HomeMy WebLinkAbout2025-11-03-AC-STM2-rptAPPROPRIATION COMMITTEE
TOWN OF LEXINGTON
,APRIL "
I. G
REPORT TO THE
2025-2 SPECIAL TOWN MEETING
RELEASED OCTOBER 27, 2025
APPROPRIATION COMMITTEE MEMBERS
Glenn P. Parker, Chair • Sanjay Padaki, Vice Chair • Alan Levine, Secretary
Carolyn Kosnoff (ex officio; non-voting) • Anil A. Ahuja • John Bartenstein
Eric Michelson • Sean Osborne • Vinita Verma • Lily Manhua Yan
STM 2025-2
APPROPRIATION COMMITTEE 27 OCTOBER 2025
Table of Contents
Summary of Warrant Article Recommendations
Introduction 1
Warrant Article Analysis and Recommendations ......................... 3
2025-2 SPECIAL TOWN MEETING
Article 2 Appropriate for Prior Years' Unpaid Bills 3
Article 3 Establish, Amend, Dissolve and Appropriate To and From Specified Stabilization Funds 3
Article 4 Amend FY2026 Operating, Enterprise and CPA Budgets 4
Article 5 Appropriate for Authorized Capital Improvements 4
Article 6 Establish, Amend and Continue Departmental Revolving Funds ... 4
Article 7 Accept General Laws, Chapter 59, Section 5, Clause 221 (HERO Act) 5
Article 8 Appropriate for Lexington High School 6
I
STM 2025-2 APPROPRIATION COMMITTEE 27 OCTOBER 2025
Summary of Warrant Article Recommendations
Abbreviations
CPF Community Preservation Fund
RE Retained Earnings
EF Enterprise Fund
RF Revolving Fund
GF General Fund
SF Stabilization Fund
IP Indefinitely Postpone
SRF Special Revenue Fund
2025-2 SPECIAL TOWN MEETING
Art-
Title
Funds
Funding
Committee
icle
Requested
Source
Recommendation
2
Appropriate for Prior Years' Unpaid Bills
None
N/A
IP (9-0)
Establish, Amend, Dissolve and
3
Appropriate To and From Specified
$1,164,367
GF
Approve (9-0)
Stabilization Funds
4
Amend FY2026 Operating, Enterprise and
See below
See below
Approve (9-0)
CPA Budgets
5
Appropriate for Authorized Capital
None
N/A
IP (9-0)
Improvements
$60,000
Lexington Tree RF
6
Establish Amend and Continue
$50 000
DPW Compost
Approve (9-0)
Departmental Revolving Funds
Operations RF
$45,000
Health Programs RF
7
Accept General Laws, Chapter 59, Section
None
N/A
Approve (9-0)
5, Clause 22I (HERO Act)
S
Appropriate for Lexington High School
$647,921,834
Debt
Approve (9-0)
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
Introduction
This report includes the Appropriation Committee's analysis and recommendations regarding all appropriations of
Town funds that are anticipated at this special town meeting, and other municipal matters that may be considered.
This report is distributed as an electronic document via the Town website. The Committee also makes
presentations during Town Meeting, including recommendations on appropriations and other matters for which
the Committee's formal position has been revised since the time of publication.
The Committee published its Report to the 2025 Annual Town Meeting on March 26, 2025. Please refer to the
preface of that report for more details of how this report is prepared and the conventions used within.
The Committee's goal is to publish its report at least one week prior to the date when the articles covered in this
report may be taken up by Town Meeting. That date is typically the same night that the annual town meeting or a
special town meeting is convened.
Committee Membership
On June 27, 2025, the Moderator reappointed Vinita Verma to a full 3 -year term on the Appropriation Committee.
Eric Michelson was also reappointed to a 3 -year term by the Moderator on June 27, 2025. There have been no
other changes to the Committee's membership.
Reserve Fnnd
To date there have been no requests for Reserve Fund transfers during FY2026.
Developments Since Adoption of the FY2026 Budget
On June 26, 2025, the Committee reviewed final budget adjustments for FY2025 as recommended by Town staff.
The end -of -year (EOY) budget adjustments were to:
1. Transfer $45,000 from "Health Insurance" to "Property & Liability Insurance"
2. Transfer $1,000 from "Board of Health Contract Services" to "Board of Health Regular Wages"
3. Transfer $65,000 from "Town Manager Prof. Svcs." to "Legal Services"
4. Transfer $11,000 from "Innovation & Technology Utilities" to "Innovation & Technology Overtime".
The Committee voted to approve all of these EOY transfers.
The Committee also reviewed, but was not required to approve, transfers from the Salary Transfer Account, as
follows:
1. $31,000 to "DPW Admin Regular Wages"
2. $97,000 to "Library - Regular Wages"
3. $11,000 to "Comptroller Regular Wages".
