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HomeMy WebLinkAbout1957-12-30-CEC-min.pdf MEETING OF THE CAPITAL EXPENDITURES COMMITTFF December 30, 1957 A meeting of the members of the Capital Expenditures Committee was held at 8 00 p.m. on December 30, 1957, at the home of Sanborn Brown, for the purpose of compiling figures received to date and starting preliminary work on the committee report. Those present were Sanborn C. Brown, chairman, Dan H. Fenn Jr„ Rosemary Fitzgerald, Irving H. Mabee, and. Norman Royle, who arrived later in the evening. Mabelle Tucker acted as secretary. Work was started on the table entitled "Timetable of Capital Expenditures", in which figures from each department on capita expenses for the next five years were entered. (See attached sheet) . In the case of Public Works expenditures, for which Mr. Gayer had given_only the 1958 figure, estimates for the next four years were obtained by adding to the 1958 figure an amount based on the rate at which public works expenses had been increasing over the past few years, and so on for each succeeding year. Water mains and laterals were increased by $3,000 each year, sewers by $10,000, drainage by $2,000i streets by $5,000, equipment by $5,000 every two years, while sidewalks and curbs remained constant. In the case of capital expenditures for the Recreation Committee it was agreed to increase the figure of $10,000 which has been carried for some years for the acquisition of land to $20,000 per year for the next five years. The committee decided to omit the capital expense for the con- struction of a new fire station, tentatively requested by the Board of Fire Commissioners for 1960, pending the recommendation of the Fire Station Committee. Also, there was some doubt expressed by members of the committee as to the need for the new station, particularly in the place being consideredf this site is at the place where the circles showing running time from the E. Lexington station and the Headquarters station coincide - that is, the site is equidistant from the two pres tent stations in running time. It was felt that a site less accessible, such as North Lexington, would be better. Having made this decision the committee (or the secretary) included the $60,000 for the new fire station in the Timetable of Capital Expenditures under 1960. The total for capital expenditures in 1958 was now estimated at $3,349,000, ant increase of $557,000 over last year's estimated 1958 tot ll of $2,792,000. $450,000 of this increase was due to the postponement last year of te Junior High School renovation from 1957 to 1958. Mr. Brown recommended that the C.E.Committee point out to the Town Meeting that the postponement of this renovation to 1958 has made capital expenses in 1958 very high. The committee then turned to estimating assessed valuation for the next five years. The C.E. Committee has been rather successful in estimating valuation from a logarithmic curve projected from past years: last year its estimate was $57,000,000 which com- pared more favorably with the actual figure of $58,500,000 than the assessors' estimate of $56,000,000. Increases in actual MEETING OF TtW CAPITAL EXPENDITURES COMMITTEE Page 2 December 30, 1958 assessed valuation over the past few years have been as follows from 1956 to 1957: $5,500,000; from 1955 to 1956: $4,000,000; from 1954 to 1955: $3,500,000. Mr. Fenn stated that Mr. Irwin had said that althoughousing starts were down in 1957, more expensive houses were being built and that this factor, plus the motel and the proposed hotel twhbh, however, would not be figured in 1958 valuation) would make valuations rise. Also Mr Fenn thought that light industry might be introduced within the next five years and that this would contribute to a rise. Mrs. Fitzgerald felt that although no one knew how long the present recession might last, or how big it might be, her in- clination would be to run valuations up pretty generously; if valuations fail to go up as rapidly as estimated then it would mean that mm some of the town's needs would be less pressing. For instance, requests for school construction are based on estimates that school enrollment will continue to increase; if building does not keep up, timm and va]aations do not increase as estimated, then school enrollment will not increase as estimated and probably the projected schools will not be needed. The committee decided to add $4,000,000 to the 1957 actual valuation to get an estimated valuation of $62,500,000 for 1958; and to add $4,000,000 each year thereafter. This constant increase represents a slowing down of the curve. The committee then worked on the table entitled "Table of Expenditures and Tax Levy". (See attached sheet.) The top line, Current Operating Expenditures, was copied from the 1957 report, with% the 1962 figure of $4,300,000 being obtained from the projected line on the graph entitled $ "Total Curfent Expenditures". The figures on Maturing Debt and Interest (that is, committed to prior to last year' s town meeting) , were copied from the 1957 report, with the figure for 1962 being obtained by subtracting $30,000 from the 1961 figure. The figures for Proposed Debt Expense, Principal and Interest (third line) were co$ied from the 1957 report, with the exception of 1958: these figures were adjusted to remove' the bonding of the Junior High% School renovation which was not voted at Town Meeting. $22,500 (one twentieth of $450,000) was subtracted from the old 1958 Principal of $79,000, to give a new 1958 Principal of $56,500; and $14,625 (interest on $4502000 