HomeMy WebLinkAboutTown of Nantucket Massachusetts - Moodys Presentation
Presentation Prepared For
Moody’s Investors Service
October 24, 2017
Town of Nantucket
Dawn E. Hill Holdgate, Chairman, Board of Selectmen
James R. Kelly, Board of Selectmen
C. Elizabeth Gibson, Town Manager
Brian E. Turbitt, Finance Director
Michael Cozort, Superintendent of Schools
Julia Lindner, Financial Analyst
Lynell Vollans, Assistant Finance Director/Treasurer
Deborah Dilworth, Assessor
Leslie Snell, Deputy Director of Planning, NP & EDC
Roselli, Clark and Associates
Tony Roselli, CPA, Partner
First Southwest Company, Division of Hilltop Securities
Cinder McNerney, Managing Director
Megan Hyland, Vice President
Lisa Driscoll, Director
2
Introduction
Moody’s Scorecard Criteria
Economy/Tax Base
Finances
Management
Debt/Pensions
Comparative Metrics
Budget Flexibility
Addressing Prior Credit Concerns
Other Pertinent Items
Economic Development
3
The current administration is making a significant positive impact on
finances and has undergone a considerable transition which has led to the
Town addressing issues that existed in 2012 and prior and leading to major improvements both financially and in internal controls in the last five years:
2012 new Airport Management appointed
2014 new Finance Director appointed
2014 first CAFR receives award for excellence in financial reporting (now four
straight years)
2014 new Airport Accounting Officer appointed
2015 established Financial Analyst position
2015 new School Business Manager appointed
2015 new Assistant Finance Director/Treasurer appointed
2016 comprehensive financial policies codified and accepted
o Emphasis on the continued philosophy of building reserves and strong internal controls
Entire turn-around has been met with remarkable success that will continue to positively impact the Town for years and decades to come
4
Recent Financial Highlights
2017 assessed value $21.7 billion; 22% increase over 2016
2018 estimated assessed value $22.1 billion; 96% of full value of over $23.0 billion
o Fourth highest in the Commonwealth
Property sales averaged approximately $1 billion in aggregate from calendar 2014 – 2016
Estimated 2017 property sales; $1.1 billion; a historical record
September 2017 property sales reached $185 million – second highest month on record
Average sales price $1.8 million; highest in the Commonwealth and amongst the highest in the United States
General Fund balance reached $38.7 million – 37.3% of revenues; the fifth straight year over 30% and a 64% increase over 2012 levels
Conversion of Our Island Home and Solid Waste from Enterprise Funds to General Fund departments; impact was accretive ($11 million) to General Fund operations
The remaining four enterprise funds including the Airport were all self-supporting during fiscal year 2017 and continued a trend of increased profitability that began in 2013
Internal Service Fund reserve balances for health insurance reached the Town’s goal of
20% of claims for the first time and amounted to over $3.3 million
5
6
Rating Numerical
Metric 2013 2014 2015 2016 2017 Score Score Weight
Total Full Value (billions)18.00 18.00 17.80 17.80 21.70 Aaa 1 10%
Full Value Per Capita (millions)1.76 1.73 1.69 1.70 2.12 Aaa 1 10%
Median Family income % of US Income 142.90%147.40%165.10%165.10%165.10%Aaa 1 10%
Rating Numerical
2013 2014 2015 2016 2017 Score Score Weight
Fund balance as a percentage of revenue 31.70%35.39%34.41%31.65%36.96%Aaa 1 10%
5 year $ change in Fund Balance as % of revenue 37.33%Aaa 1 5%
Cash balances as a % of revenue 35.28%36.84%36.84%34.99%40.73%Aaa 1 10%
5 year $ change in Cash as a % of revenue 38.17%Aaa 1 5%
Rating Numerical
2013 2014 2015 2016 2017 Score Score Weight
Institutional Framework (all communities rated same)Aa 2 10%
Operating History - 5 year average of operating profit 109.35%Aaa 1 10%
Rating Numerical
2013 2014 2015 2016 2017 Score Score Weight
Net direct debt/operating revenues 1.53 A 3 5%
Net direct debt/full value 0.73%Aaa 1 5%
Net pension liability/operating revenues 1.21 A 3 5%
Net pension liability/full value 0.58%Aaa 1 5%
Indicative Aaa 1.3 100%
Debt/Pensions (20%)
Economy/Tax Base (30%)
Finances (30%)
Management (20%)
7
2013 2014 2015 2016 2017
Fund Balance Per Financial Statements 22,719,777$ 25,505,199$ 26,307,100$ 23,282,845$ 38,725,030$
