2013-11-04-STM-CEC-rpt - Laserfiche WebLink

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CAPITAL EXPENDITURES COMMITTEE REPORT TO 2013 STM(Nov 4th) mitigation of the non-exempt debt service for the Modular Classrooms at the High School whose authorization is being requested under Article 4 at this STM. The following table reflects the effect if all those set-asides are ultimately appropriated. Projected Balances in the Capital Projects/Debt Service Reserve/Building Renewal Fund Current $2,186,566 Proposed Addition at this STM $1,799,240 New Balance $3,985,806 Previously-Planned Future Set-Aside: Mitigation of FY2015 Exempt-Debt Service ($950,000) Net Balance Before New Set Asides $3,035,806 Proposed Set-Asides Toward Article 4 Debt Service Mitigation of FY2015 Non-Exempt Debt Service ($928,500) Mitigation of FY2016 Non-Exempt Debt Service ($1,078,000) Mitigation of FY2017 Non-Exempt Debt Service ($805,496) Sum of New Set-Asides ($2,811,996) Net Balance After New Set-Asides $223,810 Those proposed set-asides for the non-exempt debt service for the Article 4 project are the result of a financing modeling that was developed with the objective of staying within the Town's goal that the annual increase in the Town's overall non-exempt debt service not exceed 5%. (That would include already authorized debt, an annual amount for each year's other capital projects based on the average of recent years, and the new debt service for the Article 4 project.) The result is to use debt (presumed to be 10-year bonds at 4% interest) to finance the total estimated amount of that project and then—subject to approvals at the 2014, 2015, & 2016 ATMs—appropriate those amounts in the previous table from the Capital Projects/Debt Service Reserve/Building Renewal Stabilization Fund to mitigate non-exempt debt service in each of those years. With those off-sets, that model predicts the increase in each of FY2015–FY2017 will be 5.0%—meeting the goal. (The 2014 ATM also would be asked to appropriate the indicated offset to the exempt debt service.) The Committee notes that the Capital Projects/Debt Service Reserve/Building Renewal Fund was established by Special Town Meeting (November 19, 2012) to provide funding toward two classes of capital projects and/or the debt service on such projects. The expectation at that time was that the initial appropriations into that new Fund would be used to offset taxpayer impact of the impending spike of the Town's overall exempt-debt service; and all appropriation,to date, from the Fund have been soley for that purpose. While the Committee unanimously endorses the appropriation into that Fund of the balance of net unallocated FY2014 revenue for later use to mitigate the impact of the non-exempt debt associated with the Modular Classrooms at the High School, we urge that additional funds be allocated to that Fund so that it also may be used to support the other two stated purposes: Capital Projects and Building Renewal—both of which needs the Committee recognizes and supports. 3