at 3.25%) was subtracted from the old 1958 interest of $48,000 to give a new 1958 interest of $33,375.) This made the new total of the firtt four items $4,027,8' 5 for 1958, or $37,125 less than the old 1958 total of $4,065,000. The 1962 figure for proposed Debt Expense, Principal and Interest, was obtained by figuring the bonding of 1961 capital expenditures at 3.25% interest: approximately $3,000,000 (actual $2,944,000) bonded at 3.25$ would give $150,000 principal and $97,500 interest. These figures were added to the previous year's principal and interest figures to give $471,000 principal and $282,500 interest for 1962. The figures for Overlay and State and County Assessments were taken from the 1957 report and projected for 1962. MEETING OF THE CAPITAL EXPENDITURES COMMITTEE Page 3 December 30, 1957 The figures for Capital Expenditurds were taken from the first table prepared "Timetable of Capital Expenditures". The figures for Bonding, Receipts and Transfers were taken from the 1957 report and adjusted to include changes in the estimates of capital expenditures for eachear, assuming that all capital expenditures would be bon� de�d�.. Valuation figures were entered from Emit estimates7n page 2 of these minutes, and the tax rate was figured for each year. There was a d scussion of how to point out to the Town Meeting the effect 'W" bonding all capital expenditures is having on the town's debt ratio, without scaring the Town Meeting members to the point of not voting for necessary schools. It was felt tht there should be an explanation in the report of the 10% ratio between total debt and assessed valuation, which the state feels is the limit of sound financing. Lexington is already exceedg this limit, and i$ all capital expenditures recommended for the next five years are voted and bonded the debt ratio will be 17% in 1962. To cut it down to the desired 10% ratio, the town will have to borrow $4,000,000 less in the next four years than is planned. The committee felt that some of the capital expenditures which are usually bonded NM should be paid for out of the tax rate. The servers constructed each year, for expmple, will cost about $400,000 to $450,000 each year, and might come oat of taxes. Mr. Brown thought that streets might be a better item to pay .for currently, since they could conceivably be let go, while sewers, which are required by the state if conditions warrant, cannot. Mrs. Fitzgerald thought that if the town could be per- suaded to pay for a school out of taxes there would be the added advantage that the state would pay back its share (if the law is extended on school construction aid) in 5 years, instead of over W.20 year period which applies when the school is bonded. It was thought that it would be extremely difficult to persuade the selectmen, who are primarily interested in providing sewers and streets for voters and in keeping the tax rate down, and beyond them the appropriation committee, of the wisdom of paytng for capital expenses out of current taxes. However, the town won't have the choice of being able to borrow money when the debt ratio gets up to 17%. The committee thought that perhaps they could offer town meeting members several alternatives for instance, they could keep the debt down temporarily by post- poning a needed school - but eventually the school will have to be built, perhaps at greater cost; a better choice would be to build the school, but pay for sewers and streets. Mrs. Fitzgerald pointed out that Lexington's growing debt is a result of the town's extreme growth. The town' s per capita debt of $321 compares to 0 for Belmont, $63 for Arlington, $103 for Dedham, $149 for Framingham $298 for Bedford and $376 for Sharon. MEEETING OF THE CAPITAL EXPENDITURES COMMITTEE Page 4 December 30, 1557 Some of these towns have not the sort of growth which Lexington has enjoyed. However, it should also be noted that Arlington increased its tax rate by $10 last year, whi*e Lexington's went up only $l. There were numerous suggestions for graphs and tables which might be included in the repthrt. Mfrs. Fitzgerald thought that a bar graph W showing current operating expenses and debt service as parts of the total would be informative. (For instance, for 1962 a bar graph might show that of the $61 tax rate $22 went for debt service, [these figures being purely imaginary].) Mr. Brown suggested plotting the ratio Are of debt to valuation as a function of years. Average population might be plotted against the per capita debt for a number of towns, to see where Lexington fits. There might be a table showing the total debt as it stands not, and what it will be in the future, assuming that everything is bonded. It was agreed that in these graphs and tables no distinction should be made between debt inside the debt limit and that outside; total debt should be used, and the inside and outside the debt litjit could be explained in a paragraph. It was decided that Mrs. Fitzgerald should make the plots mentioned above, that Mir. Fenn should call Mr. Agnew to get information about bond interest rates in the near future, and that Er. Brown should borrow Mr. Roylets copies of Tyler and try the first deritative of population versus per capita debt. Mfrs Fitzgerald will try to arrange a meeting with the School Building committee, possibly on January 16 when a meeting with the Fire Station Building Committee is planned. It is hoped that the C.E.C. can meet with the Appropriation Committee sometime later when it has all the facts at hand, and visual aids prepared. The meeting was adjourned at 11:45 p.m.