Funds Available For Appropriation
The table below summarizes changes to revenues and expenses since the FY2026 was approved. The tax levy
increased due to additional new growth, and state aid was higher than the budgeted amount. The state's Cherry
Sheet assessment was below the budgeted amount, the FY2024 snow and ice set-aside was released, and the
Minuteman Regional High School assessment was below the budgeted amount.
Funding Source
Type
From
To
Change
New growth (General Fund)
Revenue
$
3,200,000
$ 3,394,842
$
194,842
New growth (CSF earmark)
Revenue
$
—
$ 17,858
$
17,858
New Growth Suhtotal
Revenue
$
3,200,000
$ 3,412,700
$
212,700
State aid
Revenue
$
21,022,716
$ 21,532,602
$
509,886
Cherry Sheet assessments
Expense
$
(1,210,640)
$ (1,205,689)
$
4,951
Snow and ice removal set-aside (FY2024)
Expense
$
(400,000)
$
$
400,000
Minuteman Regional High School assessment
Expense
$
3,606,312
$ 3,569,482
$
36,830
TOTAL
$
1,164,367
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
The Town's tax levy new growth is now estimated at $3,412,700.1 The FY2026 budget estimated new growth
conservatively at $3,200,000, resulting in $212,700 of unbudgeted new growth revenue. In the table above, this
additional revenue is divided into two parts, with $194,842 flowing into the General Fund, and $17,858
earmarked for the Capital Stabilization Fund (CSF). The rationale for the use of this additional new growth is
explained below.
The Town adopted a framework for funding the Capital Stabilization Fund (CSF) that earmarks a portion of each
year's new growth to build a recurring revenue stream. Earmarks from prior years are cumulative, meaning that
the annual revenue stream is the sum of all prior earmarks. Each year, the size of the earmark is set based on the
certified new growth revenue attributable to PSDUP and Hartwell Avenue building projects.
Source
Amount
2025 ATM appropriation
$ 6,563,050
2025-2 STM appropriation
$ 17,858
Annual Recurring CSF appropriation
$ 6,580,908
Combined with $6,563,050 of prior -year earmarked revenue already appropriated at the 2025 Annual Town
Meeting, the revenue earmarked for the CSF going forward will total $6,580,908.
The remaining new growth revenue of $194,842 is not earmarked for recurring appropriation to the CSF, but it is
proposed to incorporate this money into a one-time appropriation into the CSF under Article 3.
State aid to the Town was $509,886 above the budgeted amount. The state "Cherry Sheet" assessment was $4,951
below the budgeted amount. The Town previously appropriated $400,000 for snow and ice removal in FY2024
that was not needed, and that amount is now available. Finally, the Minuteman Regional High School final
assessment was lower than the preliminary assessment by $36,830.
These changes yield a total of $1,164,367 in available funds for the FY2026 budget. This will all be appropriated
into the CSF under Article 3.
Lexington High School
Since the annual town meeting, Committee members have attended numerous public meetings on the design of
the new high school hosted by the School Building Committee.
In the MSBA building process, the Town has completed Module 4 -"Schematic Design" and entered Module
5 -"Funding the Project", during which the Town and MSBA staff prepared a document describing the project
scope, budget, schedule, and MSBA's financial participation. This document is now awaiting approval by the
MSBA Board of Directors on October 29, 2025.
Approval of Article 8 by Town Meeting and subsequent approval of the excluded debt referendum would allow
the MSBA and the Town to enter into a Project Funding Agreement, after which the project would advance to
Module 6 -"Detailed Design".
Updates
This report presents the official positions of the Committee as of the date of publication. The Committee will
continue to meet as necessary prior to and during Town Meeting and it may revise its official positions based on
new or updated information. The Committee also reports orally to Town Meeting on each article. The oral report
summarizes the Committee's final recommendation.
1 As of publication this figure has not been certified by the state Dept. of Revenue. The appropriation under Article 3 may
differ slightly from the amount presented here.
2
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
Warrant Article Analysis and Recommendations
2025-2 SPECIAL TOWN MEETING
Article 2 Appropriate for Prior Years' Unpaid Bills
Funds Requested Funding Source Committee Recommendation
None N/A IP (9-0)
As of publication, staff has not identified any unpaid bills from prior years. No action is required under this
article.
Article 3 Establish, Amend, Dissolve and Appropriate To and From Specified
Stabilization Funds
Funds Requested Funding Source Committee Recommendation
$1,164,367 GF Approve (9-0)
This article requests an appropriation into the Capital Stabilization Fund (CSF). The size of the request is based
on two components: one-time surplus funds in the FY2026 budget, and an update to the dedicated new growth
based on budget guidelines that are discussed in more detail below. This appropriation is partly sourced from
revised tax levy new growth, which as of this report's publication, has not yet been certified by the state Dept. of
Revenue. We expect that certification to be completed shortly before the Special Town Meeting, at which time the
amount of the appropriation will be finalized.
