September 30, 2025 – Capital Improvement Planning Committee – Video & Transcript
September 30, 2025 - Capital Improvement Planning Committee
Kelly Lappin: Okay recording in
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Unknown: Tom older who is an ex officio member depw Director, and Carol Martin was on there, but dropped off. Kelly Lappin: Okay, so Tom ex officio member is participating via zoom. Kelsi powers is attending in person as an ex officio you. Ex officially ex officio member, are you not presenting? Okay? All right, and then members of the voting, members of the committee here are here in person, myself, Kelly Latham, Brian ARPA, he Brad Carver and John Klein, Unknown: manager joined and Carol Martin.
Kelly Lappin: All right. And so we also have Carol Martin with our Select Board Liaison here on Zoom, and Michael McCall Unknown: Tom manager on Zoom. Kelly Lappin: Okay, so I'm gonna review the agenda for six o'clock. Via are they? Unknown: Robbie, are those three? Can we move at least the two ex officio members? Are they full participants? Kelly Lappin: Oh, it looks like they're
Unknown: just you bring them over to full participant status. Kelly Lappin: So Michael and Tom, it's up Unknown: to you if you want to invite Carol in as a participant versus
Kelly Lappin: you can invite Carol over to she'll still have to ask to be acknowledged. All right, so agenda. We've done the call to order. We're reviewing the agenda. We'll do announcements in a minute. So 605, public comment and members response. 615 review and vote to approve the minutes of our meeting of September 9. 625, review existing capital information, which is primarily from the warrant and address any member questions. 725, summarize and discuss capital relevant information from the financial presentation made to the Select Board on 924, 740, review draft capital and DEP policies under consideration by the Select Board. Those I believe, Brian, you know, have been approved by the Select Board. So we can flip to the to the approved ones, and then 750 topics not reasonably anticipated by the chair. 48 hours posting and setting the time of our next meeting, and we should adjourn hopefully by around eight. And times are approximate, Unknown: as is order Kelly Lappin: Fay, so any announcements from any members, I'll start Brad, okay, all right, good, and then we can go into the agenda. So let's start public comment. Oh, sorry, nope. So public comment, do we have anybody else online? No one else in there. So soon, there's no public comment, right and now we will move to reviewing and approving, vote to approve the minutes of September 9. So Brian had sent those out right after our meeting. Did anybody have any comments edits to get Brian on those, what changes. No need to discuss. So can I get a motion to approve those second All right? And so you could just do an All in favor, right? All in favor, aye. That's everybody. We're good.
Unknown: I wouldn't say I, but I
Kelly Lappin: Okay, those are approved, and now we'll move to reviewing the existing capital information. So I had sent the committee members whole bunch of existing resources, things that were already out there, most of which were from the warrant, as well as some other items related to capital. And so I asked everybody to do their own homework. I know I bombarded you with a ton of stuff, so I understand if you didn't look at every single thing and under you know, got it all committed Tom. Right now, but want to start with, if anybody had specific questions about any of those materials, we'll try and address and if not, and we just want to do kind of an overview between Brian and I. We've got enough experience we can talk through the landscape to give you sort of that baseline understanding of what's not necessarily every single project, but how does this right capital come together and how does it work? So start with questions. Unknown: I don't have any particular Bradford Carver: questions other than I think, because I'm new to this, I don't have the financial background you guys have, I think, an overview of how it works, how the sausage is made, yep, would be, would be helpful for me to put everything in context. Kelly Lappin: Sure I would expect that anything else. Unknown: I had two specific questions, and I may have just missed it when I looked at the budget, how are grants shown in the offsetting capital requests? And if they are, and the other is just, I think, how is carryover? We didn't spend it, we didn't finish the project in the prior year. How is that shown in the budget? Or is it Kelly Lappin: good? Questions? So grants? Brian, correct me if I'm wrong. Usually the request at Tom meeting, if there's it depends on the type of grant. Michael, you can correct me too, right? So in many cases, we have to appropriate, as a town depends on the grant, but we have to appropriate the full cost, right? In some cases, so like reimbursement for the schools, we appropriate the full crop, the full cost, and then we get reimbursed, because it takes some time. So most of what you see in the plan, I can't think of very many that are in the plan right now that we were discussing or anticipating grants. The only one that comes to mind is snake Brook dam, which we have talked about definitely more that there's a couple that definitely had it that had grants in the write up,
Kelsi, I was just gonna say if you look to the 2025 warrant item number six, which is a stormwater Asset Management Program, this one is actually a reimbursable grant. So we had to put up the money upfront the 206 950, but the town anticipates being reimbursed for 124,001 70. So that's when it comes to all the lot of the grants, especially with capital. It will be like mentioned within the description and justification, or if it's fully grant, it would be under the total funding sources, which is listed on pages 48 and 49 of the annual town meeting. It actually breaks out all the summary of the funding sources. So if there are, if it's like a front loaded grant, where they give us the money in advance to pay for whatever capital it'll appear on there as as part of the funding source, if it's a reimbursable grant, such as item number six, usually that comes through in the description and justification of of the information that's being given to us by the department.
