The Board of Finance held a special meeting on Tuesday, November 1, 2005 in the meeting room at Booth Library, Main Street, Newtown, CT. Chairman John Kortze called the meeting to order at 7:35 pm.
PRESENT: John Kortze, James Gaston, Harrison Waterbury, Michael Portnoy, Joseph Kearney, Peter Giarratano
ALSO PRESENT: First Selectman Herbert Rosenthal; Finance Director Ben Spragg; Schools Superintendent Dr. Evan Pitkoff; Schools Business Manager Ron Bienkowski; Doug Lajoie (CES), Board of Education Chairman Elaine McClure and members Andrew Buzzi, David Nanavaty, Paul Mangiafico; Legislative Council member, Joe Borst; 18 members of public; one member of press
VOTER PARTICIPATION: Ms. Po Murray, 38 Charter Ridge Road, asked the Board to please approve the HVAC System. She does not want the town to pay more for delaying the project. She feels it is not fair to tell people that by bonding more than 10% (of total budget), it would compromise our Moody’s Rating. Moodys looks at things such as a stable financial base and a manageable debt burden. Our tax base is above $4 billion and expected to grow at a steady rate. Moodys estimates 36,000 as our built out population and we are now at only 26,000. Moodys will understand that we will need more money to pay for necessities due to growth. The needs are genuine. We should work with Moodys to properly fund budgets. Regarding the high school expansion, she has
difficulty understanding why this Board is shocked by the $41 million dollar cost. In 1997, it cost $27 million to expand the high school. Factoring in inflation and the hurricane, the number is realistic. We should build to accommodate more than the eight year projected enrollment.
Ms. Isabella Texeira, 57 Horseshoe Ridge, asked to please fund the HVAC at Hawley School. The students need the best as far as air quality. The heat cannot be regulated. In the front part of the building, the noise level is too high when the windows are open.
Mr. Richard Gaines, 51 Black Bridge, stated that the abysmal HVAC system at Hawley School makes learning and teaching difficult. Consider passing this request on to the Legislative Council and hopefully to the voters.
Ms. Stephanie Demore, Hawley School teacher, stated that the noise and heat are hard to deal with in the 1921 building. It is important to health and education to pass this project.
COMMUNICATIONS: Chairman Kortze received the Booth Library Financial Statements from Ms. Kelly Urso of the Board of Trustees. These will be copied and sent to all Board of Finance members.
Mr. Paul Mangiafico, Board of Education member, has offered to come to the Board of Finance to talk about the recent negotiations with the educational assistants. This will be on the next agenda.
OLD BUSINESS
Hawley HVAC System – Bonding Resolution
Mr. Kortze reminded that as of tonight, the bonding for the Hawley School HVAC System improvements has been rejected by the Board of Finance because of the increase in cost. The Board of Education requested that this be on the Legislative Council agenda but it was withdrawn after they received a letter from the Council Chair asking them to try to get a positive recommendation from the Board of Finance. The recommendation of the Town Attorney is for the Board of Finance to rescind their action regarding the resolution for the HVAC system in order to clean the slate and look at this project again in order to take action.
Mr. Gaston moved to RESCIND action taken at the September 12, 2005 meeting regarding the resolution entitled “Resolution Appropriating $5,460,000 For Renovations To The HVAC System At Hawley Elementary School And Authorizing The Issuance Of $5,460,000 Bonds Of The Town To Meet Said Appropriation And Pending The Issuance Thereof The Making Of Temporary Borrowings For Such Purpose”. MOTION CARRIED: 12 YES (Kortze, Gaston, Waterbury, Portnoy, Kearney, Giarratano)
Capital Improvement Plan, including Hawley Elementary School HVAC System
Finance Director Ben Spragg distributed copies of a chart he prepared showing the existing NET debt service plus the proposed annual debt service with the Five Year Capital Improvement Plan projects; and a chart showing the Mill Rate Impact of the CIP projects, assuming 2.5% growth in the grand list each year. These charts assume the high school being designed next year with construction during the following 18 months. Of the $21 million approved for Fairfield Hills, Mr. Spragg advised that to date, he has borrowed $5 million, with $16 million left to borrow. He expects to borrow $3 million next month and the remaining over the next two years. That is reflected in these charts.
First Selectman Rosenthal pointed out that he has been to Moodys, along with Finance Director Ben Spragg, five times now since he was first elected. There are a number of things they look at such as growth in the grand list, ease in getting budgets approved, economic development, wealth factors and others. One of the things they focus on is debt and net debt. They look at the fact that Newtown pays off debt quickly and does not push principal payments off to the future like some towns. They like the fact that the Legislative Council created a Capital Reserve Fund for debt stabilization. They like that we created a policy on debt. They do not like towns who create policy and then ignore it. Anyone who says that exceeding our debt
ceiling does not matter has never had a discussion with Moodys about municipalities.
Mr. Kortze advised that he spoke with someone at Moodys today and agrees with Mr. Rosenthal’s comments. Another thing he was told is that it is very important for a town to make steady payment of principal and interest on indebtedness.
Mr. Giarratano asked if there is a “safe” period of time to be over the debt threshold before we affect our bond rating? Mr. Spragg stated that usually in that scenario, there is one project that raises the ratio and there is a “bubble” where the debt limit is exceeded. In our case, we have large projects that will continually be pushing us over the threshold.
Mr. Kearny suggests informing the Board of Selectmen and Board of Education how much bonding money could be available and let them prioritize and re-arrange projects accordingly.
At this time, the security alarm in the building went off, making it difficult to continue discussion for approximately 40 minutes. Mr. Kortze suggested that this Board combine and prioritize the two lists from both Board of Selectmen and Board of Education, then re-arrange the list taking into consideration the prioritized projects and their impact, then cull out the lower priority projects. He would also like to look at the impact if the high school project is moved out one year.
Mr. Doug Lajoie of CES was asked if any temporary solutions were looked into for controlling the heat at Hawley School? He responded that there is no control over certain wings of the building. He knows that the Dom Posca has been trying to “tweak” the heating system over the past several years. As engineers, they have not looked into this.
Dr. Pitkoff asked if it is possible to look at an amortization of 30 years? Mr. Spragg answered that you cannot bond for any longer than 20 years.
It was decided that Board of Finance members will put together a list of possible scenarios they would like to see. These will be forwarded to the bank to get an idea of bonding impacts of these scenarios.
Having no further business, the meeting was adjourned at 9:30 p.m.
Jan Andras, Clerk
Attachment A: Existing NET Debt Plus Proposed Annual Debt Service
Attachment B: Mill Rate Impact
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