The Board of Finance held a special meeting on Monday, November 20, 2006 in the meeting room at the C. H. Booth Library, Main Street, Newtown, CT. Chairman John Kortze called the meeting to order at 7:30 p.m.
PRESENT: John Kortze, James Gaston, Michael Portnoy, Harrison Waterbury, John Torok, Joseph Kearney
ALSO PRESENT: First Selectman Herbert C. Rosenthal, Finance Director Ben Spragg; Board of Education members Elaine McClure, David Nanavaty, Paul Mangiafico, and Tom Gissen; two members of public, one members of press
VOTER PARTICIPATION: Ms. Po Murray, 38 Charter Ridge Drive, encouraged Board of Finance not to reduce the high school expansion project to the “middle “ projection numbers. It would be a shame if we did not embrace the opportunity to plan ahead. There are 2,700 new housing units available. The housing market may be slow now but it is cyclical. We need to plan for growth in a strategic manner. Please consider asking the Fairfield Hills Authority to use the town hall funds to fund a multi-purpose and recreational building at Fairfield Hills. We still have over $8 million in open space funds. Why is it a priority at this time? What is the logic for the tech park investment? She would like to know each board member’s position on
priorities.
COMMUNICATIONS: All board members received a package regarding the teachers contract.
FIRST SELECTMAN’S REPORT: None
FINANCE DIRECTOR’S REPORT: Mr. Spragg advised that after last week’s Legislative Council meeting, he was asked to look into the difference in cost for financing the high school project at $47.8 million upfront or as we have been doing it over ten years. Something came from the Board of Education meeting that there would be cost involved if the town continued to fund the architect through the bid step and then do construction money afterwards. He gave the Council a report. On a three year project – a) next year $3,178,000 would be needed for the architect, b) the second year, $30 million dollars for construction with a 1/3 school building grant but because of the time frame, we will not have the paperwork in on time to get the $10 million grant in 2008/2009
so we will be borrowing $20 million dollars and assuming the costs associated with borrowing the $10 million. The $20 million will get us through 2/3 of the year. We will need the $10 million in the last four months. The cost would be $120,000. On March 1, 2009, we would borrow $10 million for four months. There would be no financial impact to appropriate the architects money first and then the construction.
Capital Improvement Plan
Finance Director Ben Spragg distributed copies of the Capital Improvement Plan with both town and school projects combined (attached to original minutes). Mr. Portnoy stated that the graph prepared by the Finance Director (attached to original minutes), clearly shows that in 2008/2009, we will reach the imposed debt limits. He does not believe we should do that. We will have to set a town-wide set of priorities, along with the Board of Selectmen and Legislative Council. That does not mean we will not do things. Every project has merit. It may mean that we have to delay some projects.
Mr. Gaston feels that the first starting point is the 10% debt limit. Are we going to work within that or exceed it? He has gone through the numbers to see what the justification is for 10% and looked at numerous other towns to see what is their long-term debt ratio and what are their bond ratings? This board set the 10% policy not to be exceeded unless there are exigent circumstances or the Legislative Council makes a decision to exceed the fiscal analysis done by the Board of Finance. The CT Municipal Profiles shows that the average town has a 7.7% debt service to total expenditure ratio. The median is 6.6%. We have a 10% limit. A town like Norwalk, has a Aaa rating because they have a much more sizeable grand list. We have an Aa2 rating because we are fiscally responsible and our grand list is growing. He feels we are where we should be and we should stick to our 10% limit. He views the Board of Finance ‘s role as different from that of the Legislative Council
because the Board of Finance is like your financial planner, whose job is to tell you what you can afford. The Legislative Council has the final say. If we go with a $47.8 million dollar high school expansion, the Board of Education may not have anything else for a number of years. The town side will probably not like some of the things we can’t afford. He feels we will grow into the high school expansion. If we plan for 13 years out, we will be without things we need/want for a number of years. If we plan for 9 years out, then other projects can be afforded.