The CSF was established as a repository of funds to mitigate debt service payments on future capital projects. in
September 2021 at the Fall Fiscal Guidelines Summit, the Town Manager proposed, and the major boards and
committees agreed on, a Capital Stabilization Funding Framework that would help to grow the CSF significantly
in anticipation of the high school project. Taking advantage of robust growth in the Town's commercial tax base,
the framework dedicates "new growth" revenue from certain new commercial developments (those in the
Hartwell area and planned developments approved by Town Meeting) as a recurring revenue stream to fund
annual appropriations into the CSF. This guideline has been applied from 2021 onward.
At the 2025 ATM, $6,563,050 was appropriated into the CSF based on the dedicated new growth revenue from
FY2025 and the dedicated revenues carried forward from prior years. New growth in FY2026 includes $17,858
from developments earmarked under the CSF framework. This revenue will be added to the dedicated annual
appropriation into the CSF in this year and in future years.
In addition, this article seeks to appropriate to the CSF, on a one-time basis, $1,146,509 which comprises all
available funds not otherwise proposed for appropriation at this STM. The sum of the newly dedicated revenue
and the available funds is $1,164,367. The Introduction contains a more detailed description of this funding.
Since the inception of the CSF, the Town has routinely appropriated one-time revenue not needed for any other
purpose into it. The primary capital project on the horizon that will draw on the CSF is the replacement of
Lexington High School. If the project is approved, the Town will begin drawing on the CSF to mitigate annual
debt service, and future property tax revenue earmarked for the CSF will be appropriated directly for debt service
rather than moving through the CSF.
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
Article 4 Amend FY2026 Operating, Enterprise and CPA Budgets
Funds Requested Funding Source Committee Recommendation
See below See below Approve (9-0)
At last spring's Annual Town Meeting (ATM), operating and enterprise fund budgets for FY2026 were presented
and approved based on the FY2026 Recommended Budget and Financing Plan (RBFP). This article allows Town
Meeting to adjust those budgets to account for developments which have occurred since the ATM. The Line
column in the table below references budget line items specified in the RBFP.
FY2026 Operating Budget
Line Description From To Change
1200 Minuteman Regional High School Assessment $ 3,606,312 $ 3,569,482 $ (36,830)
At the 2025 Annual Town Meeting, $3,606,312 was appropriated for Minuteman Regional High School (MRHS).
However, the final MRHS assessment came in lower at $3,569,482, resulting in savings of $36,830. This increase
in available funds is part of the recommended appropriation into the CSF under Article 3.
FY2026 Enterprise Budgets
Line Description
From
To
Change
3610 Water Debt Service
$ 1,438,006 $
1,344,517 $
(93,489)
3710 Wastewater Debt Service
$ 1,672,086 $
1,530,176 $
(141,910)
3720 MWRA Wastewater Assessment
$ 9,359,196 $
9,333,555 $
(25,641)
The original appropriations for Water and Wastewater Debt Service were based on estimates; the final amounts
are slightly lower. At the Annual Town Meeting, $9,359,196 was appropriated for the MWRA Wastewater
Assessment. However, the final assessment decreased to $9,333,555, resulting in savings of $25,641. These
changes were factored into the water and wastewater rates for the current fiscal year.
FY2026 CPA Budget
There are no proposed changes to the CPA budget at this special town meeting.
Article 5 Appropriate for Authorized Capital Improvements
Funds Requested Funding Source Committee Recommendation
None N/A IP (9-0)
As of publication, staff has not identified any additional funds needed for previously authorized capital projects
from prior years. No action is required under this article.
.19
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
Article 6 Establish, Amend and Continue Departmental Revolving Funds
Funds Requested Funding Source Committee Recommendation
$60,000 Lexington Tree RF
$50,000 DPW Compost Operations RF Approve (9-0)
$45,000 Health Programs RF
Town Meeting must approve annual spending limits for all revolving funds at the annual town meeting. The limits
are based on estimates of expenses that each fund is expected to incur during the year, and may not exceed the
balance plus reasonably anticipated revenue. Any further changes to these spending limits also require approval
by Town Meeting.
Some changes to spending limits are requested to cover the cost of one-time projects, which will not carry
forward into the following year's spending limit. Other spending limit changes may reflect an expansion of the
activities supported by the fund, and as such will be incorporated into the annual budget going forward.
This article seeks to increase spending limits for three of the Town's revolving funds. Each revolving fund below
has an adequate balance to cover the associated request.
The spending limit for the Lexington Tree Revolving Fund was set at $150,000. The Dept. of Public Works
(DPW), in cooperation with the Tree Committee, would use a one-time increase of $60,000 to retain a consultant
to develop an Urban Forest Management Plan. Arlington, Concord, Bedford, Burlington, and other surrounding
communities have created similar plans to manage the urban forest, with recommendations for planting, species
diversity, canopy cover, maintenance and other related items. The DPW has secured a state grant for $20,000, but
they need the additional amount requested to fully fund the plan.