Restricted Fund Balance (1,577,323) (650,518) (488,344) (414,514) (346,780)
Impact of consolidating Solid Waste 2,369,173 2,535,786 1,903,503 1,019,531 -
Impact of consolidating Our Island Home 3,488,810 3,162,486 3,916,793 8,465,169 -
Adjusted Fund Balance 27,000,437$ 30,552,953$ 31,639,052$ 32,353,031$ 38,378,250$
General Fund Revenues Per Financial Statements 76,902,637$ 78,058,829$ 82,466,298$ 88,986,863$ 103,844,891$
Impact of including Our Island Home revenues 4,839,607 4,834,660 5,785,161 9,487,103 -
Impact of including Solid Waste revenues 3,428,928 3,426,494 3,695,481 3,743,605 -
85,171,172$ 86,319,983$ 91,946,940$ 102,217,571$ 103,844,891$
Fund Balance as a % of revenue - pro forma 31.70%35.39%34.41%31.65%36.96%
Five year change in adjusted fund balance 11,377,813$
Direct cash capital - 2013 4,855,920
Direct cash capital - 2014 4,017,480
Direct cash capital - 2015 5,271,000
Direct cash capital - 2016 10,938,480
Direct cash capital - 2017 2,307,494
Five year change in adjusted fund balance after
direct cash capital impact 38,768,187$
Five year change as a % of revenue 37.33%
Key Metric Bases Adjusted for Proforma Impact of consolidating Our Island Home and Solid Waste
8
2013 2014 2015 2016 2017
Cash Per Financial Statements 23,555,841$ 25,685,649$ 26,992,764$ 25,080,672$ 42,296,282$
Impact of consolidating Solid Waste 2,758,243 2,703,196 2,718,426 9,202,502 -
Impact of consolidating Our Island Home 3,738,240 3,413,537 4,164,665 1,484,022 -
Adjusted Cash Balance 30,052,324$ 31,802,382$ 33,875,855$ 35,767,196$ 42,296,282$
General Fund Revenues Per Financial Statements 76,902,637$ 78,058,829$ 82,466,298$ 88,986,863$ 103,844,891$
Impact of including Our Island Home revenues 4,839,607 4,834,660 5,785,161 9,487,103 -
Impact of including Solid Waste revenues 3,428,928 3,426,494 3,695,481 3,743,605 -
85,171,172$ 86,319,983$ 91,946,940$ 102,217,571$ 103,844,891$
Cash Balance as a % of revenue - pro forma 35.28%36.84%36.84%34.99%40.73%
Five year change in adjusted cash balance 12,243,958$
Direct cash capital - 2013 4,855,920
Direct cash capital - 2014 4,017,480
Direct cash capital - 2015 5,271,000
Direct cash capital - 2016 10,938,480
Direct cash capital - 2017 2,307,494
Five year change in adjusted cash balance after
direct cash capital impact 39,634,332$
Five year change as a % of revenue 38.17%
9
2013 2014 2015 2016 2017
General Fund Revenues Per Financial Statements 76,902,637$ 78,058,829$ 82,466,298$ 88,986,863$ 103,844,891$
Impact of including Our Island Home revenues 4,839,607 4,834,660 5,785,161 9,487,103 -
Impact of including Solid Waste revenues 3,428,928 3,426,494 3,695,481 3,743,605 -
85,171,172$ 86,319,983$ 91,946,940$ 102,217,571$ 103,844,891$
General Fund Expenses Per Financial Statements 64,911,578$ 68,622,281$ 72,251,992$ 75,816,940$ 94,760,016$
Impact of including Our Island Home expenses 7,018,610 7,270,731 7,506,493 7,785,868 -
Impact of including Solid Waste expenses 7,993,740 8,353,782 8,852,981 10,388,660
Transfers out adjusted for proforma impact 2,389,332 808,098 1,550,000 7,845,326 2,383,154
Direct cash capital (4,855,920) (4,017,480) (5,271,000) (10,938,480) (2,307,494)
77,457,340$ 81,037,412$ 84,890,466$ 90,898,314$ 94,835,676$
Operating result 7,713,832$ 5,282,571$ 7,056,474$ 11,319,257$ 9,009,215$
Operating revenues/operating expenses 110.0%106.5%108.3%112.5%109.5%
Five year average 109.3%
10
Bonds:Pensions:
Governmental 76,064,664$ Net liability 2015 53,675,407
Wannacomet 17,846,400 Net liability 2016 59,963,947
Siasconset 5,589,900 Net liability 2017 69,565,696
Sewer 39,527,894
Airport 9,988,000 three year average 61,068,350
Land Bank 20,544,349
Moody's impact at 4.95%125,591,947
BANs:
Governmental 15,790,000
Wannacomet 4,358,000
Siasconset -
Sewer 10,920,000
Airport 6,108,213
Land Bank 1,700,000
Supported debt:
Wannacomet (22,204,400)
Siasconset (5,589,900)
Land Bank (22,244,349)
Net Direct debt 158,398,771$ Net Pension Liability 125,591,947$
Full Value 21,786,601,417$ Full Value 21,786,601,417$
% of Full Value 0.73%% of Full Value 0.58%
Operating revenues 103,844,891$ Operating revenues 103,844,891$
Times operating revenue 1.53 Times operating revenue 1.21
Debt/Pension Calculations
11
Moody’s currently rates fourteen cities and towns in Massachusetts with a Aaa rating.
