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Home My WebLink About2010-ATM-CEC-rpt (supplement & errata includes 2009-ATM-CEC-rpt errata)SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata CAPITAL EXPENDITURES COMMITTEE TOWN OF LEXINGTON O MoR ��G 0 Q� c� p y► ov! Z U APRiL 1qTN L4exrrr 0� SUPPLEMENT (including Article 9e. Land Purchase —Off Marrett Road) to the REPORT TO THE 2010 ANNUAL TOWN MEETING (Released March 31, 2010) with ERRATA to it and to the REPORT TO THE 2009 ANNUAL TOWN MEETING (Released March 30 2009) (Supplements Errata released April 12, 2009 to the 2009 Report) Released April 28, 2010 Submitted by: Charles Lamb, Chairman Ted Edson, Vice - Chairman William Hurley David G. Kanter Shirley Stolz SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata UPDATES Page 2 & 65 (Insidefront & reap coves) Summary of Warrant Article Recommendations Abbreviations: RF = Revolving Fund; CPF = Community Preservation Fund; EF = Enterprise Fund; RE = Retained Earnings; GF = General Fund; SF = Stabilization Fund; TB = To Be Determined; ATM = Annual Town Meeting 9 Land Purchase —Off Marrett Road $3,857,000 $3,857,000 $1,557,000 CPF (Cash) + $2,300,000 CPF Debt 15 School Capital Projects and Equipment 15(b) Food Service Equipment $99,500 $99,500 GF Debt Page 32 Article 8: Appropriate the FY2011 Community Funds Requested Funding Source CEC $8 Art. Description Request Recommended Funding Source 8 Community Preservation Committee Operating Budget & CPA Projects 8(I) Town Office Building Renovation $1,825,500 $1,825,500 $1,185,500 CPF (Cash) + $640,000 GF I( Debt ) CPA Projects (Multiple 9 Land Purchase —Off Marrett Road $3,857,000 $3,857,000 $1,557,000 CPF (Cash) + $2,300,000 CPF Debt 15 School Capital Projects and Equipment 15(b) Food Service Equipment $99,500 $99,500 GF Debt Page 32 Article 8: Appropriate the FY2011 Community Funds Requested Funding Source Committee Recommends $8 $7,544,982 CPF (Cash) (See below) Approval (4-1) pp Renovation Historic Resources + $640 GF (Debt) + $640 000 GF Debt Preservation Committee Operating Budget and CPA Projects (Multiple Categories) Project Description(CPA Category) Amount Requested Fundin Source g Committee Recommends (1) Town Office Building $1 825 500 K185,500 CPF (Cash) Approval (4-1) pp Renovation Historic Resources + $640 000 GF Debt Note: Except for the small change in the total amount, the revision in the balance between the funding sources and, based on the revised CPF funding, the change in our Committee's position (from 3 -2), the rest of the analysis section remains valid. (See the updated Appendix on page 6 of this supplemental report for a perspective on the current and projected funding level in the CPF.) SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata • The following supersedes our previous report on this Article Article 9: Land Approval Funding Committee Recommends Parch ase— Off Marrett Requested Source $3 $1 CPF Approval (5 -0) Road (Open ,Space) Psi rchase (Cash) + —4.2 ac res g r. $2 CPF — 1.9 acres (Debt) "... to purchase or otherwise acquire... all or any part of land shown as lots 90B and 60B on Assessors' Property Map 31, now or formerly of Cataldo ...." [Town of Lexington Warrant for 2010 Annual Town Meeting, Page 10] "This project proposes acquisition of a portion of the 121 Marrett Road property known as the Cotton Farm by the Town to preserve open space... The Cotton Farm is a very visible property of approximately 10.2 acres along Marrett Road that includes a mid -20th century house framed by an orchard to the south and wetlands and woodlands to the north, east and west. The property is listed in Lexington's Reconnaissance Report of 2006 as a Priority Heritage Landscape in that it reflects the history of the community, provides a sense of place, shows the natural ecology that influenced land use patterns and has scenic qualities." [Brown Book, Page X1-21] While a Letter of Agreement between the seller and the Town is not yet available but has been promised prior to presentation of this Article to this Town Meeting this Committee's understanding of the primary terms are as follows: (1) The following shows the proposed purchase —which is for conservation purpose only —and the adjacent property which would have new deed restrictions as part of the purchase agreement. Upper Vans Brook C-o nservatibri Area PC �Y 2 - -4.0 acres - f. 4 - Lot Restriction} - - - Proms Psi rchase —4.2 ac res g r. Deed Restriction — 1.9 acres - (C onservat i on Restriction) PC �Y 2 SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata (2) The Town would pay $3.8 million for about 4.2 acres through which there is a current roadway whose residential use (e.g., no development traffic) would continue to be available to the existing home at the rear of the adjacent land to the right (east) of the proposed purchase until the current occupants no longer inhabit that home. (3) Deed restrictions would be placed on that adjacent about 5.9 acres to the right which include a conservation restriction on the front about 1.9 acres along Marrett Road precluding any development, but allowing for a potential access roadway and upgraded utilities from Marrett Road to the about 4.0 acres that are to the rear of the restricted acreage; and a restriction to a total of 4 lots /homes, including the currently existing home, or its replacement which development, because of the conservation restriction on the front portion, would have to be on the rear about 4.0 acres. (4) Although not falling under the scope of this Article, associated with the purchase would be a gift by the seller to the Town of about 14.5 acres on Hartwell Avenue. (Although there is no current appraisal of the value of that parcel, as —at the moment —it is not buildable due to wetlands along its frontage on that roadway, its current value has been estimated as less than $100 thousand.) That property is as shown in the following: The Board of Selectmen would accept that gift Town Meeting action is not required Cataldo Property [3 Catalda Proper H a rtwe l l Ave n u e F!!!!!l Yawn Conservation Land Feet ,� Other Public Lands 3W � �� r 4.