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HomeMy WebLinkAbout2021-05-13-AC-min 05/13/2021 AC Minutes Minutes Town of Lexington Appropriation Committee (AC) May 13, 2021 Place and Time: Remote Participation: in accordance with the Governor's March 12, 2020 Order Suspending Certain Provisions of the Open Meeting Law; communication took place via a Zoom teleconferencing session that was open to the public; 7:30 p.m. Members Present: Glenn Parker, Chair; Sanjay Padaki, Vice-Chair; Alan Levine, Secretary; Anil Ahuja; John Bartenstein; Eric Michelson; Meg Muckenhoupt; Lily Manhua Yan; Carolyn Kosnoff, Assistant Town Manager, Finance (non-voting, ex officio) Member(s)Absent: None Other Attendees: Deepika Sawhney, School Committee; David Kanter, Capital Expenditures Committee; Sara Arnold, Recording Secretary Mr. Parker confirmed attendance, reviewed the authorization for meeting remotely, noted that the meeting was being called to order at 7:35 p.m. on May 13, 2021, and stated that the meeting was being recorded for the purpose of creating minutes. He noted that Ms. Yan was having some technical difficulties during the roll call vote. He also noted that materials for the meeting were available on-line. Announcements and Liaison Reports Mr. Levine reported that the School Master Planning Advisory Committee (MPAC) had met twice in the past two weeks to review the draft compendium that was written to summarize its master planning report, which is scheduled to be accepted by the School Committee on May 25, 2021. Additionally, the MPAC noted that the Massachusetts School Building Authority (MSBA) had not selected Lexington for inclusion in a process leading to a grant towards rebuilding the high school. Since delays in construction result in increased costs, it has been suggested that it might be less expensive to pursue the project without MSBA assistance. After discussions with MSBA, the MPAC decided to postpone further research on this alternative. The School administration will resubmit its Statement of Interest to the MSBA before the June deadline. Mr. Padaki noted that this Committee is now down to eight members. Mr. Parker urged members to submit suggestions to Deborah Brown, Town Moderator. Preliminary Discussion of Alternatives for Constructing and Managing Affordable Housing in Lexington Mr. Parker reported on material that had been discussed at the CEC meeting last week and had been subsequently distributed to this Committee. It describes the use of Housing Development Corporations and Affordable Housing Trusts, which may function best in tandem rather than individually. The material was prepared by staff in response to the Select Board's (SB's) interest in increasing Lexington's affordable housing more effectively. Ms. Kosnoff and other members of this Committee noted the following: • Town Meeting could replace the Affordable Housing Capital Stabilization Fund with a municipal Affordable Housing Trust that would be administered by the Finance Department performing an accounting/bookkeeping function only. This would improve liquidity of the funds, but projects would still be subject to the State procurement laws for all expenditures. 1 05/13/2021 AC Minutes • If the Town reconstituted the Lexington Housing Assistance Board (LexHAB) as a Housing Development Corporation (HDC), that Corporation could manage the construction and maintenance of affordable housing in a manner comparable to LexHAB's current role, while the application of the procurement laws, such as requiring the prevailing wage, would be based on the source of the revenue and the degree of independence of the HDC from Town government. • The current process for developing affordable housing in Lexington can be cumbersome and costly because of requirements for Town Meeting and Select Board approval. • An Affordable Housing Summit is scheduled for May 17 to introduce these concepts to stakeholders and to provide an opportunity for Lexington to begin exploring the advisability of pursuing either or both of them. Comments during the discussion included the following: • Town Meeting would put money into the Affordable Housing Trust but the trustees would be responsible for withdrawing it. This takes away some of Town Meeting's present authority. • The HDC would be able to react quickly to opportunities and make financial decisions. • The advisability of increasing affordable housing for one population segment by circumventing the procurement law that mandates prevailing wages for construction workers was questioned. • Institutional changes may be in order because the current process is not effectively meeting Lexington's goals for affordable housing. • Community Preservation Act(CPA) contributions for affordable housing would continue to be subject to the rules regarding CPA funds. Questions included the following: • Who is responsible for hiring staff at an HDC? • How would decisions, e.g., on which projects to pursue, be made and does the Town have input into the process? • When would the prevailing wage still be applicable? • Why is the trust necessary? Is this necessary for being able to accept CPA funds? Does the trust hold the property? • Would the funds in the trust be transferred to the HDC? • What different models exist in Massachusetts and what can we learn from them? What are the pros and cons? Members of this Committee expressed general support for the concept but were interested in learning more. Impact of Reducing Free Cash on the Operating Budget Mr. Levine asked to further discuss the initiative led by the Town Manager to phase out the use of free cash for the operating budget over about five years. The result would be using the free cash to pay for capital projects for which the Town would otherwise be borrowing. In the long run, this would be a wash with respect to funds available for the operating budget vs. the capital budget, but during the transition, which could last ten or more years, it would put additional pressure on the operating budget, and he does not want to see the operating budget unreasonably impacted. In response, Ms. Kosnoff reported that the Town currently uses $3.0-3.5 million from free cash for operating expenses. After reviewing the sources of free cash, she noted that there are uncertainties 2 05/13/2021 AC Minutes associated with those sources and suggested that it was inappropriate to subject items such as payroll to those uncertainties. She added that best practices do not support this practice, and that she and the Town Manager want to pursue a phase out by reducing the use of free cash by $700,000 annually. An alternative to putting available free cash into the operating budget would be to increase cash capital, which would reduce borrowing, help the Town maintain its facilities, and minimize spikes in the budget. She sees it as short-term pain for a long-term benefit. Eventually, it might be possible to project less conservatively during budget preparation, which would likely reduce free cash. In response to a request to identify the trends associated with free cash, Ms. Kosnoff agreed to explore the availability of the necessary data for such information. Mr. Kanter suggested that the school budget needs to be factored into any analysis. AC Report to the Town Meeting Mr. Parker suggested sending a short survey to town meeting members to solicit information about the usefulness of the AC reports and to suggested improvements. There was support for sending the survey, and Ms. Muckenhoupt offered to assist in its preparation. Next Meeting It was agreed to "pencil in" a meeting for June 17. Ms. Kosnoff reported that she could provide an overview of the approximate $9.0 million that the Town is receiving for COVID 19 relief programs. There was discussion about the eventual removal of COVID-19 restrictions and how this would impact AC meetings. Minutes of Prior Meetings A motion was made and seconded to approve the draft minutes for the April 14, 2021 AC meeting. The motion was approved by a roll call vote. VOTE: 8-0. Adjourn A motion was made and seconded to adjourn at 9:16 p.m. The motion was approved by a roll call vote. VOTE: 8-0. Respectfully submitted, Sara Arnold Approved: July 13, 2021 Exhibits • Agenda, posted by Mr. Parker • An Act Establishing a Nonprofit Housing Corporation for the Town of Lexington, Chapter 521, Commonwealth of Massachusetts, 1983 • Affordable Housing Trusts & Housing Development Corporations; Options for Lexington; Slides prepared by Ms. Kowalski • Ms. Kowalski's Memo to Jim Malloy, Town Manager, January 26, 2021, Re: Affordable Housing Trusts, Housing Development Corporations 3