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HomeMy WebLinkAbout2022-10-06-AC-min 10/6/2022 AC Minutes 1 Minutes Town of Lexington Appropriation Committee (AC) October 6, 2022 Place and Time: Remote Participation: in accordance with “An Act Relative to Extending Certain State of Emergency Accommodations”, signed into law by Gov. Baker on July 16, 2022, 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; Anil Ahuja; John Bartenstein; Alan Levine, Secretary; Eric Michelson; Sean Osborne; Lily Manhua Yan; Carolyn Kosnoff, Assistant Town Manager, Finance (ex officio; non-voting) Member(s) Absent: None Other Attendees: David Kanter, Capital Expenditures Committee; Gretchen Reisig, Vice Chair, Affordable Housing Trust Study Committee (AHTSC); Betsey Weiss, AHTSC; Sarah Morrison, Executive Director LexHAB; Tara Mizrahi, LexHAB, AHTSC; Elizabeth Rust, Director, Regional Housing Services Office; Carol Kowalski, Assistant Town Manager, Development; Carol Marine, AHTSC At 7:33 p.m. Mr. Parker confirmed attendance by roll call and stated that the meeting was being recorded for the purpose of creating minutes. Mr. Michelson agreed to take minutes in the absence of a recording secretary. Announcements and Liaison Reports Mr. Bartenstein reported that Carolyn Bertozzi, a Lexington High School graduate, was one of three people awarded the Nobel Prize in Chemistry. Special Town Meeting (STM) 2022-3 Article 12 – Creation of Housing Trust Mr. Michelson, followed by Ms. Reisig, presented the Committee with background information about Article 12. Committee members then asked questions about various aspects of the AHT, its formation and operations, and it goals. Questions were answered by Ms. Reisig, other members of the AHTSC, and Town staff. The Affordable Housing Trust Study Committee was formed by the Select Board to look into forming an Affordable Housing Trust (AHT) in Lexington, which would provide advantages in financing the acquisition or construction of affordable housing units. AHTs have been formed in 128 Massachusetts municipalities. The AHTSC found that an AHT would allow Lexington to use its current affordable housing revenue sources more effectively. These sources include Community Preservation Act (CPA) funds, the Affordable Housing Stabilization Fund, and, potentially, new private, State, and Federal revenue sources. The AHT would act as a “bank” for affordable housing funds and could make funds available for immediate disbursement as opportunities arise. This would be very different from the current model where funds need to be appropriated at a town meeting. An AHT would hold Town monies appropriated to it by town meeting. AHT holdings are permitted to be invested as aggressively as those of the pension fund. However, these monies would probably be kept in more traditional risk adverse municipal investments similar to other municipal funds, because 1) the Town Treasurer would be managing the money, and 2) the monies are not intended to be accumulated and held long term, but are expected to be put to work. The AHT could provide 10/6/2022 AC Minutes 2 funding to any developer, non-profit or for-profit, including LexHAB or the Lexington Housing Authority (LHA). It could also use its funds to create affordable housing in ways that differ from those used in the current development model. The AHTSC has drafted a change to Town bylaws that would allow the Trust to be formed, and a draft Declaration of Trust. Both would govern the formation and operation of the AHT. Additionally, Trust bylaws would be created, which would further control the operation of the Trust. The AHTSC envisions that the AHT would initially be funded by a vote of town meeting to transfer the existing balance and future revenues of the Affordable Housing Stabilization Fund, and/or an appropriation of money from the CPA Affordable Housing Reserve, and/or the annual 10% CPA Affordable Housing set aside. Appropriation of CPA monies would require the approval by the Community Preservation Committee (CPC) as well as by town meeting. Additionally, the AHT may make annual requests for appropriation of CPA funds. The AHT may request funds to be held in reserve awaiting projects, or for specific planned projects. While the CPC may still choose to approve direct requests from developers such as LexHAB or the Lexington Housing Authority, it is possible that the CPC will feel comfortable with having all CPA affordable housing funds flow through the AHT. One primary benefit of the Trust is its ability to use affordable housing monies quickly and respond to real estate that comes up for sale with a limited window of opportunity. The AHT would be authorized to spend up a predetermined annual limit established by the Select Board, after which the Select Board would have to approve further expenditures. The AHTSC has suggested that this spending limit be based on the average selling price of a home in Lexington. The AHT would be able to hire staff, who would be paid from its funds. The proposed Town bylaw and Declaration of Trust do not contain an administrative expense limit, but as yet unwritten Trust bylaws could contain a cap. While the town staff, primarily in the Finance Department, would be available to support the AHT, no additional town staff would need to be hired. The Town could also charge the AHT for services rendered, similar to the way the enterprise funds are charged. Any costs incurred to manage the Trust’s investments would be paid from the Trust’s holdings. STM Article 14 – LexHAB Reorganization Ms. Morrison presented the Committee with background information about Article 14. Prior to the meeting Mr. Michelson had