The Board of Finance held a Regular Meeting on Monday, December 10, 2007 in the Meeting Room at Town Hall South, 3 Main Street, Newtown, CT. Chairman John Kortze called the meeting to order at 7:35 p.m.
PRESENT: John Kortze, James Gaston, Martin Gersten, Michael Portnoy, Harrison Waterbury.
ABSENT: Joseph Kearney.
ALSO PRESENT: First Selectman Joe Borst, Finance Director Ben Spragg, Board of Education member Lisa Schwartz, Board of Education Director of Business Ron Bienkowski, two members of public, one member of press.
ELECTION OF OFFICERS. Mr. Portnoy moved to add Election of Chairman and Vice-Chairman to the agenda. Second by Mr. Waterbury and unanimously carried. Mr. Portnoy nominated Mr. Kortze as Chairman and Mr. Gaston as Vice-Chairman, second by Mr. Waterbury. Motion unanimously carried.
VOTER PARTICIPATION: None noted
COMMUNICATIONS: Mr. Kortze welcomed Mr. Gersten to the Board of Finance. Mr. Kortze noted that a list of members and next year’s meeting schedule had been sent to the members. Mr. Kearney advised Mr. Kortze that he could not attend the meeting tonight, but he supports Mr. Kortze and Mr. Gaston continuing as Chairman and Vice-Chairman. Mr. Kearney is concerned about issues with the high school design and with whether the Charter Revision Commission will recommend changes that will enable the Town to manage a surplus.
ACCEPTANCE OF MINUTES: Tabled until the next meeting.
FIRST SELECTMAN REPORT: Mr. Borst had no report.
FINANCE DIRECTOR REPORT: Mr. Spragg reported that the Town sold bonds at the end of November at 3.99%. A draft of the annual financial report for June 30 will be finished this month. The annual surplus for 2006-07 was $2,619,000 which will be used in preparation of the budget for 2008-2009. The surplus in the current year is $3,363,000 which is $744,000 less. We transferred $300,000 into the Capital Reserve Account so that $444,000 will be the gap. The tax collection rate was 99.1%.
Mr. Gaston moved to add two transfers to the agenda for the Lake Zoar Authority and for the mandatory recount by the Registrars. Second by Mr. Waterbury and unanimously carried.
NEW BUSINESS
Presentation by John DeNoto of Webster Bank. Mr. DeNoto said that the Town of Newtown is perceived by its tax exempt status and the perceived stability of its issues as well as what are bonds sold for and what are the proceeds used for. He said that the Town cannot raise funds for a tax benefit, accrue them and tax that money and invest it in a positive spread. The money must be used over a specific time for a specific purpose. Diversification of the Town’s tax base is also looked at. Also patterns such as how often budgets are turned down. Newtown relies on a large portion of real estate for its tax base. MBIA provides insurance to municipalities but they may not be doing that much longer; if the Town is issuing debt they may have to do so without MBIA. Mr. Portnoy asked what the cost is of MBIA insurance.
Mr. Spragg said that the cost is less than $300,000 but that we do not purchase insurance; we allow the underwriters to insure us. He said that the State bought bonds at fifteen basis points. Mr. Kortze asked Mr. DeNoto if there is anything about Newtown that is positive or negative. Mr. DeNoto said that investors rely on ratings and that the level of financial management in Newtown is very good. He said that a bigger issue is what is going on around us. Try to maintain the rating or get it bumped up. He said that the ratings agencies have little incentive to give the Town an bump up in the current environment. Mr. Kortze said that this is very much linked to the future happenings and the total amount that we borrow. He said that future projects would equate to a certain level of savings. Mr. Kortze asked Mr. DeNoto to expound on changing course of what was issued. Mr. DeNoto said you cannot change the purpose after the fact. Bond counsel Robinson and Cole needs to send a report to
the IRS on what the funds are spent on; this will also show in Moody’s report. Mr. Kortze noted that we have a debt cap and a surplus account. He asked what else can we do that is within our control. Mr. DeNoto said that the debt cap is addressing some of the rating agency’s issues. Also whether the insurance company ceases to be a factor in the market is very important. Mr. Waterbury asked what makes you decide to bid on a particular bond issue. Mr. DeNoto said better yield based on perceived value and credit quality. Mr. Gersten asked how significant is the issuance of insurance to managing our arbitrage. Mr. DeNoto said that short and long term bonds sold faster. Mr. Portnoy asked what is in the State’s short term fund (STIF). Mr. DeNoto said the State has had some problems with some of the items to which Mr. Spragg said these problems were with yields not principal. Mr. Portnoy asked what our balance is in STIF which Mr. Spragg will research. Mr.
Gaston asked if the size of the grand list is a single factor. Mr. DeNoto said that is not a single answer with S&P..