The spending limit for the DPW Compost Operations Revolving Fund was set at $955,000. A one-time increase
of $50,000 would be used to install a security system at the Hartwell Avenue Compost Facility. The security
system will provide cameras with visual coverage of hard -to -see areas and a new gate system will limit access to
the upper area. This is in response to the dumping of unacceptable materials (wood waste, concrete, trash, etc.) in
the yard waste piles and in front of the gate. Illegal dumping has also occurred in the upper area. The security
system will reduce costs incurred for cleaning up the unacceptable materials.
The spending limit for the Health Programs Revolving Fund was set at $100,000. An increase of $45,000 would
allow the fund to expand the Town's vaccine administration program to cover more users and more types of
vaccines. The Town is reimbursed for the cost of most vaccines through health insurance policies.
Article 7 Accept General Laws, Chapter 59, Section 5, Clause 22I (HERO
Act)
Funds Requested Funding Source Committee Recommendation
None N/A Approve (9-0)
This article seeks the acceptance of a local option under the HERO Act (An Act Honoring, Empowering and
Recognizing Our Service members and Veterans), which was enacted by the Massachusetts legislature in 2024. If
accepted, Clause 221 of the HERO Act would allow the Town annually to automatically increase the amount of
local property tax exemptions available to disabled veterans or their surviving spouses under G.L. c. 59, section 5,
Clauses 22, 22A, 22B, 22C, 22E and 22F based on an annual cost of living adjustment (COLA).2
2 Detailed information about each of these exemptions can be found in a brochure from the Town's Board of Assessors
entitled Property Tax ReliefProgramS. See: https://www.lexingtonma.gov/168/Elderly-Other-Tax-Relief
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
The COLA would be determined each year by the Massachusetts Department of Revenue (DOR) based on the
consumer price index published by the Bureau of Labor Statistics. It would be cumulative and compound each
year.
These property tax exemptions are borne in part by the state, with the remainder applied against the Town's
overlay account.' Increases to the cost of the exemptions after applying the COLA would also come from the
overlay account. In Lexington, the claimed exemptions range from $800 (Clause 22) to $2,000 (Clause 22E) per
applicant. Currently, 64 veterans or surviving spouses receive these exemptions totaling $30,400 under Clause 22,
$10,400 under 22(d) and $26,000 under 22E.4 If the COLA rate of 2.9% set by the DOR for FY2025 were applied
to these amounts, the additional cost to the Town would be about $1,900. The benefit to veterans of receiving an
inflation adjustment more than justifies this minimal cost.
The HERO Act provides for two additional forms of local tax relief which are not addressed by this article. A new
Clause 22J would allow a town, by local option, to increase the amount of its veteran exemptions by up to 100%.
However, since Lexington has already doubled both its senior and veteran exemptions by accepting G.L. c. 59,
section 5C'/z, there is no need to adopt Clause 22J. The HERO Act also eases the process by which disabled
veterans may establish their entitlement to an exemption from the motor vehicle excise tax under G.L. c. 60A,
section 1. However, that provision is mandatory for all towns and not the subject of a local option.
Article 8 Appropriate for Lexington High School
Funds Requested Funding Source Committee Recommendation
$647,921,834 Debt Approve (9-0)
This article requests the appropriation of $647,921,834 to pay for the design and construction of a new Lexington
High School (LHS), renovation of the existing Field House, and associated project costs. Town Meeting has
already approved two prior appropriations for design expenses: $1,825,000 under Article 2 of the 2022-2 Special
Town Meeting and $10,000,000 under At 26 of the 2024 Annual Town Meeting. The requested appropriation
would cover the remaining project costs and thereby bring the total appropriated amount to $659,746,834. These
funds would largely be raised through borrowing and a contribution from the Massachusetts School Building
Authority (MSBA). The debt would be repaid over about 33 years using additional property taxes authorized by
an excluded debt referendum along with within -levy tax revenue and funds from the Capital Stabilization Fund, as
explained in detail below.
As with any debt -based appropriation, this request will require approval by a two-thirds majority of Town
Meeting. The appropriation will be contingent on approval by a simple majority of voters in a Proposition 2'/Z debt
exclusion referendum scheduled for December 8, 2025.
Massachusetts School Building Authority (MSBA)
For many years, there have been a growing number of issues with both the condition of the existing LHS building
complex and its ability to support Lexington's educational mission. Given the scale of any project to renovate or
replace LHS, the Town chose to apply for support from the MSBA, which has reimbursed the Town for up to
25% of the cost for several recent school projects. The Town submitted Statements of Interest to the MSBA for a
new or renovated LHS in 2009, 2019, 2020, and 2021.