Unknown: Particular item that you're mentioning, Kelsi, this water item is a good example for a different reason. It was not in the five year capital plan the finance committee got pretty well along in its review of the fiscal 26 capital budget and the five year capital plan. And the Tom holder, who's online here, DEP W director, came to the Tom manager and the Finance Committee and the finance director, and said, Hey, we have this opportunity to get whatever it was, 40% 60% reimbursement from the state, but we don't have this in our plan or in the capital budget. Would you consider? Can't remember if we had already voted it and we had to reopen it. But that's an example of there's a plan, and then there's exceptions to the plan. In that case, you know, getting a good chunk of what otherwise going to have to get done paid for by the state, certainly there's a good rationale to bring in. So I think that particular one is a good example. On the the other one that Kelsi and Kelly mentioned, the state Brook dam project has been lingering around for three or four years. It had an initial appropriation from the town meeting two or three years ago, it was inserted into the fiscal 26 capital budget. At the same time, the town had submitted several grant requests, both state and federal, and have been unsuccessful through several funding rounds. And then, you know, we got it approved at town meeting, so in theory, they can move forward with project, but they were still hopeful of getting state. In federal money, and in fact, the state just came through with $884,000 and I'm not sure how likely it is, but there's they're still holding out hope that the federal government might come through with a good chunk of that other million four but at some point they have to get going on that project, because there was also part of it funded with ARPA funds, and those funds have to be spent by the end of fiscal by the end of calendar, 2726 I mean ARPA, American rescue plan Act funds federal government back. And so you had to commit it to certain projects that were qualified, and then you had to go ahead and then spend it no later than the end of calendar, 26 so the town manager is working with Conservation Director and trying to make sure that things get going so we don't, you know, lose The ability to use the ARPA funding. And think they're either going out or have gone out to bid, or hopefully final cost estimates for the project. We went out to bid last week. Okay, so it remains to be seen whether that whole bundle of money is going to be sufficient again over the last number of years, there's plenty of examples where the project gets approved, really get done in due course, and then they can finally get the estimates in and inflation, whatever competitive bidding environment they've got to come back to town meeting for more, more money. So hopefully, hopefully there's enough money that's now been approved to get that project done. But so it's an expanded answer to your question, but it's an example of it's covered a lot of areas. It's an example of the fluidity of process, despite the objective of trying to lock in a plan. So going back to the budget, does so does it have to be approved, assuming we won't get the grants in all cases? I think Kelly Lappin: it depends on the you can correct me, Kelsi or Mendel. It depends on the type of grant, right? So if the grants already approved, and at the front and front loaded, and it's, I think it's possible that we could do an article without right, with that subtracted, but if it's a reimbursement, you have to Unknown: do it, yeah, okay, so in the budget, unless it's up front, we would assume the full cost is in there. So the reimbursement then goes into the free capital budget, yeah. Where does it go? When you get it, it gets matched against the capital project and whatever funds have been appropriated through borrowing or use of other sources just don't get used, right? I guess I might go in that right, assuming it could be a year later that project closed. Is it just want, like, I'm just more from a budget? Is it washed in the budget, or does it actually get it close to that budget and reduced? Kelly Lappin: So what happens is we do something called capital close out. So when the project's done, and I've been managing the capital project since John a capital project since John Bugbee left as the former assistant manager, if there's any monies that is left over, it gets released. So I send a memo back to Brian Keaveney, and it some it appear sometimes that money, I don't know how he held it, because in my mind, it just goes back to the general fund, but, but it depends. So some of it is is earmarked as like surplus capital. So you can see in the summary for funding sources, especially for this so we had surplus capital, so unspent funds from completed capital projects in the amount of 590,000 zero, 42 so some, in some cases, it'll just go back to the general fund, which then just gets appropriated as free cash the next year gets certified, or it gets held over and is used again to pay for more capital projects in the intervening years, and is noted as surplus capital. But this surplus capital doesn't explicitly say what projects it comes from. It just kind of sits in its own and it depends what the depends what the