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HomeMy WebLinkAbout2017-02-15-AC-min02/15/2017 AC Minutes Minutes Town of Lexington Appropriation Committee (AC) February 15, 2017 Place and time: Hudson Room, Cary Memorial Building, 7:30 p.m. Members present: John Bartenstein, Chair; Alan Levine, Vice -Chair & Secretary; Ellen Basch; Eric Michelson; Richard Neumeier; Sanjay Padaki; Andrei Radulescu -Banu; Lily Manhua Yan; Jian Helen Yang; Carolyn Kosnoff, Assistant Town Manager, Finance (non- voting, ex officio) Members Absent: None Other Attendees: Elaine Ashton, Town Meeting Member The meeting was called to order at 7:36 pm. 1. Announcements and Liaison Reports Mr. Bartenstein reported the following, based on information provided at the Board of Selectmen's (BoS) meeting on February 13: • The Minuteman Technical High School assessment is increasing substantially, primarily because of the reduction last year in the number of participating communities. Mr. Michelson is working to get additional information. • Estimates for the Massachusetts School Building Association's (MSBA) partial reimbursement for the Hastings Elementary School construction costs have been decreased from 30% to 25 %. This is mainly to account for the fact that the projected "actual" cost of construction for this project ( —$500 /sq.ft.) is higher than the MSBA's ceiling on reimbursable per square foot cost ($330 /sq.ft.). Four contributing factors why our costs exceed the ceiling were given: ➢ The reimbursement rate ceiling is based on statewide averages that are lower than construction costs in the Boston metropolitan area. ➢ The reimbursement rate ceiling is based on data that is lagging by approximately three years. ➢ The site preparation costs at Hastings will be higher than normal due to difficult site conditions (conservation land, topography, etc.). ➢ Because the MSBA funding is limited to 1% of the MA sales tax, and the MSBA wants to finance as many projects throughout the state as possible, it has a disincentive to raise reimbursement rates to more realistic levels. • The recently released "cherry sheet" estimates, which identify the amount of State aid that communities can anticipate receiving, indicate that Lexington will likely receive about $2 million more in Chapter 70 aid than originally estimated due to increased school enrollment; this will be footnoted in the Brown Book. • Regarding Annual Town Meeting (ATM) Article 19, Appropriate for Advice and Analysis — Getting To Net Zero, it is hoped that this year's requested funding of $40,000 will be sufficient to complete a final plan; however a third and final appropriation of $40,000 may be sought next year. • The BoS is working with the Planning Board to negotiate with Brookhaven at Lexington mitigation payments for the financial impacts associated with Brookhaven's re- zoning 1 02/15/2017 AC Minutes request to allow expansion of its retirement community facilities. The Board of Assessors has re- determined that Brookhaven is a tax - exempt entity. Brookhaven currently provides Lexington with an annual payment in lieu of taxes (PILOT), and an increase in that amount has been proposed. Because the addition of 40 units would impact the Town's affordable housing ratio, and Brookhaven is unwilling to designate some of those units as affordable, mitigation payments are also being sought to allow the Town to build additional affordable housing. • Dawn McKenna, Chair of the Tourism Committee, is considering requesting funds under Article 18 at the ATM to advance efforts to rebuild the Visitors' Center. It was reported that the BoS does not support appropriating construction funds but they do support the release of some previously appropriated funds to further design efforts. • Ms. Kosnoff informed the BoS that the Town will be receiving approximately $2.0 million in premiums generated by the recent issuance of bonds, including some 30 year bonds, and some Bond Anticipation Notes (BANs). The premiums will be applied to lower the amount of borrowing for the particular projects. The True Interest Cost (TIC) is 3.06% for the bonds and 0.96% for the BANs. Ms. Kosnoff noted that although the Town has some outstanding bonds with lower interest rates, interest rates have been increasing recently and 30 -year bonds, which the Town is issuing for the first time, carry a higher interest rate. She also reported that the amount of debt carried by the Town is not expected to impact its Aaa credit rating. Ms. Yang reported that she had requested some pie charts from the School Department reflecting the components included in the school budget, and they are being prepared. 