In early 2022, the MSBA invited the Town of Lexington into a joint process to consider the renovation or
replacement of the high school. The process has been vigorously pursued by the Town and a team of architects,
designers, managers and other professionals from the firms of SMMA, Dore & Whittier, and Turner Construction
as well as others under the oversight of the School Building Committee (SBC). Our Committee member, Alan
The overlay account is a fund set aside annually in the budget, without the need for appropriation, in an amount
recommended by the Board of Assessors. The fund primarily covers the anticipated expenses of successful requests for
abatement from the local property tax. Atter all outstanding abatement and exemption issues have been resolved, unused
amounts in the overlay account may be returned to the General Fund.
4 Of these amounts, the state covers $22,200 and the Town is responsible for the balance of $44,600.
6
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
Levine, served as our primary liaison to the SBC. Other members participated in numerous public hearings and
sub -committees focused on design, sustainability, and security.
The Schematic Design phase was completed this past August, producing a design ("Bloom") that is detailed
enough to generate practical estimates of the project's scope, construction and soft costs, and schedule, and that is
anticipated to be approved by the MSBA.
The design features a single, large new building that will connect to a renovated Field House. The gross floor
areas of project components are listed in the table below. The new building will be built on the present football
field and adjacent athletic fields. Students will continue to use the existing building complex during construction.
Once the new building is completed and occupied, the old school building complex will be demolished. That land
will then be used for parking and driveways and for athletic fields that replace those lost due to the new
construction.
Building
Gross Floor Area
(square feet)
High School
441,116
Central Office
19,350
Field House (renovated)
31,400
Field House 1 -story addition
14,900
TOTAL (main building)
506,766
Field Concessions
1,223
Field Storage
2,220
TOTAL (all construction)
510,209
Reference: LHS Schematic Designs
The design includes office space for the School Department Central Office (CO), replacing the space the CO
currently occupies in the old Harrington Elementary School. There are at least three reasons to include space for
the Central Office in the new high school. First, a comprehensive evaluation of the old Harrington building done
several years ago resulted in an "F" rating to denote that it is in very poor condition. The cost of addressing the
primary deficiencies of that building have been estimated to be roughly $20 million, an amount comparable to the
cost of building new space for the Central Office.
Second, locating the Central Office in the new high school provides space that can be converted into classrooms
and thereby serve as a buffer against the risk of a large increase in enrollment.
Third, when the CO moves out of old Harrington to 173 Bedford St. on an interim basis,' the vacant building will
be demolished to make way for the 6 -acre site to be converted into two large athletic fields. Lexington's
recreational resources are not sufficient in number or type to meet the high demand for field spaces from the
schools and public. New fields at the present old Harrington site would ease the shortage during (and after) the
high school construction when several Center Recreation complex fields would be out of service. Renovations to
173 Bedford St. are nearing completion, and the relocation of the CO is anticipated within the next several
months.
Sustainability Features
The new building has been designed for exceptional energy efficiency. The building envelope will be highly
insulated and air -tight; it will also use high performance energy recovery ventilators to provide healthy outside
air, maintain a stable interior climate, and minimize the energy needed for climate control. A combination of
efficient ground- and air -source heat pumps will be used for heating, air conditioning, and domestic hot water. In
conformance with Town bylaws and the specialized building code that Lexington has adopted, the building will
be all -electric except for emergency generators which are expected to use renewable bio -diesel fuel.
Solar photovoltaic arrays will be installed on all available areas of the building roof as well as on canopies over
the football field bleachers and the rear parking lots. The arrays will be sized to be able to generate about 4,800
I LHS Schematic Design:https://www.1hsproiect.lexingtonma.org/school-building-committee
6 The Town's long-term capital projects plan foresees using 173 Bedford St. as a swing space during the renovation of the
upper floors of the Cary Memorial Library, and again during the renovation of the Town Office Building in the 2030s.
7
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
kW -DC. Per the design estimate, this generation capacity is approximately 30% greater than that required for net -
zero energy operation, and thereby provides a degree of margin for achieving net -zero energy use over several
decades as the solar panels age or as the amount of electrical energy used in the building grows beyond the design
estimate.
A 2 MW/8 MWh battery -energy storage system (BESS) will store excess energy from the solar arrays. The BESS
will perform three functions. The most important function is to reduce peak -demand charges by providing power
to the building during periods of heavy power consumption and to other systems to reduce the need for grid -
supplied power. Additionally, energy from the BESS will be sold back to Eversource as part of their Connected
Solutions program. Finally, in the event of a grid power failure, the BESS will be able to provide instant,
uninterrupted back-up power until the building's emergency generators become active.
Some of these energy -oriented features will increase up -front costs. However, the energy efficiencies of the new
building, the energy produced by the solar arrays, and the ability to manage power provided by the BESS will
reduce operational costs and even yield some operational revenue from Eversource for electrical power that is put
onto the grid. As a result, the solar and battery systems should more than pay for themselves over the lifespans of
the systems.
In short, the highly efficient building and the HVAC systems, coupled with the solar allays and BESS, are
expected to yield substantial operational cost savings for the Town as well as environmental benefits.
Project Cost and External Support
The total project cost estimate of $659,746,834 was derived with the assistance of professional cost estimators.