original funding source for a project was. The funding source is debt, right? You can't then take that, that surplus and use it on a project that's not eligible to be DEP, right? So if there is some matching, that has to happen, but usually that comes from the finance director, right? When they're doing capital budget to say, hey, here's the projects that are getting closed out. Here's where the sources of close outs on how they can be used. Unknown: So again, last year, if you look at the in the warrant on page 36 there's the, at least the anticipated motions that were to be made at town meeting under the omnibus budget. Uh, operating a capital budgets. And Kelly's point, in addition to just surplus capital, which Kelsi was alluding to, we had surplus bond proceeds that require, if she said, very specific uses. That is, they have to be projects that would have otherwise qualified for debt financing at the same term. And again, the finance director has a lot of input and into what it could be used for. And so, you know, there's more on the back end. I mean, I assume that's thoughts that we basically deal with, unless it's extremely Kelly Lappin: deal with it if it's available. So I would say we don't plan for it, right? So when we're because, when we're in, we're going to be looking at capital projects. We're planning for it. We can't plan on the fact that there's going to be surplus from other projects. So I think that happens. Typically, it's at the tail end of the process, like, we've got a plan together, and then there's some, hey, we've got surplus we can use it for for this, and take it out of whatever we were gonna we're gonna propose, my experience has been more often than not, it's been last minute emergency projects that have come up and you've needed to rejigger so you've used surplus capital Unknown: to help Close the Gap. Is that a Kelsi? Is that, I assume the finance director, sort of annually goes through that analysis with department heads, trying, trying to end the school department, trying to get a sense, because, like, three years ago, they closed out over a million dollars of projects that were done. And at these excess proceeds have been appropriated to Kelly's point. They then got used to fund that year's capital budget. The next year, I think it was only, like $50,000 or something. And then last year, it was $590,000 and so I'd assume, as a process policy, you know, I would think we would least want to know that that is happening. And I think last year, the finance committee was given the camera was an Excel spreadsheet or from the Tom accounting system. But there was an analysis, literally at every capital open capital project, of which there were 8090, projects. And then had across the page to be closed out, and then kind of accumulate up all those amounts. And each of those close outs require either a department or a committee to sometimes have to vote that it's done, done, and they are giving up those proceeds. But it makes no sense to have that usable capital sitting around. So hopefully that'll be just part of sort of keeping an eye on the inventory of open projects. Kelly Lappin: Yeah, I, if I may, Madam Chair, yes, we try to meet, I try to meet with the department heads quarterly to go over that and to get their statuses of how, how the projects are going along, and if they need any assistance, and how much, if they think they're going to get any money back or and those meetings are also like to close out, because I have a couple of projects that are in the tail end, and just making sure that they're done, and when they're done, we can be done with it, with school projects. The school committee has to meet to close those out. So those can time. Take some time to allude to your point, but I do try to meet with the department heads that have capital on a quarterly basis to go over it. And if I have time, I try to meet a little bit more often than that. And then I report that back to the town account and final structure. And he does the actual Mach nation of closing out the process, and then I just keep the records. Unknown: So does it make sense to tie that debrief out to us when it's quarterly? Here it's a status of the projects, just from a planning standpoint. We know these are not voted on. These, these are closing to have up or down. What is the inflation threshold for not having to go back and vote? I know we talked about this last time. I just didn't write it down. Kelly Lappin: Oh, for not having to go back and vote. I don't know that there is an inflation threshold. It's if there's no money left, Unknown: right, you got it. Is there an overspend threshold? Or is it to the penny? Or the way Kelly Lappin: that it should work is that the overspend is built into the project that we had approved. Unknown: So I plus zero? Well, Kelly Lappin: I don't know that it's plus. It depends. I would say any major building project has has allowance in it for overages. I'm not going to say that every single Michael or Kelsi, you can speak to this, that every single truck that DEP W has on there has, you know, a certain amount of overage in their amount. But I don't think they it's not to the penny, not to the dollar, necessarily. Unknown: But is that in the approved amount, or is that, is they asked for amount and the