Nantucket compares very favorably with these fourteen communities in the nine critical metrics typically highlighted in a ratings report.
Nantucket ranks ahead of all fourteen communities in three other metrics that are not highlighted in the ratings reports, but are part of the credit assessment.
In the slides that follow we will use the calculations developed in the previous slides and show how Nantucket’s composite score is greater than all fourteen communities.
We will show that Nantucket ranks in the top four in nine of the twelve rating metrics.
12
Acton Belmont Boston BrooklineCambridge Concord Dover HinghamLexington Newton Wayland Wellesley Weston Winchester Nantucket
Full Value 13 9 1 5 2 12 15 8 7 3 14 6 11 10 4
Full Value Per Capita 14 13 15 7 9 5 3 10 6 11 12 4 2 8 1
Median Familiy Income 10 12 15 11 14 8 2 9 6 7 4 3 1 5 13
Fund Balance as % of Operating Revenues 12 8 5 15 1 7 4 6 3 14 10 13 11 9 2
Fund Balance Trend 11 10 7 14 2 6 9 4 3 8 15 12 13 5 1
Cash as a % of Operating Revenues 14 8 4 15 1 2 6 7 5 12 9 13 11 10 3
Cash Balance Trend 12 10 7 11 2 6 9 4 3 8 15 14 13 5 1
Operating History 11 5 8 9 6 14 2 7 4 10 15 13 12 3 1
Net Direct Debt as a % of Full Value 1 5 9 2 8 6 3 11 10 7 15 12 13 14 4
Net Direct Debt X Operating Revenues 1 4 7 2 5 6 3 10 8 9 13 11 12 14 15
Net Pension Liability as a % of Full Value 8 11 15 10 13 7 2 9 3 12 14 5 6 4 1
Net Pension Liability X Operating Revenues 5 10 7 14 15 6 2 9 1 12 13 3 11 4 8
Composite rank in metrics 9.33 8.75 8.33 9.58 6.50 7.08 5.00 7.83 4.92 9.42 12.42 9.08 9.67 7.58 4.50
Ranking in each category out of the 14 Aaa rated communities in Massachusetts plus Nantucket
Nantucket carries the highest composite score of any Aaa community in Massachusetts and consistenly scores higher in the major rating metrics.