This figure includes all previous design work, all construction and site work including replacement of the fields,
all sustainability features, furnishings, fixtures, and equipment, as well as appropriate contingency allowances.
Because an appropriation only grants permission to spend up to a specified amount for a given purpose, it is
important, for large projects, to include a contingency amount in the budget to help ensure that the final cost does
not overrun the appropriated amount and thus require a supplemental appropriation. For this appropriation, the
contingency allowances total $124,300,000 (see below). Each contingency quantifies a certain level of uncertainty
and risk in the estimate. To the extent a contingency is not fully used, the final cost of the project is
correspondingly reduced.
Contingency
Percentage
Amount
Escalation
$33,700,000
Tariffs
$8,400,000
CM Construction
3 %
$12,700,000
Owner (Construction)
5 %
$26,700,000
Owner (Soft Cost)
5 %
$4,400,000
TOTAL (non -Design)
$85,900,000
Design
10%
$38,400,000
TOTAL (all)
$124,300,000
In early October, as part of the funding process, Town and MSBA staff arrived at the terms of a project scope and
budget agreement, provisionally providing for an MSBA contribution of $121.3 million,' that will be considered
for approval by the MSBA Board of Directors on October 29, 2025. With that approval, the MSBA's total
contribution to the project will become definitive.
We note that a contribution of this magnitude represents about 18% of the total cost, which is lower than the
percentage Lexington has received for recent school projects from the MSBA. The MSBA contribution can
theoretically reach as high as 36.95% of the project cost (31% plus bonuses for energy efficiency, good
maintenance practices, and other project attributes). However, MSBA contribution rules strictly define those
features of the project that are eligible for reimbursement and they also include caps on particular expense
categories, the most important of which is the per -square -foot construction cost. Some of the caps are lower or, in
some instances, much lower than prevailing costs in today's construction and materials markets.
7 The latest estimate of the MSBA contribution is higher than the pre -October estimate of $111 million.
2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
The Town has started to receive reimbursements from the MSBA for costs associated with the design work
through the Schematic Design phase. To date (mid-October), the Town has received bills for design work or
support totaling $3,937,941 of which $3,282,598 was deemed eligible for reimbursement at the designated 31%
rate. The Town has received $720,542 and $297,063 is pending; these sum to $1,017,605, which is about 26% of
the total amount billed to date.
The Town may qualify for up to about $5,500,000 in grants or rebates from Mass Save and the Massachusetts
SMART program based on sustainability features of the project design. However, such incentive payments are not
guaranteed.
The Board of the LABBB Educational Collaborative, a special education service provider set up by Lexington
and five neighboring towns that uses space in LHS, has voted to contribute $1,000,000 to the project.
Although considered in the early design phases, there is no expectation that any support will be received from the
Federal Government for the sustainability features of the design under the Inflation Reduction Act (IRA), with the
possible exception of support for the installation of ground -source heat pumps.
Capital Stabilization Fund
Under the "Capital Stabilization Funding Framework" recommended by the Town Manager and adopted by the
Select Board in FY2022, new property tax revenue from certain projects is earmarked for the Capital Stabilization
Fund (CSF). This guideline applies to projects that require Town Meeting approval of a Preliminary Site Use and
Development Plan (PSDUP), or that are located in the Hartwell Avenue area zoning district wherein the
dimensional controls were significantly relaxed in 2020. This funding framework creates a source of recurring
annual revenue which, at present, is being used to build up the CSF balance. The CSF will continue to be built up
until the debt service payments for the LHS project become substantial.
Appropriations out of the CSF can be used to pay expenses for major capital projects, which may lower the
impact on taxpayers. In the present case, the CSF will be spent down from FY2028 through FY2034 to reduce the
need to raise taxes for excluded debt service for the LHS project and thereby limit the annual rate of tax increases
due to the new debt during the first eight years. A total of about $58 million from the CSF is expected to be used
for this purpose.
Recurring annual tax revenue of about $6,500,000 has been earmarked according to the funding framework. This
within -levy revenue, together with additional smaller amounts that may become available for this purpose in the
next two years or so, will be used annually for the duration of the debt (FY2028FY2058) to further mitigate the
service of excluded debt. Since this use of the set-aside within -levy revenue will extend over approximately 30
years, a total of just over $200,000,000 in within -levy revenue will go towards the project's debt service.
Town Financing
The MSBA reimbursement, currently estimated at $121,300,000, and the LABBB contribution of $1,000,000 will
be used to pay project bills. The remaining amount, i.e., approximately $537,700,000, will be debt-financed. The
present plan, beyond some short-term borrowing in the first few years, is to issue municipal bonds in five
installments over about five years. The first four bond issues would each have a term of 30 years which is
consistent with the expected life of the building of 75 years. The fifth and final bond issue would be used for
furnishings, fixtures, and equipment for use in the new building and on the site and would have a 15 -year term.
This plan is subject to revision based on the actual timing and amounts of bills from contractors.
