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HomeMy WebLinkAbout2013 NOV STM AC Rpt APPROPRIATION COMMITTEE TOWN OF LEXINGTON a APRIL 19!k,4. a REPORT TO THE NOVEMBER 2013 SPECIAL TOWN MEETING Released October 28, 2013 APPROPRIATION COMMITTEE MEMBERS Glenn P. Parker, Chair • John Bartenstein, Vice Chair/Secretary Robert N. Addelson (ex-officio; non-voting) • Robert Cohen • Mollie Garberg Alan Levine • Susan McLeish • Eric Michelson • Richard Neumeier• Jonina Schonfeld APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM Warrant Article Analysis and Recommendations This Special Town Meeting will consider requests to make adjustments to the FY2013 operating budget, to appropriate funds into specified stabilization funds, and to fund two capital improvement projects. While the budget adjustments are not urgent, such adjustments are typically offered whenever a fall spe- cial town meeting is scheduled. They will keep the budget up to date with events that have occurred since the previous annual town meeting. The two capital improvement projects have been progressing through the design and engineering phase, and they are now ready to proceed to construction. Both projects would be significantly delayed if there is no action on them until the 2014 Annual Town Meeting, and they de- serve attention now rather than waiting. At the March 2013 Annual Town Meeting, the Town appropriated funds, under Article 14(f), to address overcrowding at Lexington High School via the installation of modular classrooms. Those funds covered the production of construction documents and cost estimates as part of the design and engineering phase. The design and estimation work having been completed,the present Article 4 will request full funding for the project, which would be implemented in two phases. The goal is to complete Phase 1 before the start of the 2014-2015 school year. At the March 2013 Special Town Meeting, the Town appropriated funds to buy the property at what is now known as 39 Marrett Road. That purchase is expected to formally close on December 3, 2013. The present Article 5 will request funds to renovate the main building at 39 Marrett Road so that it can be used as a community center, and also provide office space for certain town staff. A key goal is to move the Senior Center and the Human Services Department into the building. More renovations and possible addi- tions to the building will be considered in the future. Below, we give our analysis and recommendations on each of the warrant articles to be voted on at this Special Town Meeting. Article 2: Amend FY2014 Funds Funding Committee Operating, Enterprise Fund and Requested Source Recommendation Community Preservation $54,500 GF $86,554 GF(cash) Budgets ($10,427) Water EF Approve (9-0) ($24,966) Sewer EF This article requests supplementary appropriations and adjustments to the amounts appropriated under Articles 4, 5 and 8 at the 2013 Annual Town Meeting warrant. The requests affect the municipal, school and enterprise funds budgets as described below. Municipal The Town Clerk's office has requested a supplemental appropriation of $54,500 to line 8500 of the FY2014 budget approved under Article 4 at the 2013 Annual Town Meeting. The appropriation would cover the costs of the special primary and general elections called to fill the U.S. House of Representa- tives seat vacated by Senator Edward Markey. Salaries of the poll workers and support staff make up $29,300 of this request and the remaining $25,200 is for contracted services that supported the use of vot- ing machines. The Town will apply for State reimbursement but the amount and timing of any such re- covery is unknown. The Finance Department is requesting an adjustment to line 8400 of the FY2014 budget. This adjustment would shift funds originally designated for salaries to the expense part of the budget. The budget appro- priated at the Annual Town Meeting contemplated funding a new position in the Assessor's office. A pre- p APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM liminary look at the department's workload by the new Assessor had indicated that a new employee could be tasked with inspection work currently being contracted out, and also be available for some additional tasks. A significant portion of the anticipated position was to be funded by reducing the amount budgeted for contractor expenses. Further analysis,however,has concluded that the position is not warranted at this time. The requested adjustment would return $40,000 to expenses account so the Assessing Department can continue to use private contractors to supplement internal staffing. Schools The School Committee is requesting a supplemental appropriation of $86,554 to the Lexington Public Schools operating budget, originally approved under Line 1100 of Article 4 at the 2013 Annual Town Meeting. This supplement is necessitated by the loss of funds in several Federal and State grants due to sequestration at the Federal level and to enrollment changes, as outlined in the table below. During the FY2014 budget process this past spring, $750,000 was set aside as unappropriated funds to cover possible decreases in grant funding from the State and Federal governments during FY2013. Those funds were not needed in FY2013, so when the