actual request says, plus 5% okay, it's in the approved whatever amount we is approved in the plan is the amount. That's the four. And it's for a Tom meeting. Tom meeting is approving individual line item projects. So if you're over on one, you can't department like just pick on DEP w if the truck ends up costing more than was appropriated my knowledge Tom, you can correct me, they can't spend excess funds they have in another line item that happened that was also appropriated at some other town meeting. My knowledge that that's not possible. So it behooves everybody, as best they can to build in, certainly an inflation factor, contingency factors, but and mostly that's during the covid years, due to bunch of issues, the town got fairly behind on getting to and starting projects that got approved, and as a result, and given the passage of time, there were a number of projects that ended up it was clear they're not going to have enough money to tweet it, and so they had to sort of wait until the next available town meeting to go back and ask for additional appropriation. The fire station two is a good example where I think there was at least three the initial appropriation and at least two more after that. And part of that was passage of time. Part of it was unforeseen circumstances beyond the contingency. And there's plenty of those examples that have occurred when I was on the board of selectmen. It was around the time the public safety building was built, I think I stood before Tom meeting at least three or four times, asking for more money. And that's just not the way you want to Kelly Lappin: but one of the goals of having this meeting is that we hopefully have better right, with better control over that from a planning perspective, right? That it's planned for that projects being monitored, which Kelsi is doing, right, a great job. Can't say it was always being tracked quarterly. I can't even say it was being tracked annually. So staying on top of projects and making sure that they're moving forward, right, is going to help with that. The goal would be that we're not we're in minimal situations where we have to go back to the town and ask for Unknown: more money, right? Lisa, and it would be helpful. Of all of us, I suspect you probably have a bit more of the project management background, if I recall, from your resume. Yeah. So if there's things that you've done in the private sector that conceivably at least could be discussed here, it may not fit in the municipal world, given restrictions, but I know when we deal with financial matters, I tend to bring up things from my time in private sector, and again, they don't always translate into municipal finance. But, you know, I think towns should always be open to looking for different ways to go at these projects, to ultimately get them done efficiently, cost effectively, etc, etc, so and just have an accurate budget. I mean, I think that's the just know where the when the money's going, right. Yeah. Can I ask you that question? Then, yeah, this leads to laundry list, unfortunately. So from a budgeting approval standpoint, I just want to make sure it correctly. If we approve it for 26 gets voted and but in reality, the spending gets delayed to halfway, gets 27 as many projects will carry over from a budget standpoint, does that line and move to 27 and if so, when Kelly Lappin: no so? And I think I answer in two parts. One, capital is not restricted to a given fiscal year. So once the project is approved, that project can be done, conceivably, over any period of time, with probably some restrictions around debt and how you issue debt. But projects can and have extended far beyond when they were intended to be done. And Brian gave a good example during covid, right? Because of priorities on things that needed to be done in order to get buildings open, ADU freeze during covid, and also because, I'm sure you're fully aware right, materials that work hard to get extreme inflation in the building sector, stuff like that. Things got more delayed, but no, they don't have to be used in that year. One of the things we talked about in the capital planning working group before, when we were getting the article ready to go to town meeting, was the idea of when something we weren't necessarily doing publicly, maybe it was being done behind the scenes, but when a project's being proposed for approval at a town meeting that we have a schedule associated with it of when do we think this project is going to be completed? Certainly, big projects have big buildings, have that associated with them, but lay half an expectation for everything. When we expect to see this closed out so that we can have a little bit of accountability over it. But I think also kelsi's process of meeting with everybody is it also helps foster that. Like, all right, it's there. Why isn't it moving? Can we get it moving? But for the reason that that Brian said, I would like to avoid going back to town meeting, I would like the town to have to avoid, to be able to avoid going back to town meeting. The longer something goes on for, the more, the higher the likelihood you go back to town meeting, right? Because the longer it goes on for, the more likely the cost have increased beyond what you've beyond what you've budgeted and had approved.