1.0
11.0
21.0
31.0
41.0
51.0
61.0
71.0
81.0
91.0
101.0
111.0
110.9
29.7
22.3 21.7
17.1
10.2 9.3 6.0 5.8 5.8 5.6 5.5 3.9 3.2 2.3
Equalized Valuation – Full Value in Billions of $
(data obtained from applicable City/Town credit report)
13
0.1
0.3
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.12
0.46 0.41 0.37 0.32 0.30 0.29 0.28 0.28 0.26 0.25 0.24 0.23 0.18 0.17
Equalized Valuation – Full Value per capita in Millions $
(data obtained from applicable City/Town credit report)
14
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
350.0%
400.0%
450.0%
500.0%
382%
306%
291%
279%
255% 252%
239% 237% 232% 231% 221% 214%
165% 158%
95%
15
Median household income per capita as a % of US median
(data obtained from applicable City/Town credit report)
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0% 53.4%
37.0%
33.2%
31.7% 31.3%
29.1%
27.2%
21.6%
19.5% 18.5% 18.2% 17.9%
15.2% 14.6%
11.5%
Available General Fund balance as a % of operating revenues
(data obtained from applicable City/Town credit report)
16
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0% 37.3%
24.6%
13.1%
12.3%
10.7%
8.9% 8.5% 7.9%
6.1% 5.2%
2.8% 2.0% 1.9% 1.1%
-10.0%
Five year available general fund balance trend as a % of revenue
(data used in calculations is from Official Statements)
17
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
59.5%
42.1% 40.7%
36.5% 35.7%
32.9%
30.6%
25.0% 24.2% 23.8% 23.5%
21.7%
19.3%
18.0%
16.2%
Available general fund cash balance as a % of operating revenues
(data obtained from applicable City/Town credit report)
18
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0% 38.1%
25.3%
13.7%
11.9%
9.9% 9.7%
8.5% 7.8%
6.1% 5.4%
3.6% 2.9% 2.7% 1.8%
-9.3%
Five year general fund cash balance trend as a % of revenue
(data used in calculations is from Official Statements)
19
95.0%
97.0%
99.0%
101.0%
103.0%
105.0%
107.0%
109.0%
109.3%
105.9%
104.7% 104.6%
103.7% 103.4% 103.1%
102.4%
101.2%
100.3% 100.2% 99.9%
99.5%
98.6%
96.6%
Five year operating history – revenue/expenditures
(data used in calculations is from Official Statements)
20
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0.40% 0.40%
0.50%
0.70% 0.70% 0.70% 0.70% 0.80%
1.30% 1.30% 1.30%
1.40%
1.60%
1.70%
2.30%
Net Direct Debt as a % of full value
(data obtained from applicable City/Town credit report)
21
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.18
0.30 0.34 0.38 0.40 0.40
0.50
0.60
0.70
0.77 0.80
1.00
1.10 1.10
1.53 Net direct debt times operating revenue
(data obtained from applicable City/Town credit report)
22
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.50
0.69 0.80 0.80 0.94
1.10 1.20 1.21 1.22 1.29 1.30
1.40 1.40 1.50 1.50
Moody’s adjusted net pension liability times operating revenue
(data obtained from applicable City/Town credit report)
23
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0.58%
1.00%
1.10% 1.20%
1.30%
1.70%
1.90%
2.10% 2.10%
2.20%
2.40% 2.40%
2.80%
3.10% 3.20%
Moody’s adjusted net pension liability as a % of full value
(data obtained from applicable City/Town credit report)
24
Codification of Financial Management Policies
Revenue and Expenditure Assumptions
Budget Amendments and Updates
Long-Term Financial Planning
Long-Term Capital Planning
Investment Management Policies
Debt Management Policies
Reserve and Liquidity Policies
25
Revenue and Expenditure Assumptions
We believe our financial assumptions and projections are
realistic and well-grounded
Formal historical trend analysis is performed and
updated periodically for both receipts and spending
Efforts are made to determine whether revenues or
expenditures will deviate from their long-term trends
26
Budget Amendments and Updates
Standard procedures for reviewing and amending the
budget are in place and accepted
Weekly budget surveillance is performed to identify
problem areas
Management possesses ability and willingness to address
necessary intra-year revenue and expenditure changes to
meet fiscal targets
Our involvement of department heads on a monthly basis
is key to expenditure control
27
Long-Term Financial Planning
Long-term financial plan exists
Rolling seven-year forecasts are utilized annually and
assist in budget preparation
Future issues are identified timely and possible solutions
are vetted through various committees
Revenue and expenditure decisions are made from a
long-term perspective
Structural balance is a clear goal
28
Long-Term Capital Overview
The Town has established a ten-year long-term capital
improvement plan that is updated annually
Meetings are held with all department heads and
managers
Annual capital needs plan developed based on
high/medium/low priority
Funding sources identified up front
Linked to operating budget and long-term revenue and
financing strategies
Consultants are used to estimate the costs on larger
projects
29
Debt Management Policies
Current adopted policy 12% of general fund
expenditures
May exceed this limit only in certain situations and only
through a debt exclusion
65% of succeeding debt will be retired within 10 years
