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Home My WebLink About2013-6-11Minutes for June 11, 2013, adopted July 10 Town of Nantucket Capital Program Committe o www.nantucket-ma.gov vim'' 9pORAiE� � G Members: Phil Stambaugh (Chair), Carol Duman (Vic ech .Pe�ftqr N Linda Williams; John Tiffany; Joseph Grause, TObiaY0.rllnnen a � NUN U I EN Tuesday, June 11, 2013 y GO 4 Fairgrounds Road, Community Room — 8:30 W F � Shy'; Libby Gibson, Town Manager; Diane O'Neil, Project an r /CPO; Terry Norton, Town Minutes Taker Attending Members: Stambaugh, Dumon, Tiffany, Grause, Glidden Absent Members: Morrison, Williams Late arrival times: Dunton 8:31 a.m. Public: Matt Fee, Finance Committee member Documentation: 2012 meeting schedule; Capital Request form FY0213; Capital Projects FY2014 rate sheet; capital plan FY14 -2023; Memos Called to order at 8:30 a.m. by Mr. Stambaugh Discussion clarifying the purpose of this meeting. �[MTI_ Stambaugh, uunton, Jtnany, vrausc, �.,u— What is a capital project? Stambaugh explained present definition. Discussion should a capital project be determined by the monetary amount and/or projected useful life. Grause suggested differentiating between regular capital and recurring capital expenses such as replacement of vehicles. O'Neil used work at Our Island Home as an example of a low -cost capital project that was outside regular maintenance. Tiffany suggested the definition could depend on the level of scrutiny connected with a request. Grasse suggested leaving the definition at $50,000 and giving departments the option of putting requests before the Capital Program Committee at lower numbers when there is a funding issue or they we asking for extra money. Stambaugh said that is how it has been done, but perhaps it should be put in writing and voted upon by the committee. What are capital projects versus operating budget items? Tiffany stated that according to GASB anything done that extends the life of an asset is a capital project. Gibson explained what the maintenance line item normally covers and that, in the past, capital funding has been sought for any large maintenance project such as replacement of a roof. Stambaugh asked if the cost of maintenance projects have been spread across years. Tiffany pointed out that some maintenance projects are depreciated. A Capital Improvement Project extends the life of an asset and therefore qualifies under capital spending. O'Neil pointed out that after this past winter, the maintenance budget would not cover the cost of repairs and so that line item has been increased. Stambaugh read from the Brookline & Arlington Capital Plans their explanation of capital projects. Glidden suggested using the guideline for a Capital Project of a $50,000 threshold and useful life of 5 years. Will keep the present determination for a Capital Project and recommend to the Finance Committee (FinCom) that facilities managers need to be better at including maintenance projects in their budget. Page 1 of 3 Minutes for June 11, 2013, adopted July 10 Further discussion: Fee suggested setting aside a percentage for capital projects. Gibson explained that per the Bylaw, the minimal capital funding requirement is 1 percent to be set aside for capital items annually. This year, free cash was used for capital projects and one -time operating expenses. Suggested being stricter about that; it could be put away for larger capital expenses. A portion would be set aside for annual infra - structure maintenance. Damon doesn't like that plan because 1 percent is in reality a paltry amount; pointed out that Arlington sets maintenance at 5 percent given the total asset value of the town. Gibson said that if the bylaw is changed to 5 percent, that would be 4 percent less for department operating budgets. One percent of the total asset value of the Town of Nantucket is $700,000. Grouse stated that Bookline uses 1.5 percent of the prior year's revenue and 6 percent from general operating budget to cover debt service and then free cash. Further discussion about how to calculate the budget for capital projects and maintenance. How are capital Projects prioritized? Glidden likes the list submitted by Mr. Grause. Stambaugh explained the present point- system of prioritization of projects and that the list could easily be modified for the marine environment of Nantucket. Tiffany stated he would find the list helpful in assigning points. Gibson said that the Town's ability to pay should be a consideration of this committee; also explained that Free Cash numbers are not released until December and that moving the final Capital Program Committee (CPC) report to January would run into other timing issues. Discussion about Free Cash in relation to the CPC report. What is the Capital Planning Process? Stambaugh stated there is no apparent need to change the process, but it needs to be more inclusive of longer -range capital projects and debt payments. Looking at other towns, they have 5 -year capital planning cycles. There should be three segments: Year 1 is fixed with what is needed the next year; Years 2 -5 ought to be semi -firm; Years 6 -10 are guidelines. Damon said she would like to see departments get fixed to a 5 -year plan then ease into a 10 -year plan; thinks that starting off with a 10 -year plan would be overwhelming. Gibson suggested that in the next month or so, this committee could start meeting with department that will be having capital requests. There need not be any actual requests at that time, these will be general discussions about what will be needed next year and for years 2 -5 to encourage them to firm up their plans. Tiffany suggested that if there is a very large project looming within 10 years, it should be brought to the attention of CapCom; cautioned against getting caught up in the implementation. Fee pointed out the 5 -year plan would be very helpful with maintenance. Should annual Debt Finance costs be included as Capital Projects? - Held Are any changes to the current Proposed Capital Project form suggested? - Held Are any changes to the revenue forecast suggested? - Held Sitting Stambaugh, Dunton, Tiffany, Grouse, Glidden Gibson said that documentation needs to be available to post on the Town web site. Danton asked if members could get their books more than 2 weeks before the review of projects begin. O'Neil and Gibson explained the process of collating the information on requests, taking recommendations to the Board of Selectmen, then the creation of the book. Glidden said the goal is to make the process move faster, more efficiently and more intelligently by ensuring the paperwork is in on time and is complete and correct. Gibson said Ms Larivee and Ms Weiner came up with a projection of all projects funded in each fund and it the money was borrowed, what the debt is, what it is annually and when it retires. That information could be provided to this committee. Suggested having those two come in and talk about when stuff retires. The Town's bond rating is AA3. Stambaugh asked to set up a date for Ms Larivee & Ms Weiner to explain that process to CPC. Page 2 of 3 Sitting Stambaugh, Dunton, Tiffany, Grause, Glidden Discussion about moving the meeting time so as not to interfere with work and other meetings. June 18 8:00 a.m. — Review Proposed Changes/Bnbancements to the Capital Program and/or Process July — Debt Service Adjourned: 9:59 a.m. Submitted by: Terry L. Norton Page 3 of 3