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HomeMy WebLinkAbout2014-12-10Minutes for December 10, 2014, adopted Dec. 16 Town of Nantucket Capital Program Committee www.nantucket- ma.gov R E C E IV E D Members: Phil Stambaugh (Chair), Peter Morrison (Vice- chair), Richard Hussey (Secretary) _ John Tiffany, Tobias Glidden, Nat Lowell, Peter McEac rn MINUTES Wednesday, December 10, 2014 4 Fairgrounds Road, Training Room — 8:00 am Called to order at 8:00 a.m. Staff Libby Gibson, Town Manager; Brian Turbitt, Finance Director; Heidi Bauer, Procurement Officer; Terry Norton, Town Minutes Taker Attending Members: Stambaugh, Morrison, Tiffany, Glidden, Hussey, Lowell, McEachem Absent Members: None Late arrival: None Documents used: Tax rate model. APPROVE 1. 1. Dec 3 Approved by unanimous consent Discussion Stambaugh — This is to discuss the long -term capital financing plan. At the Thursday, December 18 Finance Committee meeting, this committee is scheduled to present its recommendations to the Finance Committee for FY2016 projects. He is trying to get tax modelling ready for that meeting. Turbitt — Expects it to be ready later today. He sent an update for FY2016 to Cinder McNerney, FirstSouthwest; it assumes the Town will borrow for the $56M for fire station and school. The plan also assumes that any building project won't be long -term borrowed for two years, so it won't hit the tax rate until then. It will give an aggregate impact to tax rate, but he asked for a breakdown of impact of fire station and School individually. Tiffany — This doesn't include a new building for Our Island Home (OIH), asked why not. The Town would pay for it. Turbitt — There isn't enough direction on OIH, so it hasn't been added yet. It hasn't been discussed or a decision made. Did not address any Enterprise Funds in this model. Tiffany — Sewer is another project that he has questions about. Turbitt — He is working with the sewer workgroup but none of that has been included in this pass. Morrison — There is the perception "we can't afford all this." The modeling shows how the Town can afford it. Stambaugh — If big projects are pushed off, the cost will continue to go up. Turbitt — FY2019 is when the biggest drop in debt occurs. Stambaugh — Should OIH be added into the model? Lowell — Agrees with keeping OIH & Sewer off the model for now. We have to explain that the tax rate will barely go up. Also have to explain who is paying for most of this. Morrison — Keeping it simple will help present the projects logically at ATM. Tiffany — The issue is the debt service going out. If a new OIH is going to be done within two years, leaving it out is misleading. Page 1 of 4 Minutes for December 10, 2014, adopted Dec. 16 Lowell — There is just so much about a new OIH that is not known, it is difficult to add it to the model. Glidden — We know how the taxes will be affected by fire station and school. Suggested creating a second model which shows OIH and sewers. Turbitt — There is no baseline about how the sewers would be financed. He could add OIH as funded in FY2019. Stambaugh — Believes there is a reason to add OIH sooner than later; we might be forced to do something. Morrison — Mr. Tiffany has persuaded him OIH should be added to the model with a best guess when it is going to happen. If it is delayed, everything still works fine. Lowell — Agrees. Gibson — OIH will have to go into the General Fund at some point. Design is scheduled for FY2016 and realistically construction would likely occur in FY2018. The big question is location. Glidden — The Board of Selectmen (BOS) has talked about changing the shift in the tax rate, which could increase the residential tax rate. As a result, they are talking about increasing the residential exemption up to 30 %. That would help a lot of fixed- income residents. Those two things will help alleviate concerns about paying for all this. The BOS is trying to make its tools a little more useful. Lowell — Asked how much of the hospital issue would play into the decision of OIH. Gibson — There is not much connection if any. Stambaugh — Sewers is a more difficult question; the projection is $40M for sewer to Madaket. Then there's another $160M laid out in the long -term plan. A question is how much of Madaket would need to be done; we don't know the answer to that question. Tiffany — He is assuming sewer will have to go to Madaket at some point, asked if is that a good assumption. Gibson — For now, yes. Glidden — The issue here is the water quality of Hither Creek, but the solution is not entirely focused on sewers. The state has mandated that if we don't meet their standards, they could fine us. We have to prioritize how and what areas we need to clean up. Morrison — He would prefer, for this year right now with two important issues before the voters, there is a landscape of other big items that will have to be addressed. This can be pushed down the road. His recommendation is to move it to another year. This year we have to do a fire station and school. Stambaugh — Asked how Madaket would be paid for. Turbitt — Sewer to Madaket qualifies for state revolving loan funds and borrowing techniques are different. Smoothing techniques would be more involved. However, he