Unknown: Can I add? So then, how does that affect the free cash, or the surplus cash that's in there, versus the DEP? Because I assume you're not going to take the debt on if the project hasn't started. Kelly Lappin: Yeah. So I think that was the second part I wanted to talk about. So I think maybe it makes sense to talk a little bit about funding sources, and I'm going to point you to page if you have the warrant open page 49 on top of page 49 just as a good place to start. This isn't the be all, end all, but it's a good place to look. So this was the FY 26 capital budget, summarized that box at the top by what the funding source was. And so thinking, maybe if we walk through each of them, and there's people that probably aren't on here, and talk about what they are, that might help a little bit. So borrowing, so debt issuance, you're right. So debt issuance, town meeting is approving that we do a capital project, and we do it with debt. The actual debt issuance is handled by the treasurer's office. So finance director oversees the treasurer's office in conjunction with the Select Board, so they're actually approving, right, signing the paperwork for the DEP placement. That doesn't necessarily happen right right away after town meeting. As I recall, we typically do debt issuances either November February, depending on advice from our financial advisor and the timing of the project. So we're not going to go out and issue debt if we're not ready to start the project, and it'll also come down to how projects get grouped, and whether or not we have cash to kind of pull things over on hand so that we don't need to issue the debt right away, because you're not doing it right every month. So there's grouping projects together. Unknown: A couple of sidebar comments there. There's two ways to finance the project. One is short term financing with bond anticipatory notes, which are generally interest only payments. And you'll typically use that type of financing where you're not ready to do a full bond offer. You don't have enough projects, enough dollar amount to make it, you know, economically feasible. And so, you know, the Treasurer and a finance director might, you know, and we have some outstanding now in town that'll partially fund projects to get them going. And then once there's a critical mass, as we're about to come up on here in November, a critical mass of water projects, for example. They're now currently partially funded with bond and participatory notes. Then long term bonds will be issued, takes out the short term financing is to when the financing long term is put on. I mean, so in the short term case, well, albeit, they could issue that whenever. They tend to also try to do that periodically, so they're not constantly in their grouping. So it's not for a project, it's just for that, typically, for a group of projects, Bradford Carver: right? But just so I'm clear just but it's for the full value of the project. Unknown: In the bond anticipatory notes, sometimes yes, sometimes no, when you get to the bond issuing the long term bonds, typically, that's the full authorized amount to borrow, unless there's been some change. And we have a couple of examples in the fiscal 26 capital budget that you know it's probably too detailed to get into tonight, but there are always exceptions. But just picking up on one of the points Kelly made, you would think that unless you're ready to go with Project, particularly when you're talking about issuing the long term bonds, it would behoove the town not to issue bonds too far in advance, because you obviously start paying at whatever 4% today, and you might be invested proceeds probably are being invested today at around 4% but if you look back three to four years, you might be paying two and a half to three and a half percent and making nine. Think so it's costing the town well. When the Council on Aging building was set to get going, there was 11 million plus or minus of bonds voted for that project. There's bunch of other projects grouped in and I think it was at least a year, if not more, before any of those bond proceeds got spent on the project for various reasons, and we'll talk about the DEP policy later, but it reminded me of an issue that came up with a public safety building years ago, where they had likewise borrowed in advance of spending down the money at a pace the federal law requires it. The tax code requires you to spend it down at and if you don't spend it down fast enough, the town has to pay a rebate to the federal government. And I recall back with the Public Safety building, the town actually had to cut a check because there's interest arbitrage going on between what the lower rates on Muni debt versus what you might be earning in a taxable investment, and it just depends on the markets. So I do have an open question out to the finance director on the Council on Aging bonding of 11 million because I believe it was sitting there beyond the point where it was supposed to be starting to be spent, and it's not my job to police that, but having lived through it many years ago, you know you don't want to have to wait for the arrest to show up at your doorstep and say, Yo, us money. So I think I think back to Kelly's point. When these projects get brought forth approved, having a good sense of what the timeline is, and that people are actually committed to getting it going, and they're closer to be able to do that now than they were two or three years ago, because there was 90 projects stacked up that needed to get completed. And so I think that's always the goal. Yeah, and there's some big projects coming down the line. That's why I say that there's where large projects in the 20 year schedule that could be over five or six years. I mean, you don't, you don't need to borrow that right away. Especially, think the market's gonna change Kelly Lappin: and you won't, necessarily. I think if we get to looking at the actual