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HomeMy WebLinkAbout2002-11-14-CEC-min Town of Lexington Capital Expenditures Committee Meeting Notes November 14, 2002 Town Hall, Room 111 Committee members present: Burnell, Hornig, Rosenberg, Stolz. Absent: Bhatia, Appropriation Committee liaison present: Sheldon Spector Towm Manager Rick White Electric Utility Ad Hoc Committee presenters: Roger F. Borghesani, Ingrid Klimoff, Patrick Mehr; Kelly Zeoli, DPW (staff to the committee) Minutes of the November 6 meeting were approved, as corrected, and will be forwarded to Appropriation Committee liaisons. Meetings Schedule (new items highlighted) 6:30 Tuesday, Nov. 19, -8:00 p.m., Summit II, Hastings School 7:00 Wednesday, Nov. 20, p.m., Recreation presention, followed by Selectmen’s meeting on capital items and priorities; begin at Town Hall Room 111 Thursday, Dec. 12, 7:30 p.m., Schools, Town Hall Room 111 (Monday, Dec. 16, 8:00 p.m., Special Town Meeting PAYT Refunds, Clarke Middle School) Tuesday, Dec. 17, 7:30 p.m., Summit III, location to be determined Wednesday or Thursday, Dec. 18 or 19, DPW operations facilities and perhaps senior center planning updates/progress reports, time/place to be determined Town Manager Presentation Rick White presented a summary of “FY 04 Capital Budget Proposals, Draft for Discussion Only” (the document should be considered part of these minutes) summarizing pending requests from DPW, Fire, Library (on which the committee has already been briefed); Recreation (briefing scheduled 11/20); MIS (briefing to be scheduled), and Social Services (briefing to be scheduled). The Electric Utility Ad Hoc Commnittee’s request, discussed later in the evening (see below) was not yet listed. A second page summarizes School requests, still being formulated. Also appended was an operating budget “at risk” list for planning purposes. The proposed capital items for FY 04 total $5.967 million (not including the $150,000 Electric Utility request). White highighted the high priority of the landfill closure; the likelihood that planning funds for the DPW operations facility will probably be withdrawn from the FY 04 request; the importance of sustaining the road improvements program funded by the prior override ($500,000 per year counted in the anticipated $1-million program, which does not yet include the $7 million authoried in last spring’s debt exclusion); and the desirability, in the next few years, of beginning a sustainable program for sidewalk repair and improvement. Spector noted the issues of new vs. old sidewalks, bituminous vs. concrete, and downtown vs. neighborhoods. Hornig asked about the item for senior-center engineering or planning/design ($100,000); White called it a placeholder; Rosenberg noted the Council on Aging would like to use the $50,000 appropriated two years ago to do conceptual design work for a greenfield and and an adaptive reuse site, and hoped the funds would be released for that purpose. Otherwise, DPW facility design appears premature. Rosenberg asked the landfill capping cost if recreation or similar use were envisioned. $5 million, said White (vs. the $450,000 envisioned for the recently approved “hot spot” approach; all agreed on the urgency of getting that done before state approval changes.) Recreation has put in a new request for fencing and bike racks at the skate park ($35,000), from tax funds. Recreation, White said, had become a victim of its own generosity, having advanced funds, permitted work to proceed before the volunteer group secured funds, etc. White expected the $5.967 million request to be brought down to $4 million on the town side. School request are just being formulated; they include $2-3 million for LHS acoustical retrofitting, and a list of what White viewed as reasonable, responsible projects (fixing the Harrington gym floor, for instance, since the building will be in use for a decade during school renovation). He said there is a process of cooperation and collaboration emerging with town and school staff communicating to begin to focus on a schools cash capital program for needed renovations, work not funded in the secondary-schools renovations, etc. Hornig saw the $5.967 million town proposals alone as more than $1 million over the 5 percent fully funded cash capital plan. What sort of capital policy would be advanced, since the current one is not working.? Would it rely on a different funding formula, policy philosophy, debt financing, etc.? White said there would be policy proposals advanced, tied to the tax levy, and similar to the cash reserve plicy. He would prefer not to rely on borrowing, but that would depend on Selectmen’s policy decisions. For purposes of making this budget, the current 5 percent of tax levy policy would be assumed to be the governing principle— the budget is not being made on the assumption that capital spending will be depleted first to make ends meet. Horning pointed out that last year, short-term borrowing costs were assumed to be 3.5-4 percent, and when they came in lower than that (2.5 percent), the savings were not made available for capital, but were used for operating budget purposes. White acknowledged that this kind of conservative assumption would prevail again (3.5 percent assumed, 2.5 percent latest short-term borrowing rate), and that although the savings ought not to be raided for operating purposes, they might be. Getting such policy questions out in the open, and determining the likely direction, ought to be a focus of Summit II next week. MIS request: Get information from town staff. Summit II, Nov. 19, ought to focus on policy issues, White said: what is the town trying to solve with an override ( immediate gap vs. 1-3 year view; can one take a 3-year view in the present circumstances? where capital fits in? size of override, split of items put at risk; what kind of capital policy, given that current ones were deviated from under the circumstances and alternative uses of cash reserves and cash capital? CEC ought to develop its agenda and provide it to Selectmen for policymaking, so that could be coordinated with policymaking, not fed in later, after decisions are taken.) All labor agreements end in 04. Town compensation policy (multiyear or one-year? Wages are 70% of budget). First time all 5 town, 4 school labor agreements can be coordinated, so good to look at wage policy, have coordinated approach, Selectmen and School Committee policy and guidance for negotiations. Overall, Summit II for process, not gap closing. What do if temporary borrowing numbers and costs go down? Health care (negotiating with unions now and see some accommodation). Etc. Electric Utility Ad Hoc Committee See the written hand out, which should be considered a part of these minutes. The committee, appointed by the Selectmen, sees issues of monitoring town accounts for accurate billing (with $30,000 savings possible, vs. rising load and costs at the middle and high schools); aggregation to buy power more cheaply; pressuring utilities to comply with state law on removing double poles; negotiating with NSTAR to improve reliability; and municipalizing delivery services, which might yield savings of 20-25 percent on average annual homeowner bills, and 10 percent or more on institutional (including town) and commercial bills. The numbers are signifcant, given total annual spending of $45 million on current and delivery charges. Municipalization, operated in 41 towns, might cut the current estimated annual delivery charges (NSTAR revenues) from $18 million to something closer to $11 million, in return for an estimated $45 million capital investment to acquire and renovate the poles, lines, and transformers, install meters, etc. Would be an estimated 40-plus person operation. The committee seeks $150,000 for a technical engineering study to confirm its economic estimates and to determine a real value of NSTAR’s plant, needed investment, etc. ($120,000) and for legal work, since no municipalization has not been done since 1927 (when multiple distributors were being shaken out to one per town; but now the 1990s restructuring of the energy industry is in place, leading to new interest. Rep. Kaufman will introduce a bill authorizing municipalization as part of the needed 2004-05 legislation on power distribution. The 1996 law got at current/supply; this one would get at local distribution competition, from municipalities, among other issues.) Committee members discussed the model assumptions in detail with the ad hoc committee members, and were, in general, intrigued by the economic possibilities of what Hornig characterized as a high risk/big payoff possibility. Concerns were raised over paying for a technical evaluation in advance of assessing legal feasibility (Horning and Borghesani concur that what the legislature does to ease municipalization is important, perhaps as important as what the consultant’s study would say about real costs and economic feasibility); over spending on legal costs as a capital item; and about whether Lexington ought to be the leader/first mover while the legal situation is unfolding, and whether it ought to go it alone or in concert with Brookline, Arlington, Belmont, Lincoln and other towns that are at least thinking about the idea. The $150,00 would be the initial town investment, with further spending for legal and startup costs (all assumed to be recoverable from the muni’s operations) in what would not, ultimately, be a town function (the “muni” would be a separate corporate entity, paying a PILOT and perhaps renting facilities, but otherwise operating not as a town department or unit). These questions aside, the political question is whether citizens are sufficiently fed up with the utility AND sufficiently convinced a muni would be the solution to their concerns and complaints. The committee ultimately seemed to feel (without making a formal decision) that the proposal is intriguing and well studied so far; that the appropriate order of events is to secure funding for the legal and policy studies (the ad hoc committee estimates $30,000) from the Selectmen (operating funds) in the coming fiscal year; and to defer the technical engineering study proposed ($120,000), pending assessment of the legal and practical/feasibility question—but that such funds could well be considered capital, since the ultimate issue would be a large capital item Meeting adjourned 10:35 p.m. John S. Rosenberg