fiscal year ended on June 30, 2013, they closed to and were eventually certified as part of the Town's Free Cash. The funding for this appropriation is General Fund revenue de- rived from upward revisions of revenue estimates used in the FY2014 budget. Grant FY2014 FY2014 Change %Change Budgeted Actual Title I $170,260 $151,274 ($18,989) -11.15% Title II $91,217 $86,954 ($4,263) -4.67% 94-142 $1,549,196 $1,514,322 ($34,874) -2.25% Early Childhood $40,116 $38,408 ($1,708) -4.26% Special Education Entitlement $74,562 (est.) $47,842 ($26,720) -35.84% Total Anticipated Cuts ($86,554) Water and Wastewater Enterprise Funds The MWRA component of the original FY2014 Water and Wastewater Enterprise Fund budgets was based on preliminary assessments issued by the MWRA in February 2013. The MWRA's final FY2014 assessments issued in June 2013 were slightly lower than the preliminary assessments, resulting in re- duced costs to the Water and Wastewater Enterprise Funds ($10,427 reduction in the water assessment and $24,966 reduction in the sewer assessment). The FY2014 water and sewer rates set earlier this fall were based on the final assessments. The proposed budget changes are minor bookkeeping updates to re- flect the change in anticipated costs. Community Preservation Fund This request will likely include an increase in the appropriation into various reserve funds of the Commu- nity Preservation Fund (CPF) originally made under Article 8 at the 2013 Annual Town Meeting. Due to recently enacted State legislation, $25,000,000 will be deposited in to the State's Community Preserva- tion Trust Fund. As a result, the fall CPA trust fund distributions to participating communities will be higher. In order for Lexington to access to this additional revenue in FY2014, an appropriation into the CPF must be made prior to setting the FY2014 tax rate. If this appropriation is not made before the FY2014 tax rate is set, the additional CPA funds will be received, but they will be unavailable for appro- priation until after the close of FY2014. 2 APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM The exact amount of this supplemental appropriation will not be known prior to publication of this report. In the past the CPA distribution was made on October 15th, but the timing of this year's distribution has been postponed until mid-November due to the late addition of$25,000,000 to the State trust fund. The surplus will be certified on October 31, after which the exact CPA distributions will be announced by the State Department of Revenue. The Committee Recommends Approval of this request(9-0) Article 3: Appropriate To and From Funds Funding Committee Specified Stabilization Funds Requested Source Recommendation See Below See Below Approve (9-0) The State statute authorizing towns to create and maintain a stabilization fund (G.L. c. 40, § 513) was amended in 2003 to permit the creation of multiple, separate stabilization funds for specified purposes. Lexington Town Meeting first established such funds at the 2007 Annual Town Meeting. Once appropri- ated into a specified stabilization fund, money can only be appropriated out of the fund in accordance with the purpose(s) specified at the creation of the fund. Creating specialized stabilization funds, altering their specified purpose, and appropriating money into or out of them, requires a two-thirds vote of Town Meeting. Status of Funds and Appropriation Requests This Article asks Town Meeting to appropriate funds into the three stabilization funds described below. The current balance of each of these funds and the amounts proposed to be appropriated are as follows: Specified Stabilization Fund Current Appropriation Balance into fund Capital Projects/Debt Service $2,186,567 $1,799,240 Reserve/Building Renewal S.F. Transportation Demand Management/ Public Transportation S.F. $283 642 $11 632 Traffic Mitigation S.F. $10,736 $28,500 Capital Projects/Debt Service Reserve/Building Renewal Stabilization Fund—The purpose of this request is to provide money for mitigating future debt service costs incurred to purchase and install modular classrooms at the high school. The sources of these funds are increases in the expected amount of FY2014 revenue that were unanticipated during the process of developing the FY2014 budget. In the plan proposed under Article 4, a total of$2,811,996 would be withdrawn from this Fund over a three year period starting in FY2015 to reduce the impact of non-exempt debt service. This would leave $950,000 in the Fund to mitigate exempt debt service in FY2015, and an uncommitted balance of $223,810. Transportation Demand Management/Public Transportation Stabilization Fund—The town has collect- ed $2,132 from the Lexington Place Condominium Trust and $9,500 from Cubist Pharmaceuticals as part of zoning agreements with the Town. Traffic Mitigation Stabilization Fund— The town has collected $28,500 from Cubist Pharmaceuticals as part of zoning agreements with the Town. The Committee recommends approval of this request(9-0). 