doesn't know what percentage to use because he doesn't know what it will cost. Glidden - $50M would be paid for by tax payers. Further discussion about modeling the cost of sewers to Madaket. Stambaugh — For modeling of the 10 -year plan, put $25M for Madaket in FY2018. Turbitt — That would not affect the tax rate until FY2020. McEachern — Regarding the new school: the School Committee was provided with two numbers $42M to $47M that were put together before the site was chosen. The size could vary so the number needs to be a range. The cost estimator has not been employed at all yet. It was brought to the committee's attention that if "the normal" route is followed, doors wouldn't open till 2018. If it is self - funded, start development before ATM so that the doors would open in 2017. There is price difference; the architect said that is another $1.5M. Glidden — Asked Mr. McEachern when there would be a final number for ATM. McEachern — They are looking to have it in January. Page 2of4 Minutes for December 10, 2014, adopted Dec. 16 Tiffany — Confirmed that the schools want to do some of the work before they get started. How many hours would they want put in before ATM. McEachern — It would be 700 hours of work prior to ATM. Tiffany — There is money in the reserve fund. Gibson — About two weeks ago, Mr. Cozort, Superintendent of Schools, contacted Dr. Matthew Mulcahy, Finance Committee Chair, to ask if there were any reserve funds available to finish the design. The answer is no; the reserve fund is for emergency items. If the schools have a gift or someone up- fronts the money, that could be a possibility; however, she would have to find out from DOR or Town Counsel if that is proper. That really needs to be closely looked at. Turbitt — A municipality cannot award a contract without a funding source. Stambaugh — Asked what has been the most expensive Town project. Gibson — The Surfside Wastewater Treatment Plant construction and upgrade at around $45M. Lowell — Schools are not perceived the same as police station or town buildings. He believes the school will pass easily at ATM. Tiffany — For modeling purposes, suggested putting in the $47M for the school; if it is less, that's okay. Gibson — She will explain to the BOS that the range for the school is now $42M to $47M. Discussion about the projected cost as opposed to what the actual cost might end up being. McEachern — With the regular process, the school wouldn't go to bid until April or May 2016; with the sped -up process, the bid would go out in Fall 2015. Asked about getting the money for design from free cash. Turbitt — Free cash has to be appropriate by the legislative body. It has to go through Town meeting under a separate article. Gibson — There is $5.2M in free cash that's been certified. Town Administration is recommending to the BOS how that would be used. The BOS has had a policy for the last few years that not all of the free cash is spent. There is a little less than $500,000 in the reserve fund; she cannot imagine the Finance Committee would wipe that fund out leaving nothing for actual emergencies. Turbitt — The question he has for the schools, if the borrowing passes, the school is good to go the day after the borrowing is certified. McEachern — Asked if a contract could be signed that dictates payment doesn't start until funding is approved. Turbitt — No. The Town cannot enter into a contract without a funding source. Stambaugh — In regards to 2 Fairgrounds Road, 20 South Water Street and the 37 Washington Street, asked Mr. Glidden if the BOS would want this committee to suggest an alternative for those. Glidden — We have priorities: fire station, school and sewers. Morrison — These are on our radar screen; when we first address them, we will want to bring forward a space -needs plan. Glidden — Dynamics are changing really fast with the new construction of buildings. We need to be careful about that. Tiffany — Regardless of what is done with 20 South Water Street, that will not happen soon. It is currently in 2017 but it isn't going to happen then due to other priorities. Morrison — Recommends delegating to Mr. Tiffany to go through the plan and offer suggestions about what year projects should turn up. Turbitt — Should give Ms McNerney a chance to model it first. Moving everything out of 2017 is unrealistic. Stambaugh — Suggested committee members attend the BOS meeting this evening when the FY2016 capital project recommendations will be presented. Page 3 of 4 Minutes for December 10, 2014, adopted Dec. 16 Morrison — About the up- coming Finance Committee presentation; he feels that it might be a benefit for Mr. McEachern to explain to Finance Committee the reason for the range of cost of new school. Discussion about the presentation to Finance Committee on Dec. 18. 1. The revised model will be available at the next meeting for review and discussion. 2. BOS December 10 workshop - meeting topics: FY2016 budget, 2015 Annual Town Warrant, and Town Administration and Capital Program Committee recommendations for the FY2016 capital budget. V. DATE OF Wednesday, December 17, 2014, 8:00 a.m. at 4 Fairgrounds Road, Training Room Adjourned: 9:37 Submitted by: Terry L. Norton Page 4 of 4