The Board of Finance held a regular meeting on Monday, February 9, 2009 in the meeting room at Town Hall South, 3 Main Street, Newtown, CT. Chairman John Kortze called the meeting to order at 7:30 p.m.
PRESENT: John Kortze, James Gaston, Michael Portnoy, Joseph Kearney, Martin Gersten and Harry Waterbury
ALSO PRESENT: First Selectman Joseph Borst, Finance Director Robert Tait, Schools Superintendent Dr. Janet Robinson, Legislative Council members Jan Brookes and Pat Llodra, three members of the public and one member of the press.
VOTER PARTICIPATION: None noted.
COMMUNICATIONS: Mr. Kortze handed out updated copies of the high school breakdown of costs related to the portable classrooms. Mr. Kortze stated he will be speaking on a series of emails he received from Bruce Walczak.
ACCEPTANCE OF MINUTES: Upon motion of Mr. Gersten, the minutes of the 01/22/09 meeting were unanimously accepted as presented.
FIRST SELECTMAN REPORT: First Selectman Borst reported that Hawley Realty has given up the lease agreement for the Newtown Hall. Danbury Hospital is reanalyzing all facilities and feels they need to take care of their home base first. Mr. Kearney said the Hawley explanation is fairly useless, not giving any reason for backing out of the lease. Mr. Borst said the town will put together a cost analysis to send to the hospital for reimbursement. Mr. Kortze asked how this will affect the Kevin’s Community Center grant. Mr. Borst stated the grant is separate from the Hawley lease; to be used for Kevin’s Community Center in Fairfield Hills. Hawley was to be the lessee, subleasing to Danbury Hospital and a possible sublease to Kevin’s Community Center. Mr.
Kortz asked if the grant is dependent on Fairfield Hills and Kevin's Community Center was going to sign a sublease wouldn't that indicate the two are inter related? Mr. Borst answered that it has not been treated that way because Kevin's Community Center never came to an agreement with Hawley. Mr. Kortze noted that the grant seemed to be inter related; if Hawley and/or Danbury Hospital doesn't lease space, Kevin's Community Center is stuck. Mr. Gaston inquired about Kevin's Community Center occupying the Edmond Town Hall. Mr. Borst answered that would be up to the Board of Managers of the Town Hall. (Att. A: Ltr. To First Selectman dtd. 2/3/09 & email statement Newtown FFH property).
FINANCE DIRECTOR REPORT: Bob Tait spoke about the Governors budget, saying towns will remain flat with one exception. In prior years one time excess funds were used; those funds will not be available. The Pequot and Mohegan grants will be going down $326,000, which is disproportionally to other towns; it went down more than it should have. January tax collections were strong with a percentage over the total was more than 35.4%. The town received a favorable bond rating, 2.27 true interest cost. Mr. Kortze asked what the difference in total revenue is this year versus last year. Bob Tait explained the only difference is the two grants, everything else remained flat.
UNFINISHED BUSINESS: none noted.
NEW BUSINESS:
Discussion and possible action: Discussion with Webster Bank consultant:
Barry Bernabe, Financial Advisor from Webster Bank reported that the town has an excellent bond rating of Aa2. Investors are very risk adverse. Today the spread between the borrowing costs are wider. In determining a bond rating, agencies look to the finance director and the board of finance, the discipline in paying off debt. Mr. Kortze asked if paying off principal and interest at a faster pace is a good idea. Mr. Bernabe answered rating agencies like to see the debt paid off sooner. Another determination in bond rating is economic and demographic characteristics. The final determination is financial performance and debt management. Rating agencies like to see adequate financial reserves. Mr. Bernabe pointed out that Newtown, Monroe and Trumbull have had the same
bond rating in the past and both Monroe and Trumbull have been downgraded because they draw down their reserve levels. The one thing out of the towns control is the stressful period of the economy. Newtown’s constant bond rating is a positive. Higher rated communities are getting very good rates. Investors are looking at the underlying financial position of each community. In the future, Mr. Kearney would like to see what the town is going to present to Moody's. He would like to see how Newtown stacks up against other towns; there may be a strong case to make as to why we are rated lower than some towns. The Attorney General is interested in the process. In the past the Town has done what has been suggested by Moody's only to maintain the same bond rating. Mr. Bernabe stated the Attorney General is suing the rating agency saying they are rating municipalities too harshly. The rating agencies recalibrated bond ratings
for municipalities, skewing them up higher but reconsidered when the economy took a down turn. Agencies don't like when communities use the fund balance to balance the budget. Mr. Bernabe explained that there are many metrics Moody’s look at, such as diversification of the grand list and the demographic numbers. Mr. Kearney stated Moody's needs to be more transparent in the rules that are applied. Mr. Bernabe proposed the possibility of going to another rating agency the next time. Mr. Kearney asked if there was a case to be made against Moody’s, stating they are not "doing right by certain towns in CT". Mr. Bernabe suggested the town "be careful with that."
The town can refinance some outstanding bonds; based on today interest rate the town can save over $400,000. Mr. Bernabe recommended getting the legal authority to issue refunding bonds because the savings goes up and down depending on the overall level of interest rates. Mr. Kortze noted that he would like the topic of Moody's put on the agenda prior to the towns next meeting with Moody’s so the Board can discuss it prior to the meeting. Mr. Kortze would like the other items, from a comparative perspective, put on paper so the Board can see what is in the towns control and what is not; this could give an idea of areas that need focus. Mr. Portnoy asked about the bankruptcy code. Mr. Bernabe said that municipalities cannot file for bankruptcy without the consent of the Governor. Mr. Kortze asked what Newtown highlights are. Mr. Bernabe answered: strong demographic position, well managed and strong finance director.