3 APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM Article 4: Appropriate For Modular Funds Funding Committee Classrooms at the High School Requested Source Recommendation $7,700,000 GF Cash Approve (9-0) GF Debt This article is a request from the Lexington Public Schools (LPS) to appropriate funds and approve bor- rowing for the purpose of adding modular classrooms and additional educational space at the Lexington High School. Enrollment at the high school has increased beyond expectations and now surpasses the current design capacity of 1,942 students. The high school FY2014 enrollment(as of September 3, 2013)was 2,030 stu- dents. Enrollment is projected to increase to about 2,154 students in FY2016, which is 17% above the current design capacity. The number of special needs students in the school system has also increased markedly, especially as in-house programs have enabled students (who had been attending more costly out-of-district programs) to receive services within the LPS system. The overcrowding problem at the high school has been compounded by the need to repurpose general education classrooms as space re- quirements have changed. Since the last major renovation project was completed more than ten years ago, approximately 12 general-education classrooms at the high school have been converted to administrative, special education, or special program uses. The trend of educating special needs students in the LPS system rather than in outside placements is con- tinuing. At present there are students in two Intensive Learning Programs (ILPs)located at the Clarke and Diamond Middle Schools who will be in the high school age cohort starting next school year. Therefore, the School Department plans on expanding the in-house ILPs to the high school to serve these students and future students through age 22 who require ILP services (as required by state law). These high school programs will function as extensions of the Clarke- and Diamond-based programs. The plan is to install two groups of modular units in the courtyard spaces adjacent to or between existing buildings. The units would comprise 12 general education classrooms as well as groups of 5 and 7 educa- tional spaces for, respectively, the extensions of the Clarke- and Diamond-based ILPs. The units have an expected life of 10 years and would act as a bridge to accommodate the educational needs of students un- til the high school can be renovated or replaced as discussed in the Lexington capital projects master planning effort. The installation of the modular units would be done in two phases. The first and larger phase would be done in the summer of 2014, and the second and smaller phase in the summer of 2015. Preliminary cost estimates indicate that modular units are less expensive than new construction; in Sep- tember, per square foot costs were estimated at approximately $261/sq. ft. while new construction would be $350-$375/sq. ft. As a frame of reference, the cost of construction of the new Estabrook School is in the range of$450/sq. ft. In October of 2013 a revised estimate of construction costs made using 90%-complete construction doc- uments was released. A revised financing plan was then prepared by Town officials that takes into ac- count the total cost of both phases, including both construction and non-construction costs such as Furni- ture, Fixtures and Equipment(FF&E), wages and benefits for the owner's representatives, and contingen- cies. Based on the new outlines of the total program, the requested appropriation will be in the amount of $7,700,000. The project is proposed to be financed by non-exempt borrowing with portions of the debt service in fis- cal years 2015, 2016, and 2017 to be paid using approximately $2,912,000 from the Debt Service/Capital Projects/Building Renewal Stabilization Fund. This plan assumes approval of the appropriation of ap- proximately $1,900,000 into that Stabilization Fund as proposed under Article 3 of this Special Town Meeting. This financing plan smooths out the year-to-year increases in the amounts of tax levy funds needed for the non-exempt debt service budget including the debt service for previously approved pro- jects, debt service on unspecified new capital projects per typical capital budgets, and the debt service on 4 APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM the $7,700,000 to be borrowed under this Article. The plan yields annual debt service increases after the application of the planned Stabilization Fund withdrawals that are close to or below 5%, i.e., the portion of the tax levy revenue that will need to be devoted to debt service will increase smoothly over the next few fiscal years.No debt exclusion would be required under this plan. Chapter 44 of the Massachusetts General Laws categorizes modular structures as equipment, for which debt may not be issued for a term longer than 5 years; however, the Board of Selectmen may extend that authorization to 10 years, and it is anticipated that they will do so for the borrowing proposed under this article. The Committee recommends approval of this request(9-0). Article 5: Appropriate For Funds Funding Committee Renovations to Buildings to be Requested Source Recommendation Acquired at 39 Marrett Road $2'846'184 CPA $322,816 GF Approve (6-0) $3,169,000 This request would appropriate funds for Phase 1 of the renovations on the building at 39 Marrett Road to create a new Community Center. The funds would cover the design and engineering process all the way through construction documents, as