Issue Date
Amount
Term
(years)
Assumed
Rate
Bond Structure
Feb. 2026
$20,000,000
30
4%
Level Payment
Feb. 2027
$100,500,000
30
4%
Level Payment
Feb. 2028
$166,400,000
30
4%
Level Payment
Feb. 2029
$204,800,000
30
4%
Level Payment
Feb. 2030
$55,800,000
15
4%
Level Principal
When the Town issues bonds, it has the choice of structuring the repayment as "level payment" or "level
principal". The first option allows the Town to pay debt service using fixed annual payments of the same amount
for the duration of the debt. The amounts of principal and interest represented in each payment vary, but the total
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2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
amount of each payment remains the same. This is similar to a typical home mortgage payment schedule. The
second option allows the Town to pay a fixed proportion of the principal, e.g., 1/301' for a 30 -year bond, plus the
interest on the principal outstanding at the time of payment. This creates a declining payment schedule where
payments near the beginning of the term are higher than at the end. Level payment makes it easier to manage cash
flow, especially for very large bonds, but the tradeoff is that the borrower pays more in interest than with level
principal.
Normally, the Town uses level principal for its long-term borrowing, but the first four bond issues for the LHS
project would use level payments. The additional interest is deemed an acceptable cost for spreading the tax
impact relatively evenly over the duration of the debt service rather than front -loading it. The fifth bond, which
would fund items like equipment, fixtures, and furnishings with shorter lifespans than a building, would have a
correspondingly shorter term and the plan is to use level principal instead.
Taxpayer Impact
The Town has published a website' that allows residents to input the FY2025 assessed value of a property and
generate a table with estimates of the additional property tax the LHS project debt would impose on the property's
owner. These estimates are calculated according to the following assumptions:
1. Future tax bill impacts are calculated in current -year dollars and are not discounted for the time value of
money.
2. Property valuations are based on FY2025 assessed values, and future valuations are assumed to increase or
decrease in proportion to the town -wide average change. This also assumes that the Residential vs.
Commercial -Industrial -Personal Property (CIP) tax rate shift remains at the current factor of 1.75.
3. The 3% CPA surcharge on property tax bills is included.
4. The impact of new growth for the tax levy from new construction is not modeled. In practice, new growth will
spread the remaining debt burden over a larger base, thereby lowering the tax impact on individual properties.
5. The total cost to the Town will be $659.7M, less an MSBA reimbursement of $111 million (an earlier
estimate), and a contribution of $1 million from the LABBB Educational Collaborative.
6. Future energy credits and rebates are not modeled. Any monies that are received may be applied to further
reduce the project debt service.
7. Municipal debt will be issued over a four- or five-year period, primarily for 30 -year terms with level
payments, and with a final issue at a 15 -year term with level principal payments, using an assumed 4%
interest rate. Actual interest rates will vary depending on the market for municipal bonds.
8. Annual within -levy tax revenue of $7.06 million is earmarked to mitigate debt service in all years.
9. The balance in the Capital Stabilization Fund will be $58 million at the beginning of FY2028, and will be
used during FY2028—FY2034 to create a gradual rather than sharp increase in the tax impact.
It is emphasized above that the tax impact calculator numbers are estimates. In that spirit, one may note that the
MSBA reimbursement amount is now expected to be $121.3 million rather than $111 million and the within -levy
annual contribution may be somewhat lower than the assumed $7.06 million. These differences tend to offset each
other and will have minimal effects on the overall tax impacts.
DesiLin Cabacity
Many discussions have taken place over the course of the project regarding the new building's nominal design
capacity of 2,395 students. Some residents have expressed the concern that this capacity is too small in light of the
current LHS enrollment together with the additional enrollment that may result from zoning changes made in the
last few years that allow the development of multifamily housing under the MBTA Communities Act. For the
reasons set out below, we believe the building is properly sized and that increasing the nominal capacity would
increase the cost of the building without sufficient justification.
' Tax impact calculator:https://www. lexingtonma.gov/2431/Lexington-High-School-Project-Tax-Impact
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2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
We briefly compare the new building's capacity with projections of enrollments in the first five years that the
building will be in operation. Even though the nominal design capacity is 2,395 students, the building could serve
many more students without becoming severely overcrowded like the current building. First, the design capacity
assumes an average class size of 23 students and a classroom utilization rate of 85% (the utilization rate is the
fraction of class periods that a teaching space is actually in use for teaching). For comparison, in the current LHS
building the utilization rate is about 95% and the average class size is close to 25 students. Changing the
classroom utilization rate in the new building from 85% to 90% and average class size from 23 to 25 would
increase the school capacity by about 300 students. Second, the space for the Central Office could be converted
(via a renovation at some cost) into about 12 classrooms that would be able to serve an additional 240 to 300
students. Third, the building is being designed to allow an addition to be built (at considerable cost) off of the end
of the B wing that could serve an additional 550 students.
