The Board of Finance held a regular meeting on Monday, February 14, 2011 in the Council Chambers, 3 Primrose Street, Newtown, CT. John Kortze called the meeting to order at 7:35 p.m.
PRESENT: John Kortze, James Gaston, Harry Waterbury and Michael Portnoy.
ABSENT: Joseph Kearney, Martin Gersten.
ALSO PRESENT: First Selectman E. Patricia Llodra, Finance Director Robert Tait, Town Attorney David Grogins, two members of the public and two members of the press.
VOTER COMMENTS: none.
COMMUNICATIONS: Mr. Kortze submitted an email from B. Walczak (Att. A). Mr. Kortze said the issue was brought up originally because the emails were sent to the Board of Finance. His concern was that there were multiple members of different boards that were communicating amongst each other. Mr. Hennick of FOI confirmed that copying multiple boards and having dialogue between members of different boards where everyone is copied, constitutes a meeting. Mr. Gaston said that the context of the minutes is incorrect. The public can communicate with the boards but not when there are multiple discussions with multiple persons of different boards that do not represent that they are elected officials speaking for themselves and not on behalf of a board. Mr. Kortze submitted an email from
Maggie Conway (Att. B) regarding Two Schools - One Song, students building a school in a village in Cambodia. There is a fundraiser at The Fox Hill Inn, on February 25th.
MINUTES: Mr. Gaston moved to accept the minutes of January 27, 2011 with the amendments noted under communications relative to emails. Mr. Waterbury seconded. All were in favor of accepting the minutes as amended.
FIRST SELECTMAN REPORT: The latest storm report was shared. There is $139,000 in contingency. Moody's made it very clear that our fund balance is not where other municipalities of the same rating is; we cannot take out of fund balance for operational purposes and we have to build our fund balance again.
FINANCE DIRECTOR REPORT: The reports from Moodys (Att. C) and Standard & Poors (Att. D) were distributed. This is the first time the rating agencies have reported concern over fund balance. The town has not deviated from any planned use of fund balance. Zero use of fund balance is planned for this coming budget. ‘Stabilized’ means budget revenues equal budget expenditures. First Selectman Llodra said that the town has to eliminate reliance on use of fund balance to offset tax increases and build the reserves up again. Using no fund balance and having a financial forecast plan for the next five years will satisfy the rating agencies. Mr. Portnoy questioned the General Fund, fund balance analysis in the budget and the $1.3 million encumbrances. Mr.
Tait said that is an average from prior years. Encumbrances are obligations to a vendor.
OLD BUSINESS:
Discussion and possible action:
1. Referral of CIP: First Selectman Llodra shared materials given to the Board of Selectman at the meeting of January 7 (Att. E). The debt load in year five needs to be examined to see if it can be reduced to 9%. The Board of Selectman needs time to reflect on the best strategy, look at the priorities and react and respond. Item number one of the Legislative Council request is to review the current Middle School project for the surplus available between what was authorized and what will actually be needed to construct the new roof. The Hook & Ladder amount is $500,000 but $425,000 was needed to complete the demolition of Litchfield House. Mr. Kortze understands that anything added early on will push up years 3, 4 and 5 and there is a
savings in the Middle School roof in excess of $1,000,000 but we have incurred the additional demolition cost and the third year of Hook & Ladder. Item number two is Hook & Ladder may be pushed out one year from the February 2011 borrowing or pushed out further. Mr. Tait said that the new CIP process starts in June; if we know things then that we don't know now we can move it. There is not much impact if moving $500,000 from this year to year three. First Selectman Llodra doesn't want to commit until looking at the impact on the cap and on the debt. Item three states the Board of Finance should look at moving needed projects up in the plan with any funds that become available per the above. First Selectman asked to wait until there is real clarity on the Middle School roof costs. Mr. Tait said we don't want to add anything to the next two years.
2. BOE Management Letter: (Att. F) Mr. Gaston moved the letter to the Legislative Council from the Board of Finance, subject Referral of auditor's management letter and requesting input regarding Board of Education transfer (Att. G) with the correction of capitalizing the letter B in the last paragraph on the word "Board" and by adding "will arguably" to the first paragraph, forth sentence. (corrected version attached). Mr. Portnoy seconded. All in favor.
NEW BUSINESS
Discussion and possible action:
1. Transfer: $65,000 from 01510-2031 Sand to 01510-2032 Salt: Mr. Gaston moved the transfer for $65,000 from 01510-2031 Sand to 01510-2032 Salt. Mr. Waterbury seconded. All in favor
2. Transfer: $6,000 from 01500-4061 Cont. Drainage to 01515-1003 Overtime
$38,000 from 01500-4061 Cont. Drainage to 01515-4025 Cont. Serv.:
This item was tabled and will be acted on at the next meeting.
3. Executive Session: Litigation regarding Hook & Ladder: Hook & Ladder discussion was not discussed in Executive Session.
ADD TO AGENDA: Mr. Gaston moved to add discussion on the current status of Hook & Ladder as item #4 under New Business. Mr. Waterbury seconded. All in favor.
4. Current Status of Hook & Ladder: Atty. Grogins assumes Hook & Ladder will borrow money and pledge the fire station. They are a private entity and will own their real estate. First Selectman Llodra said that the intent of the $1.5 million was to gift to H&L, in three $500,000 increments, after the building was built to pay down their mortgage. The pledge was to position them in a more favorable place when trying to secure a mortgage. Mr. Kortze asked how the town can gift $1.5 million and separate itself, how do we know what they are building is consistent with how the tax payers would spend their money? Atty. Grogins said that the lender will want to know about the financial commitment by the town. A special appropriation would be made when the gift is
made. Mr. Kortze asked if the town is responsible if the fire company doesn’t operate in a manner that would be consistent with the disbursement of public funds. Mr. Gaston asked what the town has done in the past and if it would be able to contractually subordinate the property if they wanted to sell it. Atty. Grogins said a lien could be put on the property to assure the town could recover some or all of the money. Mr. Kortze said there has to be a very clear understanding of the purchasing procedures. First Selectman Llodra noted that there are five fire companies and we have a relationship with each one and we have investments in their property. The origin of this request is because of the concern we have for the condition of the building they are in; a building the town owns.
ANNOUNCEMENTS: Mr. Kortze said there is a lot of conversation on the budget. There have been a lot of questions about the surplus on the Board of Education and on the Town side. He has asked Mr. Tait for help in clarifying this.
ADJOURNMENT:
Having no further business, the Board of Finance adjourned their regular meeting at 8:53.m.
Respectfully Submitted,
________________________
Susan Marcinek, Clerk
Att. A: B. Walczak email, 2/3/11
Att. B: M. Conway email, 2/13/11
Att. C: Moodys report
Att. D: Standard & Poors report
Att. E: CIP scenarios using 9% debt service
Att. F: Management Letter
Att. G: BOF response to management letter, 2/14/11
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