like DEP schedule, you'll see projects that got issued in pieces, right? That were bigger projects that got issued in pieces. So it is possible to do that. One of the things that Brian just said, I just said it at our last meeting, is the job right, that we're facing as a committee in conjunction with the town manager, right is not just how much money and where the money comes from, but resources to do the project. So one of the problems that the town definitely suffered from was appropriating funds for projects, approving projects that there was no way could be done in a reasonable period of time. And so that created the cycle of, we got to go back to town meeting and get more money. It's like, well, probably knew we weren't going to get this done for for three years, right? Why did we slate it that way? And there's reasons. I mean, I know Tom holder has told me before, right? Sometimes you need to have the project approved in order to start the process right? So there are reasons to do it, but that's goes back to if there's clear expectations at the outset of this is the project, this is the timeline for the project, then there's something to hold accountable to. And we're not in a situation of, I thought we were starting. We issued the bonds, and we haven't used any of it or Unknown: suffering the projects into preliminary, you know, do the do the assessments for the quarter million and then move on breaking it Kelly Lappin: into pieces? Yep. And Unknown: what we've seen in the last two or three years, because of what Kelly described, is that finance director recommended to the town manager, who then recommended the Finance Committee, even though the five year plan called for certain projects to be coming up for that particular year's capital budget, to just push them out, literally push other than life safety type thing. Push everything they push things out, like a year, push the whole schedule back a year. And so that that I would assume would be part of our review process. I'm not clear on whether we're reviewing or doing, but we'll talk about that some other time. Yeah, I think Kelly Lappin: right now, I'm just trying to make sure we've got enough foundational knowledge to deal with projects when they come in. So talked a lot about barring already. Unfortunately, I don't think we're completely done. So Brian differentiated part of the borrowing nuances. I think the other piece that's important to understand is that borrowing can happen in sort of, I think, three different flavors, right? One is within the levy. Yeah. And I'll talk about what the levy is in a minute. Second is excluded or outside the levy, right? And then the third is through self supporting funds. So probably going to get a little tricky, because when we talk about water historically, we would have said it on the self supporting DEP, right? The water fund is going to pay the payment on the debt. When we get to talking about MWRA, we'll probably flip that on its head and have discussions about whether or not that's self supporting, Unknown: maybe ambulatory. That was still positive, right? What was that ambulatory? And those service fees that we got Kelly Lappin: there? Oh, ambulance fees. Yeah, so that's another so that's not debt, but it could have debt. So that's another, another way, typically, though, I think the way we used ambulance fees before is the town took on the debt, and then the ambulance fund reimburses the town for the debt. So it's a little bit different than the water fund, where the water fund the debt falls under the water water enterprise fund, and they're paying the DEP, so little bit different. So the levy,
Unknown: yeah, keeping up on all this. And I'm going to tell Kelly Lappin: you guys the same thing I see at work, like we're saying it. Will say it as many times as you need us to. You can ask the question as many times as you want in as many meetings as you want. Okay, Levy. Are either of you familiar with the levy? Okay, so I'm gonna, I'm gonna put taxes, Yeah, same taxes. I'm gonna butcher this, I'm sure. But I'm gonna try to do this simple, as simple an explanation as I can. The laws of Massachusetts say that the town cannot raise taxes more than a certain percent. That is a half percent plus new growth. I'm not, I'm not getting into the detailed explanation. I will. I can send you guys, there's a good presentation on the State's website that explains how the levy works, and I I can't do it as good as that presentation, so I will send you the presentation. But that's a constraint that the town has the fine finance committee and Tom manager. Everybody are going to face when they're doing the budget. You can get around that in a couple of different ways. You can vote, as a community, we're going to override. We agree as a community that we're going to do more than that, than that limit for a given year. For many years. Recently, the town hasn't been up against that limit we're we're running into it possibly this year, right? So it hadn't been an immediate issue, but it had been an identity issue, and at least in the time I lived here, which has been a while, we had had an override vote for that purpose. For capital projects, you can vote to exclude a project's debt from the levy. So it's basically like an over. It is an override, but it's specific to that project. So you're voting rather than voting to say, hey, tax, the tax levy can go up by more than than the limit, but would otherwise be allowed. You're saying the cost of this specific project is excluded for the life of the project. So you're taking that piece out whatever the debt service is for that project. You're excluding it from that limit. And does Bradford Carver: it have to be a capital project, actual physical product project, or can Unknown: it be to be excluded Kelly Lappin: the town, in theory, could do it for, I think, for anything, but we don't, right. We have a policy to have it be a bigger over a