Enterprise debt to be subsidized through user rates
30
Reserve Policies
Reserve ratio on a GAAP basis shall not be below 15% of
expenditures (Unassigned + Assigned/adjusted
expenditures)
Expectation to maintain total reserves above 30% to
provide available resources for storm mitigation or
unexpected emergencies
Free Cash may not be used for operating items and may
only be used for nonrecurring items, emergency items, and
capital or long-term liabilities such as OPEB
Free Cash shall not be below 5% of budgeted expenditures
31
Reserve Policies
General Stabilization Fund
o Target to reach 7% of expenditures (currently 6.6%)
o Use for unique and emergency type situations (i.e. 9C cuts, snow and ice,
catastrophic event)
Capital Stabilization Fund
o Target to reach and exceed 3% of expenditures
o Use for capital only to help subsidize capital improvement plan or
emergency capital event
32
Budget flexibility is a key component to Management’s strategy to
deliver its goals successfully
The Town has significant budget flexibility:
Excess levy capacity (average 3.4% of levy over past 5 years)
Direct cash capital in lieu of borrowing ($27.4 million in the last 5 years)
Willingness to override (four successful operating overrides since 2004)
Willingness to exclude debt; overrides totaled $6.6 million of debt service during
2017
Override capacity of $475 million is second highest in Commonwealth after Boston
New growth continues near historic highs
Fund balance ratio at historic highs
Philosophy of conservative forecasting guarantees increase in reserves from year to
year (outperformed budget by almost $8.0 million in both fiscal 2016 and 2017)
Establishment of other reserves outside of the General Fund
33
Other reserves outside the General Fund total
approximately $11.5 million.
Airport Reserve Fund $1,929,664 (about 15% of revenue)
Health Insurance Trust Fund $3,344,014 (about 21% of claims)
School Revolving Funds $947,754
Waterways Improvement Fund $1,120,591
Ambulance Reserve Fund $1,140,181
Beach Improvement Reserve Fund $1,213,133
Sale of Real Estate $1,805,564
These may all be used to smooth out operations in
challenging times
34
Storm mitigation is a critical component of the Town’s strategic goals
The Town is confident it is well prepared for a major catastrophic event
o The No-Name storm in October 1991 was the costliest storm to hit the Island on
record; damages island wide were $30 million ($54 million indexed to 2017)
o The Town reviewed 100 years of data and used this as the benchmark regarding
storm mitigation risk.
o The majority of this damage was to private properties not Town properties.
o The Town developed a Hazard Mitigation Plan under the Federal Disaster
Mitigation Act of 2000 which is in the process of being updated
•https://www.nantucket-ma.gov/DocumentCenter/Home/View/17104
•https://www.nantucket-ma.gov/DocumentCenter/Home/View/17103
o Participates in the State Hazardous Mitigation Plan
o Three federal reimbursement vehicles were used to cover the entire cost of the
damages of the No-Name Storm:
•Hazard Mitigation Grant Program
•FEMA Individual Household Program
•FEMA Public Assistance Project Grants
35
In addition to Federal Assistance, other disaster mitigation
sources have been identified as follows:
Excess flood insurance - $10 million
Borrowing – $1 billion of borrowing capacity
Override – $475 million in override capacity
Other flexibility sources:
Direct cash capital averaging about $5 million per year for last five years
Excess levy capacity averaging 3.4% per year for the last five years
Excess reserves (currently General Fund balance at almost 40% of revenues)
36
Self support for Enterprise Funds
Our Island Home and Solid Waste were consolidated into the General
Fund
Both of the above were accretive to the General Fund as those activities
had accumulated cash reserves
Siasconset Water will be merged with Wannacomet Water upon approval
from the Governor (legislative approval was required since these were set
up by an act of the Legislature)
All four remaining enterprise funds were self supportive in 2017
No General Fund subsidies were made to any of these 4 enterprise funds
No planned subsidies are in place for 2018 for these 4 enterprise funds
The slides that follow show a very positive trend for the enterprise funds
that we believe has adequately addressed the risk exposure
37
38
2013 2014 2015 2016 2017
Operating Income (Loss) Per financial statements 1,907,904$ 2,376,040$ 2,606,664$ 2,897,429$ 3,007,708$
Depreciation 973,291 985,727 1,077,667 1,226,783 1,375,028
Principal Maturities (2,130,000) (2,135,000) (2,165,000) (2,218,000) (2,000,800)
Interest Expense (1,155,488) (1,129,757) (1,036,213) (896,708) (831,631)
Adjusted Income (Loss) for purposes of self support (404,293)$ 97,010$ 483,118$ 1,009,504$ 1,550,305$
Wannacomet and Siasconset Combined
39
2013 2014 2015 2016 2017
Operating Income (Loss) Per financial statements 1,609,270$ 1,373,560$ 1,420,846$ 1,570,802$ 1,627,955$