Mr. Bernarbe stated everything in the report is positive, Newtown is a big success. Mr. Bernabe advised the town to be careful with using the fund balance to balance the budget. Mr. Gersten asked about the capital items in the budget. Mr. Tait stated there isn't much capital in the upcoming budget. (Att. B: Webster Bank presentation)
High School Modular Classrooms Resolution:
Mr. Gaston moved to waive the reading of the entire Resolution Providing For A Special Appropriation In The Amount of $897,286 For The Purchase Of Modular Classrooms. Mr. Gersten seconded. All in favor.
Mr. Gaston moved the Resolution Providing For A Special Appropriation In The Amount Of $897,286 For The Purchase Of Modular Classrooms Including Electrical And Sewer Connection To Be Used At Newtown High School To Accommodate The Increased Population And Authorizing The Issuance Of $897,286 Bonds Of The Town To Meet Said Special Appropriation And Pending The Issuance Thereof The Making Of Temporary Borrowings For Such Purpose. Mr. Gersten seconded. The amount in the resolution matches the amount in Dr. Robinson’s letter dated January 22, 2009. The cost summary includes a $90,000 removal cost that is not included in the resolution because it won’t happen for a few years. Dr. Robinson reported that the modular classrooms are two quads, eight rooms. Pat Llodra pointed
out that the initial issue was paying $550,000 for installation for portables that would be returned to the company. It made more sense to purchase than to lease. Mr. Kearney asked if anybody was following the market to see if the prices have dropped in this market. Dr. Robinson stated these are used and feels this was a good choice which meets the needs of the town. Motion unanimously passed. (Att. C: Resolution)
Debt Management Policy:
Mr. Kortze noted two changes in the policy (Att. D): Section V E. to no more than and the last paragraph at a minimum. Mr. Kortze moved to recommend the debt management policy to the Legislative Council with the changes. Mr. Gersten seconded. All in favor.
Mr. Waterbury questioned the recent motion at a Board of Selectmen budget deliberation to add $285,000 to the CIP. Bob Tait said that would be addressed during the budget process, saying it wasn’t in the CIP at this point.
Freedom of Information Complaint: Mr. Kortze submitted the FOI complaint for the record (Att. E). Mr. Kortze reported that Bruce Walczak filed a complaint that the Board went into executive session, that an item was voted on to add to the agenda and that the clerk was invited to executive session. Mr. Kortze stated the item added to the agenda was handed to him the evening of the meeting, which was noted at a subsequent meeting for the record. Mr. Kortze contacted Atty. Lisa Siegel at Freedom of Information. It is within the purview of the Board to add anything to the agenda at a regular meeting. The motion to go into executive session on Nov. 24, 2008, was warned properly. The warning was included in the complaint. The reason the clerk, Ann Mazur, was invited into
executive session is because she clerked for public building and site, having intimate knowledge. Lastly, Mr. Kortze received an email from Mr. Walczak on February 9, 2009, stating he had withdrawn the complaint. This is the second time Mr. Walczak has had an issue with Mr. Kortze and the running of the meetings. The first issue was in regards to Mr. Gerstens appointment. The Board of Selectmen appoints members to Boards. Mr. Kortze found it ironic that Mr. Walczak notified him to let him know the complaint had been withdrawn but didn’t speak of lodging the complaint and didn’t call or come to a meeting to articulate his issues. Mr. Kortze stated that anybody in the public has the right to question what any public board is doing. In Mr. Kortze’s opinion boards and commissions go to exorbitant measures to involve the public and make sure that everything is done correctly. Mr. Kortze will discuss any issues in public.
Transfer:
Mr. Gersten moved to transfer $10,000 from Account 01570-2000 Contingency to Account 01680-0000 Newtown Cultural Arts Commission. Mr. Gaston seconded. Mr. Portnoy requested a summary. Mr. Borst reported that the money is needed for a one day film festival which will include a movie produced by Harvey Hubbell V, “Dyslexia”. The Board of Selectmen has approved the funds. The motion unanimously passed.
Budget Meetings:
Mr. Gersten moved to add discussion and possible action on the budget schedule. Mr. Gaston seconded. Mr. Kortze reported that he would like more meetings and he would like them televised. Mr. Kortze would like to work with Pat Llodra to schedule meetings, possibly meeting earlier as to coordinate with the student’s schedules as they are involved in the taping. Ms. Llodra reported that John Voket, from the Newtown Bee, will upload any taped deliberations onto YouTube, giving two live options, Channel 17 and YouTube. The goal is to have one meeting with the Board of Education and the Board of Selectmen. The Public Hearing is scheduled for February 26, 2009.
Mr. Kortze asked First Selectman Borst to reschedule the February 26th meeting with Tom Murtha.
Mr. Kortze welcomed Sue Marcinek as the new clerk for the Board of Finance. Ann Mazur has resigned all meetings she previously clerked.
The department requests for the 2009/2010 are on the town website. Mr. Kortze stated that subsequent board’s actions should be made clear on the website.
First Selectman Borst reported the Selectmen budget is being presented at $38,000,069 which represents a 3.64% decrease to the current year budget.
ADJOURNMENT: Having no further business, the meeting was adjourned at 9:06 p.m.
Susan Marcinek, Clerk
Attachments: A: Letter to First Selectman dated 2/3/09; B: Webster Bank presentation; C: High School Modular Classroom Resolution; D: Debt Management Policy; E: Freedom of Information complaint
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