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AD HOC COMMITTEE ON PILOTS
(Payment in Lieu of Taxes)
PROBLEM:
The Town of Lexington created enterprise funds for water and sewer operations in 1987 Later a
similar fund was established for Recreation services in 1988 when the Town purchased the Pine
Meadows Golf Course. All direct and indirect costs for the operation of the water and sewer
functions, including capital costs, have been built into the fees/rates charged. None of the costs of
providing water and sewer services are supported through the real estate tax levy The
Recreation Enterprise Fund has not generated enough revenue to fund all the indirect costs
incurred to support this recreation operation. The tax levy supports all financial operation costs
and administrative oversight connected with the Recreation function while some capital
investment and Public Works Park Division support is funded through Recreation program fees.
The Town of Lexington and Bedford water purchase agreement, and subsequent revenue
generated as a result of the agreement, made it feasible and appropriate to transfer $500,000 per
year from the Water Enterprise Fund to the General Fund in the form of an in lieu of tax payment.
This practice has been in place for approximately six years. The 1997 Annual Town Meeting
approved an expansion of the in lieu of tax transfer to the Sewer Funds with the explicit
understanding that the Board of Selectmen would create a citizens' committee with a charge to
examine the feasibility of continuing and/or expanding this practice.
CHARGE:
The Ad Hoc Committee on PILOTS will examine the practice of transferring funds from the
Water, Sewer and Recreation Enterprise Funds to the General Fund hi the form of in lieu tax
payments. The Ad Hoc Committee should consider the feasibility, practicality, and advisability of
continuing this practice. The Committee should examine the effects of this practice on the rates
charged for water, sewer and recreation services. The Committee should examine whether this
practice results in a water and sewer rate/fee that is incompatible with the rates charged by other
MWRA communities. Similarly, the Committee should determine whether implementing a
Recreation Fund in lieu of tax payment will result in Recreation program fees that are
incompatible with fees charged by other organizations and companies serving the citizens of
Lexington. Finally the Committee, should as a result of their work, make formal policy
recommendations to the Board of Selectmen by October 15, 1997 regarding PILOTS.
MEMBERSHIP:
The Committee shall consist of seven to nine citizens appointed by the Board of Selectmen with
liaison participation from the Appropriation and Recreation Committees.