Depreciation 2,124,472 2,197,593 2,157,304 2,163,851 2,219,146
Principal Maturities (2,081,802) (2,284,019) (2,322,524) (2,542,956) (2,418,649)
Interest Expense (1,052,213) (1,341,150) (1,241,353) (1,295,670) (1,007,893)
Adjusted Income (Loss) for purposes of self support 599,727$ (54,016)$ 14,273$ (103,973)$ 420,559$
Sewer
40
2013 2014 2015 2016 2017
Operating Income (Loss) Per financial statements (2,512,831)$ (2,186,671)$ (1,576,732)$ (1,490,443)$ (1,608,482)$
Depreciation 2,337,481 2,391,192 2,394,011 2,491,379 3,294,782
Maintenance not part of operating *- 704,116 654,814 287,658 271,591
Principal Maturities (619,000) (765,000) (834,000) (820,000) (839,000)
Interest Expense (445,968) (592,138) (430,551) (406,899) (458,378)
Adjusted Income (Loss) for purposes of self support (1,240,318)$ (448,501)$ 207,542$ 61,695$ 660,513$
* Represents expenses charged against bond proceeds that were individually not large enough to capitalize and recorded as
maintenance. These disbursments are not part of the Airport operating fund.
Airport
Nursing Home Operations
Our Island Home consists of 45 beds at full capacity; currently, 40 beds
are occupied
The residents and taxpayers have embraced the facility by committing
over $2 million in tax dollars annually for a number of years
The facility employs almost 70 full-time mostly skilled workers and over
50 part-time workers
The employment (over $4 million payroll) provides stimulus to the
Town.
This is a good thing
Closure of the facility has been part of strategic discussions but we do
not believe this would be beneficial to the Town
41
Nursing Home Operations
Receipts have averaged $6.4 million per year on a cash basis over the
past 4 years
Disbursements have averaged $7.4 million over this same period
The budget has included an appropriation averaging $2.3 million
annually from taxation to cover the short-fall, with a corresponding
strategic increase to reserves with the difference
The Town expects to receive $6.0 million and expend approximately $8.0
million annually in future years
The commitment to appropriate over $2 million per year is expected to continue
The Town’s strategic plan of increasing reserves for this activity has been
highly successful
As of June 30, 2017 approximately $8.1 million in reserves have been established and are recorded as a committed balance in the General Fund
42
Nursing Home Operations
In May 2017, the House of Representatives passed a revised version of
an Affordable Health Care Act (the Act)
It has been met with aggressive opposition
If the Act were passed, states are expected to experience cuts to their
Medicaid allotment
The Brookings Institute conducted a study that concluded that using 2011
Medicaid enrollment figures, states could expect to lose $17.8 billion in
Medicaid reimbursements
This would result in a median loss to states of 19%
States have the option of increasing their share of the reimbursements
(Massachusetts currently contributes 50%) or passing it down
43
Nursing Home Operations
Our Island Home expects to receive 68% of its future income from
Medicaid with the remainder from Medicare (5%) and private pay (28%)
This represents approximately $4.1 million Our Island Home
The median cut, if not subsidized by the Commonwealth, could result in
a reduction of approximately $780,000 per year using the 19% median
Possibilities:
o This may not pass the Federal Legislature due to aggressive opposition
o This is not scheduled to begin until 2020
o The Massachusetts cut may be closer to 11% due to the current allocation percentage
o The Commonwealth may pick up all or a portion of the cut
o The Town has 11 years worth of reserves to cover the maximum short-fall
which extends the runway to 2031
o The Town could increase its annual appropriation as this is not a material amount
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An additional concern presented in prior years was that
Nantucket’s wealth was not comparable to other communities in
Massachusetts that are rated Aaa
We agree that the raw data as presented in a previous slide shows that Nantucket
ranks near the bottom of Aaa rated communities in Massachusetts
The raw data only includes 15% of the residential tax base who live year-round
on the Island and while this is still good enough to merit a low-end Aaa
classification, the true amount is significantly higher
The remaining 85% is made up of billionaires and millionaires who own second
homes on the Island; it is their tax assessments that drive the tax levy which
represents well over 90% of the Town budget not the 15%
We estimate that 6% (over 1 out of 20) of all US billionaires own property on the
Island
One needs to look no further than EQV per capita at over $2 million per person
and the over $1 billion per year in annual property sales to understand that the
slightly above average wage earner is not the purchaser of these properties
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Property owners exist from 49 states and 15 countries, thus the tax