UNFINISHED BUSINESS
Capital Improvement Plan. Mr. Kortze said that the Town side of the CIP would be discussed tonight and asked Mr. Borst if he had any changes to the CIP. Mr. Borst said he did not have time to review the CIP. Mr. Spragg said he thought we were going to reconcile the Middle School numbers tonight. Mr. Kortze said that the purpose of the meeting tonight was to discuss the Town CIP and that we will reconvene to discuss that. He also said that a joint meeting will be set up with the Boards of Finance, Selectmen and Education to discuss the CIP.
Enrollment projections. Mr. Kortze said that in December 2006 the Board of Finance approved funding for an architect for the High School project contingent upon upcoming and the most current enrollment numbers. Ms. Schwartz said that the Board of Education had hired Mr. Prowda and was also getting information from Dr Bothwell on enrollment projections. She was told that the Town had hired a consultant but Mr. Kortze advised her that this was not the case.
Ms. Schwartz said that she been under the impression that the Board of Finance wanted to stop the High School project. Mr. Kortze asked the members of the Board of Finance if any of them wanted to stop the project but no one responded.
Mr. Kortze noted that the Build Out Staff Committee comprised of himself and Mr. Waterbury and Mrs. Doyle and Mrs. Llodra from the Legislative Council had reviewed enrollment projections. Ms. Schwartz said that the Board of Education is looking for insight into Mr. Prowda’s methodology and that his 2005 report is very different from his later report in structure. Mr. Portnoy noted an error in Mr. Prowda’s report in that “670” students should be “938.” Ms. Schwartz agreed. Mr. Gersten said there was also an error in a figure later in Mr. Prowda’s report. Mr. Portnoy noted that the Board of Finance did not have Mr. Prowda’s 2005 report, only one page of enrollment numbers. Mr. Waterbury asked if the Board of Education discussed how Mr. Prowda’s methodology was
different in his two reports. Ms. Schwartz said we don’t want to go forward with any decisions unless we get a more comprehensive picture.
Mr. Kortze noted that revaluations have been sent out and the High School is coming up at the same time. He said that the Boards of Finance and Education should have a discussion about the High School and should build a case for the Boards who will have to approve it. Ms. Schwartz said that the Board of Education is working on a position paper now indicating why making a decision now may not be in our best interests and it also may not be in the context of changing things. Mr. Kortze said that we must make this case to the voters. Mr. Kortze said that we do not want the Town and Board of Education operating budgets affected by a project that is out there. Mr. Gersten asked if the Board of Education is considering alternatives.
Mr. Kortze said that a prudent individual would expect the Boards to take into consideration such items as the economic climate, revaluation, enrollment and the price of oil. He said that the Town should look at what we really need to support the High School. Could this money be applied to something like the Middle School and move this up. Ms. Schwartz said that we need to see the position paper to re-evaluate the project. She said that redesign would take six months. Mr.Bienkowski said there is very little flexibility in the schedule if we want to get the bids and vote prior to June 30.
Mr. Kortze noted that the Board of Finance has asked for the scalability option for one year. Mr. Waterbury said that the publicity about the mix-up regarding the Middle School caused skepticism among the voters. Mr. Kortze said that the Board of Finance feels that the Board of Education needs to make a case for building the High School. Ms. Schwartz recommends that a meeting be held with the Boards of Finance and Education, the First Selectman and the Chairman of the Legislative Council. Mr. Waterbury said that we need statistics that we can defend. Mr. Portnoy asked that if Mr. Prowda’s figures are right do we have enough capacity today. Ms. Schwartz said we are over 100 capacity, but Mr. Portnoy said that is only one school
COMMUNICATIONS. Mr. Kortze noted that he had attended the Board of Selectmen’s meeting because there is a question about the Town Hall which was a large dollar amount in the CIP. If there were any costs to changing direction the Board of Finance would like to understand them. He did not comment at that time about moving the project forward.
Transfers. Mr. Gaston moved to transfer from Account 01570-2000 Contingency $3,601.00 to Account 01360-0003 Lake Zoar Authority. Second by Mr. Portnoy and unanimously carried. This is to cover a short fall.
Mr. Gaston moved to transfer from Account 01570-2000 Contingency $5,720.00 to Account 01180-1007 Election Workers . Second by Mr. Waterbury and unanimously carried. This is for the mandatory recount.
Mr. Gaston moved to add to the agenda a resolution to Herb Rosenthal, Ben Spragg and Jan Andras. Second by Mr. Gersten and unanimously carried.
Mr. Gaston moved the following Resolution to Herb Rosenthal, Ben Spragg and Jan Andras: That we, the members of the Board of Finance, express our thanks and gratitude for their exemplary work, professionalism, sincere dedication and long standing good will that they have so demonstrated to this Board and our Town.
Their efforts, professionalism, sincerety and their dedication are models for others who follow.
We wish them the best in their future endeavors. We will miss them. And know, that we believe that their efforts have helped make Newtown a better place to live.
Second and unanimously carried.
ADJOURNMENT Having no further business, the meeting was adjourned at 9:08 p.m.
Ann M. Mazur, Clerk
| 