Mr. Waterbury agrees that we need to stay within the 10% limit. Mr. Kearney agrees as well and stated that there needs to be a very compelling reason to exceed that limit, with a study of the ramifications and trade-offs in the future.
Chairman Kortze asked each member to give their impressions from the joint meeting held with the Board of Education.
Mr. Portnoy does not feel that anyone successfully defended the “high” Bothwell numbers, especially with the economic slow down and housing permit slow down we are experiencing. He feels there is reason to build to the “middle” number. He also heard during public participation that people think we believe we should think about designing different building for multiple uses, ie. Sr. Center/Community Center/pool. If we also included a gym, we could then save on expanding the high school gym.
Mr. Kearney agreed with Mr. Portnoy. Mr. Gissen did a great job in presenting and answering questions at the joint meeting. He would like to hear a follow-up to the question asked that night by the First Selectman regarding contingency. Although the numbers did not support building to the “high” Bothwell number, that is what we were asked to do and what the Board of Education recommends. He does not feel there was a compelling case although there is no exact science on the numbers and everyone can have an opinion. He would be more comfortable with the “middle” number.
Mr. Kortze heard that people want “town government” to plan comprehensively. We need to consider all needs of the town and not become focused on one project. Right now, that is the $47 million dollars for the high school. We need to keep up with maintenance such as roads.
Mr. Gaston heard Mr. Bothwell say that once you project past five years, it is conjecture. If we are trying to plan for 20 years out, things could change such as school funding being taken over by the state. If we average developing 50 lots per year for the next 12 years, there would be 600 new houses built and with two children per house that would account for 1,200 more students. If 1/3 of those are high school age, there would be 400 new students in the high school in twelve years. That would be 2,088 students which is only 60 students short of the 2,137 student “high” Bothwell projection. But what can we reasonably give up in order to build to the “high” number? We would have to push the Hawley project out
four years and do no other school projects. He wants to get the numbers to the 10% limit.
Mr. Waterbury stated that he had arrived late to the joint meeting and unfortunately missed the public participation segment. He is not convinced we will have the level of students being projected.
Mr. Kortze thanked the Board of Education and especially Mr. Gissen for the tremendous amount of information that was supplied at that joint meeting. He still does not understand how Dr. Bothwell gets those high numbers, which contradict the state numbers. Perhaps the “mid” was the most justifiable number.
Mr. Kearney feels there is a strong case to be made for design to go forward to the “high” projection but whether or not we actually build to the high will be based on other projects. We could have the design and then phase the project.
Mr. Gaston asked the Board of Education members to give their opinion regarding how they would feel about building to the “mid” numbers for the high school and having other school projects vs. building to the “high” ($47.8 million) as requested and having the other projects pushed out to possibly 2013/2014? Board of Education Chairman Elaine McClure stated that she would be more comfortable if their board discussed this as a whole and did not give their individual opinions at this time.
Mr. Kortze asked what is the next step regarding the NEASC? Dr. Pitkoff advised that we have to provide a report to NEASC by January 2 to list recommendations that were made and what actions we have taken towards meeting them. We will list what the architect has done, that we have held a joint meeting and that the project is in the CIP. We will show them that we are moving towards the goal of providing relief for the overcrowding situation. The NEASC will take that and will decide on whether they want us to continue giving updates in six months to a year or whether they will be leaving us on warning status or moving us to probation.
Mr. Kortze advised that he spoke to the Legislative Council Acting Chairman about setting up a joint meeting with them. He would like the Board of Finance members to meet again to come up with numbers and then go to the Council to see what direction they feel we should go in. Mr. Kortze asked Finance Director Spragg to help come up with a few scenarios before going to the Council. Board of Finance members will e-mail their suggestions for scenarios to Mr. Kortze to forward to Mr. Spragg. Meeting dates will be worked out and announced.
Having no further business, the meeting was adjourned at 9:15 p.m.
Jan Andras, Clerk
Attachments (to original minutes in Town Clerk's Office)
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