2016-03-21-CEC-ATM-rpt - Laserfiche WebLink

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CAPITAL EXPENDITURES COMMITTEE REPORT TO 2016 ATM (cash or debt). As with any capital project, this Committee will give our recommendation on each of the projects put before the Town Meeting. (See Article 8) The CPA provides an alternative funding mechanism for capital projects. The CPA creates a separate pool of money that can be used for a limited set of projects. It can help accomplish some of the Town's traditional capital needs, but only those that fall within the limited purposes of the Act. See the report of the CPC for information on how Lexington has spent the funds received from its taxpayers and the State under the Act. It is important to note that the projected available CPF cash is not a limitation on what the CPC can recommend to Town Meeting for approval. The method of paying for what the CPC recommends can — and now often does — include, in part or in total, the issuing of debt instruments. It remains the recommendation of this Committee that any such debt be for as short a term as practical after considering the funding projected for the CPF over at least the next 10 years and consideration of projects that might come before the CPC for consideration which would require funds beyond those allocated to the three, mandatory, 10% of revenue, Reserves for use on Open Space, Historic Resources, and Community (Affordable) Housing. If front -end loading of such debt were practical, that, too, remains a recommendation. The debt service on such debt instruments is an obligation borne by the CPF throughout the term of those instruments — whether short -term financing (e.g., notes, such as a Bond Anticipation Note [BAN]) and/or long -term financing (i.e., a Bond). In the future years, it is incumbent on the CPC to recommend to Town Meeting, and for Town Meeting to appropriate in full, those obligatory debt - service payments. (See Article 8(p)) One approach that provides flexibility in making a decision about how much, if any, CPF cash should be applied, up front, for a very -large project is to defer that decision by initially issuing a BAN that has a term of 1 year or less for the full amount of the project. When that BAN matures (which typically carries an interest rate substantially below even the relatively low rates on the Town's bonds), at that time make the decision on whether to use CPF cash to reduce the total for which a bond would then be issued. Doing so permits the Town to have a better idea of how much CPF cash should be held in anticipation of the next —and later— years' demands upon the CPF. That mechanism has been used in the past and this Committee would expect it to be proposed for FY2017 and in the future for other very -large projects. Although there are other factors that will affect the size of the State's CPA Trust Fund from which the supplements are made (e.g., its administrative expenses and interest earned on that Fund), the following table has a year -to -year comparison of CPA Trust Fund collections at the Registry of Deeds, its revenue source, for the first 3 months of this Trust -Fund year which is the latest data we have been given. Also included in the last column is the change from last- year's collections to the year before that so the chart provides the percentages for each of the last two year- over -year comparisons. CPA Trust -Fund (CPATF) Collections at the Registries of Deeds ($M, rounded) Month Comparison of CPATFs Current to Last ...... ........... .................. Last: to Its:Previaus ...... ........... .................. ...... .......... FY2016/2017 FY2015/2016 Change Percentage Reri er tage£henge Nov $2.137 $2.099 $0.038 1.8% $.. °lo;::::::: Dec $1.993 $1.720 $0.274 15.9% S:4%::::::: Jan $2.236 $2.106 $0.129 6.1% ::12:3 Totals2 $6.366 $5.925 $0.440 7.4% Source: Massachusetts Department of Revenue's (DOR's) Monthly Reports of Collections & Refunds ( "Blue Book") 1 The month of the DOR's "Blue Book ". Although fees allocatable to the CPA Trust Fund are collected in each month, the July through April collections are reported in the subsequent month's report, and then the May & June collections are combined and reported in the June report. 2 Totals may differ due to rounding. Does not include any adjustments that may have been made to monthly data prior to the latest month. 7