well as the cost of the bidding process and the actual construction. The Ad Hoc Community Center Advisory Committee (AhCCAC) consists of seven town residents fo- cused on exploring and refining the programmatic needs of a future Community Center at 39 Marrett Road in Lexington. The committee is also supported by a large contingent of liaisons from various Town committees and departments, including the Appropriation Committee. This group has been collaborating with Steffian Bradley Architects to consider the best possible use of the buildings and land at 39 Marrett Road, and to make recommendations to the Board of Selectmen on how to proceed. Creating a Community Center will require renovations to convert a large portion of the existing building at 39 Marrett Road from its original office layout into a space suitable for public gatherings of various sizes. In some areas, there will be significant changes in the size and organization of rooms. Other areas of the building will be left in their present configuration. There are also structural engineering upgrades required to permit a change in use from office space to a place of assembly, and building code require- ments that must be met to accommodate the increased numbers of people who will be using the building. Minor updates for accessibility and safety will be incorporated along with technology modifications to allow for compatibility with the Town's systems and for building security. Prior to purchasing the building, a feasibility study for the "full build" of the Community Center(exclud- ing the addition of a large, multi-purpose space) estimated that approximately $950,000 would be needed for the design & engineering (D&E), and approximately $8,546,000 for the subsequent construction, roughly $9,500,000 in all. To date, $100,000 has been appropriated for the initial D&E,to create schemat- ic designs for Phase 1 and the "full build". The AhCCAC has initially focused on Phase 1, a subset of the "full build", intended to create a facility that will be available relatively quickly, while still providing adequate space and flexibility for many of the Town's needs for at least two more years after the completion of Phase 1. The AhCCAC is also dis- cussing the future of the Community Center after Phase 1 is complete. The AhCCAC will continue gath- ering data and deliberating, and a Phase 2 "full build" plan may be ready for Town Meeting at the 2014 Annual Town Meeting. The first proposal for Phase 1 was estimated to cost $962,000 for D&E plus construction. This proposal would have allowed the building to be occupied in fairly short order,but the result would have limited the usefulness and flexibility of the building until further construction could be done. It could also have re- 5 APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2013 STM sulted in major inconveniences during future construction phases due to the need to work around existing programs and occupants. After further discussions with town staff and committee liaisons, an expanded scope for Phase 1 was de- veloped. The current proposal for Phase 1 includes all of the work necessary to: • avoid major disruptions to staff and public programs in the future, • replicate or improve all services currently provided by departments moving into the building, • make the facility more flexible, including increased floor-load capacity and additional restrooms. The Town's Human Services Department and the Senior Center (both currently hosted in the Muzzey Condominiums) will be able to relocate to 39 Marrett Road as soon as Phase 1 is completed, currently estimated to be in the fall of 2014. Funds to address accessibility issues in the Muzzey Condominium space were previously appropriated by Town Meeting, but have not been spent in anticipation of this move. The need for a higher quality space for the Senior Center is thus a key driver in the current pro- posal. The Town's Recreation Department will also be able to move in to 39 Marrett Road, allowing closer co- ordination between Human Services and Recreation. This will ultimately simplify renovation work on the Cary Memorial Building,portions of which are currently used for storage by the Recreation Department. The current estimate of$3,169,000 versus the initial $962,000 estimate should be considered in the con- text of the "full build" estimate of$9,500,000. The intent of this proposal is not to add additional costs above and beyond the "full build" estimate,but to advance to an earlier date the implementation of a larg- er portion of the "full build." On Thursday, October 24, 2013, the Community Preservation Committee (CPC) met to consider this re- quest. Town Counsel advised the CPC that items in the request totaling $322,916 were of questionable eligibility CPA financing. These items represent approximately 10% of the total request. The CPC then recommended that the balance of$2,946,194 be funded using CPA funds. The breakdown of CPA funds would be $602,756 from the CPA Historic Resources Reserve, $1,994,119 from the CPA Unbudgeted Reserve, and $259,310 from the CPA Undesignated Fund Balance. Details of the funding source for the items not covered by CPA funds will be presented at the Special Town Meeting. The Committee recommends approval of this request(6-0). 6