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Government of the Dcistrict of Columbia Office of the Chief Financial Officer 1350 Pennsylvania Avenue, N.W., Suite 209, Washington, DC 20004 (202) 727-2476 www.dccfo.com Natwar M Gandhi SEP 15 2006 The Honorable Kathleen Patterson Dear Councilmember Patterson: This letter is in response to your request for an independent review of the "Cost-Benefit Analysis Update" by PSA-Dewberry Inc. ("PSA-Dewberry Report") that compares the potential cost of building a new central library at the old convention center site with the option of renovating the existing central library. The Office of the Chief Financial Officer ("OCFO") has reviewed the PSA-Dewberry Report and has performed an analysis of the comparative costs of building a new central library versus renovating the existing central library. Our main findings are the following:
The attached Table 1 highlights the findings. The OCFO's cost estimates for the construction of a new central library are approximately $61 million higher than the estimates in the PSADewberry Report. Over 40% of the cost differential can be attributed to the project contingency and the financing costs. The OCFO's estimates include a 10% project contingency as well as approximately $11 million for the cost of financing the project, whereas the PSA-Dewberry Report only includes a 5% contingency and no estimate for financing. In addition, approximately 18% of the cost differential can be attributed to the soft costs of the project. The OCFO's soft cost estimates include costs related to testing, permits, fees, consultants, and legal and accounting services that were not included in the PSA-Dewberry Report. The rest of the cost differential can be attributed to the hard costs of the project. The OCFO's hard cost estimates included higher numbers in a variety of areas including remediation, excavation, structural framework, electrical and plumbing, and garage construction. The OCFO's estimates for the soft and hard costs of renovating the existing library are only slightly higher than the estimates in the PSA-Dewberry Report. The differential between the two cost estimates is primarily due to the project contingency and the financing of the project. The OCFO's estimates include a 10% project contingency and $9 million for financing, and the PSA-Dewberry Report includes a 7% contingency and no funds for financing. Our cost numbers include estimates for the build-out and rental of interim space in a privately owned building that are in line with the estimates in the PSA-Dewberry Report. My office also examined the possibility of using publicly-owned space during the interim period. However, we could not identify available publicly-owned space in the downtown area that would be adequate to house the library's collection on an interim basis. If the District could find adequate public space to house the library on an interim basis during the renovation of the existing library, the overall cost of the renovation option could be reduced. Because the costs of constructing a new central library are almost identical to the costs of renovating the existing central library, we do not see a financial reason to choose one option over the other. In either case, the District will need to identify additional financing sources. My office would be happy to work with you, the Office of the Deputy Mayor for Planning and Economic Development, and the DC Public Library to structure financing options to support the higher costs of the project. Please feel free to contact me with any questions you may have. Table 1: Cost Comparison (in millions)
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