constituent is spread and not concentrated
Out of 3,500 counties in the United States, Nantucket County ranks 8th in
median income
Based on this we believe the salary pool is diluted and an analytical
below the line adjustment should be made similar to the example in
Moody’s standard criteria where the population of a university was
factored differently into the income calculation
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Positive Drivers for fiscal year 2017
Hotel excise and meal tax – exceeded forecast by $800,000
Motor vehicle excise – exceeded forecast by $500,000
Tax Title – never used in forecast $400,000
Licenses and permits - exceeded forecast by $325,000
Fees for services - exceeded forecast by $250,000
Other minor items – exceeded forecast by $700,000
Expenditure turn backs - $4,550,000
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Overview of Fiscal 2018 budget
Planned use of Free Cash
Future Debt Plans
Capital Projects
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Other Postemployment Benefits
Created Trust under 3MGL Ch. 32B Section 20
Created dedicated annual funding source from taxation of $500,000
Funded over $2.4 million as of August 2017
Major efforts to manage unfunded liability are underway
o Significant plan design changes
o More aggressive investment policy
o Adopt proposed policy to use pension windfall in 2037
A current pro forma actuarial valuation using the new assumptions
shows a net OPEB liability of about $68 million and a full fund date of
2051
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Land Bank
Separate organization created through a special act
Town may advise but does not control
Town guarantees debt
Land Bank required to place funds in a sinking fund annually to
guarantee debt payment
Outstanding debt $22.2 million
Annual debt service $2.4 million
Unrestricted equity $18.9 million
Operating income $16.1 million
Should be categorized as self supporting
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Economic development mission
Maintain strong property values
Plan for the orderly and coordinated development and protection of the
physical, social and economic resources of the Island
Maintain low vacancy rate and turnover in commercial property
Aggressively compete with other family destinations
Improve the appearance of property and the Town
Stimulate future investment in the community
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Expansion of wastewater system is key further
economic growth
Will result in increased values and growth
Will attract more business to the island
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Significant Projects
Harbor Place
Richmond Great Point Development, LLC
Nantucket Cottage Hospital
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Harbor Place
Downtown parcel (5.65 acres) located adjacent to the Boat Basin
Four current landowners
Currently home to a fuel farm, supermarket, parking lot and boat marina
Extraordinary opportunity for the Town to develop its waterfront into a mixed use
gateway
Recently the landowners presented a plan to redevelop the entire area
Plan includes relocation of fuel farm and supermarket; and removal of parking lot
Erection of a three-story parking garage and transportation center that will
aesthetically blend into the downtown
Facelift of the area closest to the waterfront with a mixed use component in the center
of the new layout
Estimated project to complete – over $1 billion
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Harbor Place ($1 Billion development)
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Richmond Great Point Development LLC
Old South Road Properties
Goal of RGPD is to make the best and appropriate use of the company’s land
portfolio through the development of a thoughtful mixed-use Master Plan
Community
Consists of rental apartments that include 28 market rate apartment units
Studio, one-bedroom and two-bedroom options
Proposal for 42 residential buildings on 14.5 acres that include 225 apartment
units of mixed market rate and affordable rate units and a proposal for 94
single family lots for 2, 3 and 4 bedroom homes; both mixed market rate and
affordable priced homes was approved by the Planning Board in March
2017.
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Richmond Great Point Development LLC
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Nantucket Cottage Hospital
$120 million construction of new hospital campus
Current facility is 104 years old and is in need of major repairs and maintenance
In danger of losing accreditation with Massachusetts Department of Public Health
New facility will be designed to maximize privacy, safety and efficiency in a more modern
medical manner
Expected to be completed in 2018
Funded completely from gifts and donations including $20 million from Massachusetts
General Hospital
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Nantucket Cottage Hospital
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