submitted questions to Ms. Morrison. These questions and those from Committee members covered various aspects of the conversion of LexHAB from a quasi-municipal organization to a private non-profit 501c(3) organization and its effect on operations of the organization. Questions were answered by Ms. Morrison, other members of LexHAB, and Town staff. The conversion is being pursued to enable LexHAB to create new affordable housing units more efficiently and to maintain its current housing stock. Founded as a quasi-municipal organization in 1983 by special State legislation, a ruling about four years ago clarified that LexHAB must follow all public procurement regulations. The result has been escalation beyond that of the free market of the per unit cost to LexHAB in constructing housing. The LexHAB organizational close association with the Town is quite unusual; many other towns instead have formed 501(c)(3) non-profits to develop affordable housing. Non-profits are able to develop new housing at costs up to 40% less than municipalities. 10/6/2022 AC Minutes 3 LexHAB has determined that the best way to change its organizational structure would be to file a home rule petition with the State legislature for a special act that would codify the change. The special act would also transfer the deeds for LexHAB’s current properties to the new organization, saving the expense of refiling all these deeds. LexHAB’s mission and structure would remain the same. Once the special legislation is passed by the State, LexHAB would file articles of incorporation and bylaws with the Massachusetts Secretary of State. These documents would detail the organization’s mission, structure, and operating procedures. Additionally, as a non-profit organization LexHAB would be required to file annual Form 990 disclosures that would help to maintain operational transparency. The purpose of the organizational change is to eliminate LexHAB’s quasi-municipal status, which currently binds it to the State’s procurement regulations. At a minimum, this separation would require that the Select Board no longer nominate the LexHAB board. As with many other 501(c)(3)s, the LexHAB board would nominate and approve its membership. LexHAB would also independently control its property portfolio, in accordance with its mission. However, LexHAB values its connection to the Town and plans to maintain a high level of coordination by forming committees that could have Town elected officials and staff on them, as well as having official liaisons. LexHAB’s future plans would be guided by its strategic plan and implemented under guidance of internal Development and Public Relations committees. LexHAB would seek Select Board, Community Preservation Committee, and Planning Board representation on these committees. Additionally, LexHAB is looking to work closely with the CPC and Affordable Housing Trust for financing of its developments. As with any private developer, LexHAB would be required to conform to local zoning laws and permitting regulations, and to pursue any desired zoning change via either the Zoning Board of Appeals or Town Meeting. The STM motion would authorize the Select Board to file a home rule petition with the State Legislature. This article is on the warrant for this Special Town Meeting so that the home rule petition can be filed by the start of the next legislative cycle. It could take up to two years for the special act to come to a vote. The Committee did not vote on either Article 12 or Article 14 but when queried the members had no negative comments. Minutes of Prior Meetings No minutes were ready to be approved. STM Report and other STM Articles Mr Parker briefly discussed the use of Wdesk with the Committee. Mr Bartenstein asked Ms Kosnoff about the timing on getting final information on the Town budget adjustments to be made under Article 4. The final numbers are not ready at this time, as some of them are dependent on the final amount of new growth in the tax levy. The Assessors Department new growth number may be available by end of next week. At this time the Reserve Fund replenishment may be limited to $500,000, due to the availability of funds. Ms. Kosnoff informed the Committee that Mike Cronin’s presentations for Articles 5 and 10 have been posted on the Town Meeting webpage. The funding for the proposed work under Article 5 is requested to come from the CPA; the CPC’s vote on this article is on its October 20 meeting agenda. 10/6/2022 AC Minutes 4 The Town is hoping to fund Article 11, Center Streetscape Sidewalk Extensions, with cash. However, if available new growth revenue is not sufficient, the balance would be financed with debt. Ms. Kosnoff reported that additional OPEB funding under Article 7 would be indefinitely postponed. The administration wants to prioritize appropriations into the Retirement Fund (pensions), as the latest actuarial calculations have indicated that the Retirement Fund’s full funding date has been extended. The major factor in this is the assumption of a lower and more realistic rate of returns on investments. The assumed rate was dropped 0.25%, and it’s possible that the next evaluation will drop that rate another 0.5%. Ms. Kosnoff reported that there is an ongoing discussion within the Town administration on how to best use the additional $1,000,000 of new growth that will come from Takeda’s decision to not seek a manufacturing exemption for its personal property in Lexington. Adjourn The meeting was adjourned by roll call vote at 9:42 p.m. Respectfully submitted, Eric Michelson Approved: November 1, 2022 Exhibits ● Agenda, posted by Mr. Parker ● Mr. Michelson’s questions to Ms. Morrison