HomeMy WebLinkAbout2013-01-17-AC-minJanuary 17, 2013
Minutes
Town of Lexington Appropriation Committee
January 17, 2013
Place and time: Cary Memorial Building, Estabrook Hall, 7:30 p.m.
Members present. Glenn Parker, Chair; John Bartenstein, Vice Chair and Secretary; Alan
Levine; Susan McLeish; Eric Michelson; Jonina Schonfeld; Rob Addelson (non- voting, ex
officio)
Members Absent: Robert Cohen; Mollie Garberg; Richard Neumeier;
Other Attendees: Andrew Friedlich, Town Meeting Members Association
The meeting was called to order at 7:37 p.m.
1. Announcements:
• Ms. McLeish was welcomed back to the Committee.
Ms. McLeish agreed to review the draft minutes for this meeting before they are
distributed to the whole committee. Ms. Arnold will prepare and forward the draft
minutes to Ms. McLeish and copy Mr. Bartenstein. Comments will be added using
track changes. Mr. Bartenstein and Ms. Arnold will coordinate finalizing a draft for
the Committee's approval.
2. Liaison Reports:
• In a recent conversation with David Horton (Lexington School Committee
representative for the Minuteman Technical High School), Eric Michelson reaffirmed
the Appropriation Committee's position that Minuteman should minimize its reliance
on current year tuition.
• The Cary Memorial Building Committee presented its report to the Board of
Selectmen on Monday, January 14. The report identifies the components of the
original building improvement proposal that need to be addressed, which are
estimated to cost $8.5 million; it doesn't suggest that any component can be
eliminated or pared back.
• The Community Preservation Committee (CPC) supports the appropriation of
$550,000 for Cary Memorial Building design and engineering costs in the FY2014
budget. This item is in the "white book" but the selectmen have not yet taken a
position on the expenditure.
• At a recent candidate's coffee, Selectmen Chair Deb Mauger indicated that a proposal
to purchase the land and facilities at 33 Marrett Road will likely be brought to Town
Meeting.
• The Solar Task Force is evaluating the potential for putting solar panels on the roof of
the Public Services Building. This project is physically feasible and would probably
produce a positive cash flow of $10,000 to $20,000. The primary goal is
environmental without creating a negative cash flow. The next step is to issue a
request for proposal for the installation. Additionally, the group is considering the
January 17, 2013
installation of solar panels on other buildings and perhaps also on the ground at
Hartwell Avenue. The latter is particularly complex. This will be a two year process.
If the Town pursues this, it will be necessary to hire a management company that
builds, installs, and operates the equipment, partially because of the complexities and
partially because an outside company is eligible for tax incentives. Other
communities have successfully installed solar panels, but there is little incentive for
towns to join forces.
The increase in the School Department budget is driven by increased enrollment;
approximately twelve new teachers are needed. The new positions and the associated
benefits are included in the School Superintendent's budget, which can be found in
the "white book ". The School Department is holding a public hearing on its proposed
FY2014 budget on January 30, 2013.
The municipal budget is increasing 1.9% and the school budget is increasing 6.9 %.
The Committee discussed why the split in the Town budget for the municipal side
(22 %) and schools (78 %) remains stable although the school budget has been
increasing more rapidly than the municipal side. Mr. Addelson explained that the
total revenue is estimated and then amounts are subtracted (current year school
budget, current year municipal budget, set aside for potential Marrett Road purchase
and maintenance, shared expenses, facilities, debt service, the AC reserve, pension,
cash capital and OPEB) before the percentage split is applied to the residual. If there
is an unallocated component, the Town decides how this is used.
Mr. Parker volunteered to attend future meetings of the Ad hoc Town -wide Facilities
Master Planning Committee (AhTFMPC).
3. Capital Projects: The Committee discussed the potential funding of Cary Memorial
Building renovations and the purchase of a portion of 33 Marrett Rd. using CPA funds. Not all
of the purchase of 33 Marrett Road will be CPA - eligible, but minimally at least some portion
meets the open space criteria. The Town has approximately $4.0 million available annually for
CPA proj ects.
In response to questions about why other capital projects, such as the police and fire stations and
the schools, aren't being addressed at this time, Mr. Addelson reported that they aren't ready as
definitive proposals. He also noted that this year's $2.4 million in unallocated revenue wouldn't
be enough to fund most of those big- ticket projects, but it would be a candidate for funding of a
$3.0 million high school project that may be brought to a fall special town meeting.
The Committee discussed tax levy supported debt service. Mr. Addelson explained that the
average term for the town's bonds is eight years, and recent interest rates have been favorable.