A number of factors must be carefully considered when projecting future LHS enrollments over the long term.
The first factor is to project the enrollments of high school students who would come from the current housing in
Lexington. At present, the smaller cohorts particularly in the elementary grades indicate, although not with
absolute certainty, that such enrollments will decrease substantially for the next 5 to 10 years. The Lexington
Public Schools (LPS) elementary enrollments have dropped from 3,150 in FY2018 to 2,425 (preliminary count) in
FY2026. As smaller cohorts in the lower grades advance, it is likely that the size of cohorts in the higher grades
will fall below current levels. The LHS enrollment hit a peak of 2,405 students in FY2025 and has decreased to
2,367 (preliminary count) in FY2026.9 The current LPS cohort -survival -method mid -point projection of the LHS
enrollment in FY2030 is 2,176 students and in FY2035 is 1,831 students.
The second factor is to project the potential enrollments of students in new multifamily housing that is yet to be
constructed. Tn the report of this Committee to the 2025-1 Special Town Meeting,10 we projected that there could
be a total enrollment of 1,940 students in all LPS grades when both the expected construction and the future
construction including the potential construction on Hartwell CM zone properties. Approximately one third of
LPS students will be enrolled in grades 9-12. This suggests that the MBTA multifamily housing could yield about
650 LHS students. This is a generous estimate (but not a strict upper limit). We expect that the development of
this housing and the subsequent enrollment of students who occupy that new housing will take place gradually
over about ten years.
While this projected number of students from new housing will offset the decline in enrollments of students from
current housing, it appears that the likelihood is low that the practical capacity of the new school will be
exceeded, at least in the first decade or so. However, one must keep in mind that projections of both future LHS
enrollments and the number of students in new housing are not only subject to statistical uncertainties, but also,
since they concern human behavior, come with the associated caveat that trends may change or that unforeseen
factors may come into play.
Recommendation of Support
The need for a new high school is clear. The current building is severely overcrowded, and core spaces like the
cafeteria, gym, and hallways are too small for the current enrollment. The building fails to meet many of our
school system's educational program needs, e.g., there aren't a sufficient number of teaching spaces and the
classrooms are generally too small. For more details of the inadequacies of many other spaces in the current
building, see the narratives in subsection A.3 Proposed Project Support of District's Educational Program from
Section 4.1.2 /Schematic Design of the Schematic Design submission to the MSBA.11
The proposed new building would be able to accommodate many more students without being subject to
overcrowding. The core spaces and classrooms would be sized appropriately to the size of the student body today,
and other types of spaces would better serve many of the school's departments. The new HVAC system that
includes the capability for air conditioning as well as heating would markedly increase levels of comfort, thereby
facilitating a greater focus on learning for students and teachers alike. The new building would have dramatically
9 Enrollment numbers from LPS District Growth by Grade PK -12 -Annual Report at https : //docs . Roogle . com/
spreadsheets/d/1hKY0oRsn5ShKg7XI0ekxZxFSWfWJYCkPoyN5LfvcTw/edit?gid=0#gid=0
10 2025-1 Special Town Meeting:https://lexingtonma.gov/2265/2025-1-Special-Town-Meeting
"Section 4.1.2/Schematic Design:https://drive.google.com/drive/folders/10zlwl4Ly0aN1-umkFRgwJ9fLTVa9UwJB
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2025-2 STM APPROPRIATION COMMITTEE 27 OCTOBER 2025
increased energy efficiency and would generate electrical power from sunlight, yielding significant operational
financial and environmental benefits.
The use of $58 million from the CSF balance, and the annual use of $6.5—$7.0 million of within -levy tax revenue
for the duration of the debt service, is a substantial commitment of future resources. Ultimately, this component of
the financing plan would contribute over $250 million towards the total debt service, thus decreasing the tax
impact of the debt exclusion on Town residents and businesses. Given the scope of the project, the Committee
believes this is a prudent use of within -levy tax revenue.
Delaying the LHS project would only exacerbate the poor conditions in the existing building, and increase the risk
of a drastic building system failure. Rejecting this request would sacrifice MSBA support for the project with no
assurance of timely renewed MSBA support in the future. In the meantime, construction costs would likely
escalate further due to inflation. Many of the existing building's systems are well beyond their end of life, and the
building's energy performance is quite poor. Some of these building systems are at risk for catastrophic failure
that could entail very costly extraordinary repairs. Without the promise of a new building, the current building
complex will demand significant capital investment. There is no responsible course of action for the Town that
avoids significant LHS -related expenses over the next few decades.
The Town has invested an extraordinary amount of time and resources to design a high school that meets the
needs of a 21 It century population. it has integrated this project into its capital planning to provide a smooth
transition with a minimal loss of Town services during the construction period. Finally, Town staff has developed
a financing plan to make it feasible. We should all be very proud of this work, which is the culmination of years
of careful planning and preparation.
The Committee recommends that this appropriation be approved.
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