HomeMy WebLinkAbout2011-02-23-AC-minFebruary 23, 2011
Minutes
Town of Lexington Appropriation Committee
February 23, 2011
Place and time: Town Office Building, Room G-15,7:30 p.m.
Members Present: Glenn Parker, Chair; John Bartenstein, Vice Chair and Secretary;
Robert Cohen; Alan Levine; Susan McLeish; Eric Michelson; Rob Addelson (non- voting,
ex officio)
The meeting was called to order at 7:50 p.m.
1. Liaison and Staff Reports.
Board of Selectmen (Rob Addelson and Susan McLeish). Two topics of
interest discussed at the most recent meeting of the Board of Selectmen were a
recent $4.7m bond issue by the Town and final approval of the recommended
FY2012 budget.
o Bond Issue. Mr. Addelson reviewed the highlights of the bond issue for
the Committee. The process began with a ratings conference call with
Moody's that resulted in reaffirmation of the Town's Aaa rating. (The
Moody's report will be posted on the Town web site.) The bond issue was
then put out to bid. A total of 9 bids ranged from a "true interest" cost of
2.05% to 2.19 %. "True interest" is a measure used to compare on an
"apples to apples" basis multiple bids that contain different coupon rates,
bond premiums and other terms and conditions. The actual interest rate
in any given year may be different from the true interest, which is the
average annual interest cost to the Town over the life of the bond.
The successful bidder was Roosevelt and Cross with a true interest bid of
2.05 %, which includes a premium of $169,000. The coupon rate is front -
end- loaded, as high as 4% or so in earlier years but lower in later years.
The bonds were sold on February 16 and have maturities ranging from
five to ten years.
Bonds issued at this time last year were sold at a true interest cost of
about 1.5 %. Interest rates are starting to trend upward due to unease in
the markets about municipal finances generally, but with its Aaa rating,
Lexington will do much better than most other communities.
The Town also issued a bond anticipation note (BAN) in the amount of
$1,297,400 for the purpose of making a progress payment on the
acquisition of the Cotton Farm Property. There were 5 bids, the lowest of
which was from Century Bank for .7 %, with the note due 7/1/11. There
will be a request at the upcoming Annual Town Meeting to appropriate
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February 23, 2011
$1,300,604 from the Community Preservation Fund to retire the note when
it comes due in July. This amount should ultimately be offset by the
$500k LAND grant as and when that grant is received, for a net cost to the
CPF of approximately $800,000.
o FY2012 Budget. Mr. Addelson summarized the status of discussions
about hiring a new Assistant Fire Chief and reinforcement of the fire
station floor. There was a recommendation for $108,000 in total for this
new hire, to include $15,000 for benefits, but the BOS is still reviewing the
need for this position. The selectmen voted to move approximately half of
this appropriation to the expense budget to fund a needs evaluation. If the
need is confirmed, the remaining half would be available to fund the
position beginning January 1, 2012. The expense budget also includes
$3,500 for uniforms. The selectmen also adjusted the fire department's
original request for $750k for capital projects, which included $450k for the
floor reinforcement and $250k for an office trailer. The $250k has been
removed from the request as it needs further justification.
Mr. Levine inquired whether the benefits calculations used in projections
of the cost of an additional hire includes a component for future pension
and retiree health benefit (OPEB) costs. Mr. Addelson said that it did not.
There was general discussion of how pension and retirement costs are
funded, and Mr. Cohen noted that newly hired employees are now
required to contribute from their salaries much higher pension
contributions than prevailed before the 1980s (11% versus 5 %), and that
this reform should result in a gradual reduction of required contributions by
the Town to the pension fund overtime. Mr. Addelson explained that
employees make a contribution to their current health benefits but are not
assessed for retirement health benefits.
Mr. Addelson advised that the Brown Book will be available electronically
Monday, February 28, 2011, and will be printed next week for later hard -
copy distribution.
Mr. Addelson noted that preliminary MWRA assessments have been
posted and will be reflected in the Brown Book. In the White Book, they
were level- funded from last year's amounts. Preliminary water rates are
up 5.6% from FY11 and sewer rates are up 7.2% for a combined increase
of 6.5 %. Mr. Bartenstein pointed out that there will not necessarily be rate
increases of the same magnitude because MWRA costs represent only
about half of the water and sewer enterprise fund budgets, and the
remaining components of the budget are not inflating as rapidly; also, final
MWRA assessments made in July are often lower than the preliminary
assessments. Mr. Addelson added that the rate increases could be
further mitigated by appropriations from retained earnings.