2. Minutes A motion was made and seconded to approved the February 2, 2017 AC Minutes, with minor edits. The motion passed. VOTE: 9 -0 3. Reserve Fund Transfer Mr. Bartenstein explained to new members that the operating budget approved by Town Meeting each year includes an allocation for a Reserve Fund, disbursement from which, by statute, is the responsibility of this Committee. These funds are available for unexpected or emergency expenses. The protocol is for the BoS to approve a request that is then brought to this Committee for approval. Appropriated funds not used by the end of the fiscal year go into free cash. In recent years, $900,000 has been appropriated for this line item, but the amount used has been considerably less. No FY2017 funds have been used to date. Ms. Kosnoff reported that the BoS is requesting a Reserve Fund transfer of $17,115 for hiring professional services to conduct a due diligence survey of the 20 Pelham Road property before completing a purchase and sale agreement. Included are $2,500 for an environmental study, $11,615 for surveying, and $3,000 for contingency funds. The $8.0 million previously appropriated for the purchase of the property is not available to cover these costs, nor is $150,000 previously appropriated for a second access road study, of which $43,000 remains unspent; any excess funds designated for the road study will flow to free cash. Ms. Yang stressed the importance of any Reserve Fund transfer being included in the total costs for this project. 2 02/15/2017 AC Minutes A motion was made and seconded to approved the transfer of $17,115 from the Reserve Fund into the budget line items needed for the project. The motion passed. VOTE: 9 -0 4. Proposed Sustainable Building Protocols Mr. Neumeier reported on discussions between the Department of Public Facilities (DPF) and stakeholders about efforts to develop a sustainable building policy in general and, in particular to incorporate sustainable components in the Hastings Elementary School design. Pat Goddard, DPF Director, is requesting feedback from the finance committees on a number of Hastings design issues. In response to questions, Mr. Neumeier observed that most of the proposals for sustainable components of the Hastings project appeared to offer credible cost savings over the life cycle of the buildings sufficient to repay cost of the investment, and therefore the cost to the taxpayer would be de minimis. It was generally agreed that investment in energy- saving features that will advance the Town toward net zero goals while at the same time paying for themselves are desirable, although care must be taken not to overestimate promised energy- saving benefits. However, this Committee does not have the expertise or bandwidth to research and evaluate the detailed proposals at Hastings; these are best addressed by the Permanent Building Committee and the Capital Expenditures Committee. 5. Discussion Regarding Outside Legal Fees Mr. Neumeier reported having received a breakdown of fees for outside legal services used by the Town and School Departments. He also spoke to Mary Czajkowski, Superintendent of Lexington Public Schools, about the use of outside counsel. He was pleased to learn that the school department had reduced its outside legal fees from $374,000 in FY2013 to $46,000 in FY2017 to- date. This was done primarily by reducing the number of phone calls to lawyers. Further discussion about the Town hiring inside counsel was postponed to a later date. 6. Next Meeting It was agreed that the next meeting would be on February 23, despite it being school vacation week when some members are not available. The Chair of the BoS has invited Committee members to attend the February 27 BoS meeting, when several financial issues will be on the agenda. 7. AC Report to 2017 Annual Town Meeting (ATM) and Special Town Meeting (STM) Mr. Bartenstein reported that this Committee's report to the STM should be completed by March 13 in anticipation of the 2017 ATM and the first 2017 STM both starting on March 20. A substantially complete initial draft of the STM report has been circulated. Although additional information about some of the articles is still needed, votes were taken on the following STM -1 articles, with the caveat that these could still be changed: • Article 2 Appropriate Design Funds for Fire Station; Funds Requested: $450,000: A motion was made and seconded to support this article. The motion passed. VOTE: 9 -0 • Article 3 Appropriate Design Funds for Fire Station Swing Space; Funds Requested: $50,000: A motion was made and seconded to support this article. The motion passed. VOTE: 9 -0 3 02/15/2017 AC Minutes • Article 4 Appropriate Design Funds for Lexington Children's Place /20 Pelham Road; Funds Requested: $771, 250: Ms. Yang and Ms. Yan questioned the advisability of moving forward on this project at this time, stating that the cost is high and there may be better alternatives. Ms. Yang suggested moving the high school project forward to take advantage of the relatively low interest rates that are currently available. Others discussed the extensive effort that has gone into exploring alternatives over recent years and the importance of moving forward at this time for logistical reasons associated with the timing of a debt exclusion vote and increasing enrollment. A motion was made and seconded to support this article. The motion passed. VOTE: 7 -2 • Article 5 Appropriate Bonds and Notes Premiums to Pay Project Costs: A motion was made and seconded to support this article. The motion passed. VOTE: 9 -0 There was a brief review of assignments for writing the report. 8. Adjourn The Committee adjourned at 9:38 p.m. The documents used at the meeting are listed below. Respectfully submitted, Sara Arnold, Recording Secretary Approved: March 2, 2017 Exhibits • Agenda, posted by John Bartenstein, Chair • Request for Transfer from Reserve Fund dated 2/15/17 4