� acres SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata Returning to the 4.2 acres proposed to be purchased by the Town, a proof plan based on preliminary engineering had been provided by the seller showing that it has the potential to be subdivided into nine, by- right, building lots. That property has been evaluated by two independent appraisers, both based on a "highest and best use" market valuation. One appraisal concluded there was a $4.4 million value; the other, a $3.7 million value. (Neither appraisal assigned any value to the two deed restrictions on the adjacent land.) While the Town is constrained by law not to spend more than the appraised value and although the conclusions of the two appraisals differ by a significant dollar amount, as neither's methodology or data has been formally refuted, the Town is not legally constrained to the lower value. In addition to the $3.8 million purchase price, it is anticipated that there would be up to $57 thousand of closing costs to the Town. This Committee has reviewed and endorses the proposed financing approach which involves the use of $1.557 million of Community Preservation Fund (CPF) cash in FY2011 ($1.5 million to the seller at closing, expected in the last half of this calendar year, and the $57 thousand for those closing costs) with the seller taking back a 2 -year, interest -free, bond for the $2.3 million balance ($1.3 million to be paid from the CPF in FY2012 & $1.0 million from the CPF in FY2013). As we have reported before, to the extent it's practical, we urge the use of cash and, if debt is necessary, then we urge that it be of a short term and front - loaded. The proposed approach for this land is fully consistent with that principle. This Committee recognizes that the proposed land purchase has long been a priority of our Town's Conservation Commission as its acquisition would protect an exceptional streetscape, provide a wonderful addition to our conservation -land holdings, and is further of value because it provides as shown in the earlier drawing public connectivity to existing conservation land and the opportunity for a limited, off -road, parking area in proximity to conservation land. However, we are deeply concerned that this purchase represents an extraordinarily expensive action and we do not ascribe to the concept that our Town should purchase any and all conservation land at any price even if offered at less than an appraised value. While more conservation land is an enhancement, it is not necessarily always the highest and best use of our Town's financial resources. After all, Lexington is not bereft of conservation land. We understand that about 1,400 acres in our Town is already under conservation protection which is about 13% of the Town's about 10,650 acres). Further, we fully appreciate that the acquisition of open space is a designated purpose of the Community Preservation Act (albeit only one of the designated purposes), but at the $3.8 million purchase price for the Cotton -Farm land, that would not only represent a significant draw on the CPF (see the updated Appendix on page 6 of this supplemental report for a perspective on the current and projected funding level in the CPF), it represents at about $905 thousand/acre-an extremely high, and new level, for a per -acre payment. (While we recognize that this is a totally different kind, and location, of land than was last - year's purchase of the 7.93 acres of Busa -Farm land, that $4.1 million purchase represented a cost of about $517 thousand /acre.) We can also see that in our eagerness to acquire this parcel, even at such a high per -acre price, we may well ratchet up the expectations with regard to future potential acquisitions. However, from our Committee's perspective, this project has been well defined, proposes to use an appropriate funding source and approach, and would be of value to our town. Therefore, in our role as an advisor to Town Meeting, we unanimously recommend you approve this request. But, in the end, this Committee acknowledges that the value judgment being called for here, in regard to whether this is a prudent purchase at this time, is a subjective one that cannot be based solely on quantitative matters. Such judgments are for Town Meeting to make. 4 SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata Page 53 Project Description Amount Requested Funding Source Committee Recommends (b) Food Service Equipment $99,500 GF (Debt) Approval (5 -0) Note: The only change is in the Project Description with the deletion of "and Software "; the analysis section remains valid. The version of the Appendix