certain threshold. I can't remember. We used to say two and a half. I don't know what we what we're at, is it still two and a half. It's so over two and a half million projects that you would have in town that were done as excluded debt, big ones that I can think of the high school when it Unknown: was it's with respect to debt that's associated with a capital that's funding a capital project. And I think Kelly's saying that traditionally, the town has used that mechanism generally for larger capital projects, just because, if you had to include both debt services levy debt and excluded that both those debt services appear in the town's operating budget, but for purposes of not running into the state's prop two and a half limitation, any excluded debt service gets taken outside of that silo of calculation and then kind of added in, again, if you will, to what ultimately gets taxed to the residents for the period. Time that debt is outstanding, once that debt is fully paid off, that's been excluded, that override piece for that goes away. Bradford Carver: So for something like the NWA project, which I know is big on the horizon, is that something you could do through excluded debt Unknown: that's going to require probably a separate and probably not tonight, but a separate discussion, because there's different options for how to handle the paying of the debt associated with that project. Kelly Lappin: But it could Yes. There's a lot Yes, but it could Unknown: be excluded debt in a couple different ways, Kelly Lappin: and it requires so an excluded debt vote requires a vote here on building right? Taxpayers come out and vote, and it's 50% for the exclusion at the ballot box, yes, and then you're still going to go to town meeting and vote the project right, and debt is a two thirds majority vote at Tom meeting. So it's, a two step process, right? The first step is, is it going to be excluded or not? The second is, are we going to actually approve the project? Unknown: That rule is for generally, all capital, including this, MWRA happy hollow, well, project with one exception, which I don't want to get into tonight, but there is a special rule that's currently being debated by select board or considered by the cycle back to that also get it characterized excluded DEP without going to the ballot. Michael McCall: Yeah, you didn't mention, you mentioned those two steps, town meeting and the ballot, but there still is the vote of the Select Board, unless I missed you saying, Yeah, Unknown: put the question on the ballot. The Select Board has to vote. Board members have to vote in favor. Put a debt exclusive question on a ballot. It's a super majority and and so there's, there's a lot of you have to get over and the town, my recollection, having looked at the last 20 plus years of both prop two and a half operating overrides and debt exclusion overrides, I don't think the town, with one exception, which is the first go around in the high school, the town hasn't failed to pass a debt exclusion question of the ballot. And generally, when that happens at the ballot, since we generally voted before town meeting, you can do it after. It's generally also been passed the two thirds vote at town meeting on the operating side, which we're not talking about tonight, there's a different threshold to get it on the ballot at a different threshold town meeting, because you're generally operating but all these things are very, sort of specific, particular, and I'm not sure it's sort of this. It's important for you to have kind of a background knowledge of that. I don't necessarily think this committee is going to be involved in. Who's making what decision on what's excluded, we may make a recommendation as to what projects warrant using excluded debt versus levy debt, which traditionally has fallen upon the Finance Committee to do in the past, but beyond that. So it's important to try to grasp and as Kelly said, there's no doubt that we're going to have to come back to this and and if she can pass out to the rest of you the primer, I think that'd be helpful to kind of read through it. It's a video, whatever. Yeah, I think the important Kelly Lappin: part, because I agree with Ryan, I don't know that it's our right, we might make a recommendation. It's not our job to decide excluded or not. And at the end of the day, the cost the taxpayers the same. So it's it's dealing with, you know, override land and whether or not there's an override, but you're going to pay the debt service in either situation. So in terms of, can we bear the load as a town, that doesn't change. So I don't know that it has too much impact on what we have to do as a committee and deciding where it fits, other Unknown: than understanding, albeit it hasn't happened often in Wayland in the last 20 plus years. If you get a no vote, that project can still go forward, but it would have to go forward with levy debt, which would eviscerate the operating budget, right? Means the only way to accomplish that would be to cut services which are Kelly Lappin: poor, vote overrides every year and vote Unknown: operating different threshold, so which is also difficult. So what does it show in the summary for outside Kelly Lappin: the living so there wasn't in in this particular warrant, there wasn't that this year. We didn't have any excluded debt in this particular year. Unknown: Was it unusual to have free cash then as well? Is that kind of why? Kelly Lappin: No so free cash is ever so. Why don't we? We'll step through the rest of the categories and then go back to the ones that aren't in here. Unknown: We. Free cash is never free. I get it. That's taxpayer money. That's taxpayer money that's sitting in a reserve, right? Kelly Lappin: So free cash is taxpayer money that is sitting in reserve, which is essentially the result of either right under spending of prior year budgets or more revenue that came in than was anticipated in the budget. