HomeMy WebLinkAbout2012-10-23-AC-minOctober 23, 2012
Minutes
Town of Lexington Appropriation Committee
October 23, 2012
Place and time: Stone Room, Cary Hall, 7:30 p.m.
Members present. Glenn Parker, Chair; Joe Pato, Vice Chair; John Bartenstein, Vice Chair and
Secretary; Alan Levine; Richard Neumeier; Robert Cohen; Mollie Garberg; Rob Addelson (non-
voting, ex officio)
Members Absent: Eric Michelson; Jonina Schonfeld
Other Attendees: Carl Valente, Town Manager; Pat Goddard, Director of Public Facilities;
Margaret Coppe, School Committee Chair; Mary Ann Stewart, School Committee; Andy
Friedlich, TMMA; David Kanter, Capital Expenditures Committee
The meeting was called to order at 7:34 p.m.
1. Liaison Reports: Robert Cohen reported that Carl Valente's negotiating team for the
Vistaprint tax increment financing (TIF) proposal met with Hobbs Brook, owner of the
properties called Ledgemont 2 and 3. Vistaprint is currently leasing the Ledgemont 2 building
and is interested in leasing the proposed Ledgemont 3 facility. The discussion at the meeting
with Hobbs Brook focused on the role Hobbs Brook might play in helping to keep Vistaprint in
Lexington. Hobbs Brook stated that they plan to build the Ledgemont 3 building whether or not
Vistaprint decides to lease it, and that all other facilities in their portfolio are fully occupied and
thus unavailable to Vistaprint. It was noted that Vistaprint is expanding rapidly and needs an
additional facility as soon as possible. It was also noted that Vistaprint is the kind of business
that fits well in Lexington.
2. Special Town Meeting Article 6, Estabrook School: Margaret Coppe provided a broad
overview of the financial aspects of the project to replace Estabrook School, and she and Pat
Goddard explained why the construction estimates for the project now exceed the $31.0 million
previously approved. It was noted that it is too early to use any of the contingency funding to
make up the difference.
Margaret Coppe reviewed the process and considerable efforts taken by the School Committee
and Permanent Building Committee (PBC) to reduce the gap and added that the scope of the
project has not changed. The School Committee plans to ask Special Town Meeting to
supplement the original appropriation by an amount somewhere between $2.0 -2.8 million. This
amount is needed to avoid project cuts that the School Committee found untenable and should be
sufficient to prevent the project from going over budget.
The PBC will be meeting on November 8, 2012 to make a recommendation for the exact amount
of the request, and the School Committee will be meeting on November 13, 2012 to vote on that
recommendation.
October 23, 2012
In response to questions, it was explained that the School Committee's anticipated appropriation
request will include not only funds necessary to close the current estimated gap in hard
construction costs of $1,252,674, but also a buffer to cover potential additional cost increases
that may surface because:
• The Town has two estimates of construction costs for the project, one of which is
$800,000 higher than that used to determine the current gap; and
• The cost of materials continues to increase.
David Kanter added that one element of the project budget, the cost to demolish the existing
building, is particularly difficult to predict and may trigger higher bids than are currently
proj ected.
Pat Goddard explained that the Town is utilizing a special bidding process under Chapter 149A
that allows it to enter into a Guaranteed Maximum Price (GMP) project funding agreement with
a general contractor who provides construction management -at -risk services prior to going out to
bid. The sub - contractors must pre - qualify. This may result in a higher cost than taking the
lowest bidder, but the Town expects higher quality work that will better serve the Town and
avoid problems over the long term. Trade contractor bids will be due December 20, and
Shawmut will submit the GMP on December 30. It is known that other state and community
projects will be going out to bid in the winter, and going out to bid in December should result in
better bid prices than if the town were to wait until later.
Committee members recommended that the School Committee develop a clear and concise
explanation for the Special Town Meeting of the factors underlying the project cost overruns and
supplemental appropriation request.
3. Unfunded Pension Liability: Rob Addelson shared a spreadsheet developed by the
Town Retirement Board's actuary showing several options for reaching 100% funding of the
Retirement Fund prior to 2040, as currently required by state law. If the Town retains its current
goal of 100% funding by 2020, the total pension contribution required for FY14 would increase
from $4.2 million to $7.3 million. That extraordinary increase results from two factors: (1) the
fact that the valuation of pension assets, which is done as a rolling average over several years to
smooth short-term market fluctuations, is now picking up the full impact of the post -2008
recession; and (2) the use of new actuarial tables reflecting longer life spans. Rob Addelson
commented that the actuary's calculations assume an 8% return on assets, which is now
generally considered to be optimistic. He would be more comfortable reducing that assumption
and hopes the Town can eventually move in that direction.
The options on the spreadsheet include plans that would achieve 100% funding in 2025 and 2030
without burdening the Town with an increase of more than about $600K in any given year. The
spreadsheet also shows how the future funding schedules would change if either an extra $1
million, or an extra $1.7 million, were appropriated at the upcoming special town meeting as
one -time additions to the pension fund in FYI 3.
2
October 23, 2012
Some Committee members noted that the financial markets have improved significantly in the
last year or two, and that this will likely mean a higher valuation when the next biennial
revaluation of the pension portfolio is done. Rob Addelson and Carl Valente acknowledged that
the projected funding requirements could be adjusted downwards in the future if this were to
occur.
Rob Addelson and Carl Valente support extending the target date for achieving full funding to
2030, which would still allow ten years to accommodate potential future adjustments if that
proved necessary. They also support contributing an additional $1 million in FY13, which
would not materially lower annual funding requirements but would have the advantage of
allowing the Town to achieve 100% funding by 2029 instead of 2030. The source of the
additional $1 million would be currently identified undesignated funds.
On a straw vote, six members of the Committee supported this option; one preferred amortizing
the liability until 2030 without appropriating the extra $1 million in FY13.
4. Minutes: John Bartenstein reported that the October 18, 2012 minutes are still being
reviewed.
VOTED: The September 20, 2012 Minutes were approved by a vote of 7 -0.
VOTED: The October 3, 2012 Minutes were approved by a vote of 7 -0.
5. Next Meetings: The Appropriation Committee will next meet on November 1, 2012.
Because Sara Arnold will be out of town, a committee member will need to assume the
responsibility of taking minutes. Members were encouraged to have draft write -ups on Special
Town Meeting articles, as previously assigned, ready by that meeting, and earlier if possible so
that votes can be taken on the articles. Final drafts will need to be completed for the November 8
meeting.
The meeting was adjourned at 9:30 p.m.
A list of documents and other exhibits used at the meeting is attached.
Respectfully submitted,
Sara Arnold
Recording Secretary
Approved January 31, 2013
October 23, 2012
Exhibits
Appropriation Committee Meeting
October 23, 2012
1. Meeting Agenda posted by Glenn Parker, Chair
2. Estabrook Budget Review October 23 materials distributed by Margaret Coppe, including:
table showing costs, construction budget summary, value engineered cost sheet and plan for
getting to the budget, October 22, 2012 letter from DiNisco Design Partnership, and table
showing notable cost increase items
3. Spreadsheet showing alternative scenarios for Retirement Fund contributions distributed by
Rob Addelson