said the city has already identified funding sources to help alleviate the taxpayer burden. She told attendees of a city council workshop April 26 that Keene had accrued more than $1.6 million in federal grant funding, and that city staff had applied for two more federal grants. If awarded, these grants would bring in an additional $3.1 million.
Once councilors have decided on project designs, Dragon expects staff will pursue even more grant funding.
“We’ve always anticipated once we had a more concrete design, going after some of the bigger grant funds,” she told councilors last week.
Three paths forward
Councilors are considering three downtown designs, ranging in projected price from $14.1-14.9 million. Whichever proposal moves forward, the cost of the infrastructure work will be the same at $8.8 million, according to the latest cost estimate.
The decision before councilors is how Keene’s core should look when the roads are rebuilt.
Earlier this year, city officials had predicted the project, which will rip up Main Street and upgrade sewer and stormwater systems built in the late 19th and early 20th centuries, would cost around $7 million.
That figure was raised to $9.4 million after the city’s consultant on the project, Stantec, provided an updated preliminary estimate, Public Works Director Kurt Blomquist told The Sentinel on March 10.
In her email Wednesday, Dragon explained that the project’s original cost estimate was developed more than two years ago. The work is slated to begin in 2025.
“The majority of cost increases have been attributed to the change in the construction climate,” she said, noting that the city has recently seen significant price hikes in material and labor costs. For example, she said construction flaggers in 2020 cost between $25 and $30 per hour, but in recent project bids, the price per hour has increased to $45 to $67. By the same token, material pricing has jumped 30 to 60 percent, she said.
Recommendations the project’s steering committee made in December include replacing the signalized traffic circle at Central Square with a compact roundabout. Plans also showed a wedge of green space connecting the current square with the northern side where Life is Sweet and the United Church of Christ are located.
Other recommendations from the steering committee include protected bicycle lanes, as well as a raised intersection linking Gilbo Avenue and Railroad Street that could double as space for a festival or other event.
These designs are estimated at $4.36 million, with the total project cost at $14,870,928, according to the most recent estimates Stantec provided councilors last week.
Other costs included in the project total — regardless of which option councilors choose— are the preliminary design, ($570,928) and the cost for the final design after a decision is made ($1,140,000).
A different option would keep a signalized intersection, but includes the green space that was part of the steering committee’s recommended design. This option would limit eastbound traffic on West Street to one lane (currently there are two), and restrict northbound traffic from three to two lanes, as vehicles approach the intersection. The most expensive of the three options, this downtown redesign would cost $4.46 million, bringing the total to $14,970,928.
Blomquist said the difference in cost between the signalized and roundabout option comes down to the cost of replacing the traffic signals.
The third option, estimated at $3.61 million, would make minimal changes to Central Square, but just like in the signalized-intersection option, would limit the number of lanes on West Street and Main Street. The total projected cost of this option is $14,120,928.
“It would be what people have described as ‘put it back the way it is,’ ” Blomquist has told The Sentinel.
According to Dragon, the city’s Capital Improvement Program for fiscal years 2025-27 has allotted for $1.5 million to come from tax increment district funds, as opposed to general taxation, and another $2.15 million is expected to come from bonds for fiscal year 2025. Keene has already appropriated around $399,000 from past tax revenues, she wrote.
According to Keene’s website, tax increment financing occurs when the city collects the incremental property tax revenue resulting from new construction, renovation or expansion, and allocates that money for public infrastructure improvements, such as the downtown project.
That still leaves more than $6 million to be raised if councilors approve the most expensive option. How that remaining cost is sourced relies on what other funding the city is able to secure, Dragon said. The tax-impact differential between the three options is “minimal,” she continued, since the difference between the most and least expensive options is $850,000.
In the meantime, the cost estimates will probably continue to change.
Dragon said that the current cost projections are based on 2023 pricing.
“It is anticipated that the project cost will fluctuate as the construction market changes,” she said.
And according to Court Street resident Paul Bilgen, this is cause for concern.
Inflation will drive the price even higher, he wrote in a letter to the editor to The Sentinel, predicting that the cost of the project could be more than $16.3 million by the time it starts in two years.
At the end of last week’s city council workshop, councilors voted to send the project to the Municipal Services, Facilities and Infrastructure Committee to make a recommendation before the full council makes a decision.
That MSFI meeting is scheduled for May 15 at 6 p.m., at City Hall.
Hunter Oberst can be reached at 355-8546, or firstname.lastname@example.org.