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February 23, 2011
• School Committee (Alan Levine). Ms. Garberg and Mr. Levine had a meeting
with Mary Ellen Dunn last week to discuss school capital projects. There have
been changes to food service operations to eliminate cash transactions, which
makes accounting smoother. Mr. Cohen commented that there may be too much
flexibility for the children as there is no cap on purchases. There was discussion
regarding capital purchase of new equipment with $30k of the $50k that would be
paid from the food service fund.
• CPC (Glenn Parker and Susan McLeish). Mr. Parker and Ms. McLeish
attended the most recent CPC meeting where there was discussion of two items
that may be taken up under Article 8:
o Article 8(d), LexHAB Set - Aside. The CPC voted in favor of the LexHAB
proposal for a set -aside fund from which potential future purchases of
housing units could be made, subject to a set of non - binding guidelines.
The request was for $450k to be allocated in advance in order to avoid a
double closure process when a desirable property is found. CPC, CEC
and BOS would have to approve a purchase prior to finalization.
o Article 8(h), Muzzey Window Replacement. The Muzzey Condo window
replacement project was also discussed. The Muzzey High Condo
Association is seeking financial assistance for up to approximately 35 unit
owners who have not yet performed required window replacements
because conditions imposed by the Historic District Commission (HDC)
significantly increase the cost of the replacements. An earlier proposal for
interest -free loans from the Community Preservation Fund was supported
by the CPC but may be withdrawn. Several unit owners present at the
meeting suggested that they would be willing to forego any financial
assistance if they were allowed to add the cost of the replacement
windows to the cap on the sale price of their units. Ms. McLeish noted
that such an arrangement would not assist those in financial need in
funding the current costs. She also commented that the criteria for
purchase of condo units at Muzzey allows for a fairly high income level but
the original proposal did not include any needs test. Mr. Addelson said he
believed the funding had been sought as an historic preservation, not an
affordable housing, project.
• Miscellaneous. Mr. Addelson alerted the Committee that the recent trend of
rising energy costs could result in the need to draw on the Reserve Fund in
FY2012. He reminded the Committee of the recommendation a few years ago to
raise the AC Reserve Fund by $100k for rising energy costs as there was
concern with the short -term direction of the market. This is in regards to
gasoline, diesel and heating oil, not natural gas and electricity where there are
separate contracts for the next few years. Mr. Addelson advised that the amount
to be requested for the senior service program has not yet been finalized,
although $45,000 is still being carried in the budget. Charlotte Rogers is looking
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at this program to increase participation. If the requested appropriation is
reduced, the balance not used will become unallocated revenue
2. Article Assignments and Discussion.
• Article 16. Ms. McLeish reported that this article would allow a supplemental
annual allowance of $3k (from $6k to $9k) for widows of retired employees who
sustained injuries while performing job duties. She will determine what fund this
would be paid from, the source of the request and how many people could be on
this program at one time so the Committee can understand the longer term
liability.
• Articles 37 and 38: Citizen Articles (Patrick Mehr). It was agreed to postpone
discussion regarding the commercial and residential assessments until Mr.
Neumeier is in attendance as he is doing the write up.
• Article 17. Citizen Article (Alan Seferian). Reducing the CPA surcharge was
discussed and invitations will be made to hear a presentation by Mr. Seferian and
to include a representative of CPC in a future meeting. An op -ed piece in
expected in the Minuteman next week.
• Article 36: Citizen Article (Ephraim Weiss). There was a brief discussion of
this article seeking a resolution urging the Committee to accelerate analysis of
employee health benefit costs. It was agreed to postpone further discussion until
Mr. Pato is present and there has been an opportunity to review last year's
resolution.
The next meeting is scheduled for Thursday, March 3, 2011.
The meeting was adjourned at 10:00 p.m.
No documents or other exhibits, other than preliminary drafts of article write -ups, were
used at this meeting.
Respectfully submitted,
Andrea Yepez
Recording Secretary
Approved March 3, 2011