on the next page supersedes our previously published version. SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata ADDendix: Community Preservation Fund Cash for FY2011 Note: Where we use collected amounts, there will be relatively small differences from those line items in sources. Can Expend in Items Amount ($) FY2010 FY2011 Comment From FY2010 Budget— Unappropriated Balances Open Space Reserve 397,207 Yes Yes Historic Resources Reserve 141,194 Yes Yes Community Housing Reserve 7,289 Yes Yes Unbudgeted Reserve 935,336 Yes Yes FY2010 Revenues less FY2010 Appropriations Net of other Reserves Subtotal for FY2010 1,481,026 Yes Yes Undesignated Fund Balance (exclusive of State 4,103,488 Yes Yes Match received in FY2010) 217,287 Cotton -Farm Land Debt Service - 1,300,000 Estimated State Match received in FY2010 on 869,162 Yes Yes FY2009 Surcharge Subtotal of Undesignated Fund Balance 4,972,650 Yes Yes Total from all Prior FYs (excluding State Match 6,453,676 Yes Yes "True -Up') State Match True -Up 191,228 No Has a Qualifi- cation Total from all Prior FYs 6,644,904 From FY2011 Budget Revenues Property Surcharge (Estimated) 3,111,416 No State Match on FY2010 Surcharge (Estimated) 941,700 No Prior FYs' Unbudgeted Reserves plus Booked Investment Income Based on being 29.73% of the $2,961,858 commited FY2009 Property Surcharge and a 98.69% collection rate. (See below for true -up to 36.2% actual match.) Without any returns of unused appropriations for completed projects and unbooked Investment Income Additional 6.5 %, over the above estimated match, to fully fund the $1,060,390 actual match. Can only be used after FY2010 closes and has been certified by the State Department of Revenue — typically in the September time frame. Without any returns of unused appropriations for completed projects and unbooked Investment Income Yes - 98.68% collection against committed $3,153,000 Yes In 1 st round, estimate 31.00% of committed FY2010 Property Surcharge ($3,078,358) after applying collection rate of - 98.68 %. Investment Income (Estimated) 50,000 No Yes Total FY2011 Revenue 4,103,116 No Yes Total Available to CPC (Prior Year +FY2011 10,748,020 Proposed Appropriations Open Space 1,717,000 Historic Resources 2,356,533 Community Housing 1,091,129 Recreational Use 1,225,220 Administrative Budget 150,000 Subtotal of Proposed Projects 6,539,882 Busa -Farm Land Debt Service 2,562,100 Subtotal of Proposed Projects & Debt SvcF 9,101,982 Mandatory Allocations to Reserves Based on $410,312 Open Space 0 Historic Resources 0 Community Housing 0 Subtotal of Allocations to Specific Reserves 0 Total New Uses (including to Reserves)l 9,101,982 Balance for Only FY2011 Revenue /Expenses - 4,998,866 Cumulative Balance (including Reserves) 1,646,038 Basis for 10% allocations Without any returns of unused appropriations for completed projects and unbooked Investment Income Article 8(a) (50% of $320,000); Article 9 ($1,500,000 cash. portion of purchase plus $57,000 closing costs) Articles 8(g) $150,000; (h) $100,000, (i) $60,000; (j) $25,000; (k) $73,000; (1) $1,185,500; (m) $35,000; (n) $31,700; (o) $45,100; (p) $18,000; (q) $202,933; (r) $400,000; (s) $5,300; & (t) $25,000 Articles 8(d) $386,129; (e) $10,000; & (f) $695,000 Articles 8(a) (50% of $320,000); (b) $190,047; & (c) $875,173 Article 8(v) First of 3 payments That allocation basis is 10% of FY2011 Revenue These three allocations are using a minimum allocation approach while the Town uses an alternative of allocations, as needed, to match the proposed appropriations in each category. Information only; not used in other calculations Partial Balance Available to CPC for Next Full -Cycle of Projects (See comments for qualifiers) Total Remaining Available to CPC 1,646,038 Also doesn't include adjustment to final State Match (including Reserves) in FY2011 or unbooked investment income. Est. Returned Prior -Prof Residual Balances 479,500 Est. unused amounts from prev funded projects FY2012 Surcharge Revenue (Estimated) 3,220,316 3.5% increase over FY2011 collected. Doesn't include Estimate of State March to be Rcvd in FY2012 1,000,000 Busa -Farm Land Debt Service - 974,600 Busa -Farm Debt Share of Premium & Accr Int 217,287 Cotton -Farm Land Debt Service - 1,300,000 Partial Ball Available for Next Full Cycle >_ 4,288,541 Allocation for Preferred General Reserve - 2,000,000 Partial Bal Avail for Next Full Cycle w /Reserve >_ 2,288,541 Ending Balance 0 0 0 estimated investment income in FY2012 Based on some increased match rate over FY2011 Second of 3 payments From participating in Town's Feb 2010 Bond Sale First of 2 interest -free bond payments (principal only) Per above comments; expected to be a minimum Not mandatory SUPPLEMENT to the CEC REPORT TO THE 2010 ANNUAL TOWN MEETING with Errata ERRATA In the 2009 Report, page 17, 2 nd full paragaph, line 5, and in the 2010 Report, page 19, line 3: Change "almost 1,050 parking spaces" to "99 parking spaces ". Also in the 2010 Report: Page 12, The Community Preservation Act (CPA), 1st paragraph: (a) In lines 6 & 7, change: 44 $14,542,865" to 44 $14,522,865 111 , 44 $2,557,468 (17.6%)") to 44 $3,157,468 (21.7%) 44 $3,556,645 (24.5%)" to 44 $3,566,645 (24.6 %) ", and "$7,322,117 (50.3%)" to 44 $6,692,117 (46.1%) (b) In the table, last column, last line, change " >$926,356 "" to " >$941,700"" and in the footnote, change "98.69 %" to "98.68 % ". 7