He added that Carl Valente, Town Manager, recommends a growth in debt service equivalent to
growth in revenue (5 %). Currently, the Town's debt service growth is not as high as the Town's
increase in revenue, and there will be a drop in debt service in 2015 — 2016 of approximately
$900,000. This may provide opportunity to fund additional projects. In response to a question,
Mr. Addelson said that the idea of a building depreciation fund is worth discussing, but it raises
intergenerational equity issues; should people today be paying for building expenses from which
they will not benefit?
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4. Wright Farm Debt Financing: Mr. Addelson reviewed the process for issuing debt and
presented a table that identifies estimated available CPA funds for Fiscal Year 2014
appropriations. There is just under $2.2 million in excess of the current claims on CPA funds
before factoring in debt service costs required to purchase Wright Farm or acquisition costs
related to a purchase at 33 Marrett Rd. Town Meeting approved $2,950,000 in debt financing for
purchasing Wright Farm. The Town usually issues a bond in February each year, but it is
currently premature to prepare a bond that includes Wright Farm because there isn't enough
information relating to the other potential CPA fund needs that would inform the choice of a
bond term, including the Cary Memorial Building and the potential purchase at 33 Marrett Rd.
Mr. Addelson recommends issuance of a Bond Anticipation Note (BAN) for Wright Farm rather
than a bond. This will be good for one year, during which the Town only pays interest, no
principal. When transitioning to a bond, it would be possible to pay down some of the debt using
CPA available funds. When the Town knows the direction that is being taken on the various
projects, it will be better able to determine appropriate terms for a bond, including its duration.
5. Committee's Report to the 2014 Annual and Special Town Meeting:
• Warrant Articles:
➢ Article 15 (Appropriate Bonds and Notes Premiums): Mr. Addelson
explained that this is a placeholder, and it may be combined with Article 25 in
the final Warrant, which covers supplemental appropriations for previously
authorized capital improvements. The Department of Revenue, Division of
Local Services has recently proposed new rules that would allow towns to
appropriate bond premiums received in connection with the issuance of
excluded debt and apply them immediately to project funding, effectively
reducing the total amount that must be borrowed. Currently, such bond
premiums must be reserved and applied over time to offset future debt service
on the bonds. (Bond premiums on within -levy debt flow to free cash at the
end of the fiscal year.) Under current market conditions, bond offerings tend
to be structured with up -front premiums and higher coupon rates for
marketing reasons. The Town will be going to market in a week or so with a
major bond issue that covers, among other things, excluded debt funding for
the Bridge, Bowman and Estabrook school projects, and it is anticipated that
the Town will receive substantial bond premiums, totaling several million
dollars. Appropriating the premiums would reduce the amount of future
borrowings required to complete the projects.
➢ Article 22 (Appropriate from Debt Service Stabilization Fund): This is a
boilerplate article permitting annual appropriations of state matching funds
received for school construction projects undertaken a number of years ago
that have been reserved in a specified stabilization fund; the funds
appropriated must be applied to offset the excluded debt service for these
proj ects.
➢ Articles 16 and 17: These articles would allow an increase in the benefits
payable by the pension fund to certain widows, and the Committee should
take a position.
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January 17, 2013
➢ Article 26 (Establish Qualifications for Tax Deferrals): The Committee
should take a position if any changes in tax deferral qualifications are
proposed.
➢ Article 30: This is a proposed by -law change that would allow the Town to
enter into a 20 year agreement for solar power. The Committee should take a
position.
Invitees for Future Meetings: The Committee discussed who should be invited to
discuss projects. Possibilities included Deb Mauger, Pat Goddard, someone from the
School Committee, someone from the CPC, and Bill Kennedy from the AhTFMPC.
Mr. Parker will start by asking Deb Mauger, someone to discuss Cary Hall, and Pat
Goddard.
Schedule for Appropriation Committee's Report to Town Meeting: Discussion of the
financial articles at Town Meeting is expected to begin on April 1, therefore the
Appropriation Committee report should be available by March 18. This means that
final drafts should be prepared by March 7, and the report should be completed by
March 14. Mr. Parker will prepare a draft schedule, and Committee members should
be thinking about the articles they will address.
6. Next Meeting: The Appropriation Committee will next meet on January 31 at 7:30 p.m.
The meeting was adjourned at 9:35 p.m.
Documents and other exhibits used at the meeting are listed below.
Respectfully submitted,
Sara Arnold
Recording Secretary
Approved February 7, 2013
Exhibits
1. Meeting Agenda posted by Glenn Parker, Chair
2. Table showing Preliminary Estimate of [Community Preservation Act] Funds Available for
Appropriation at the 2013 Annual Town Meeting, prepared and distributed by Rob Addelson
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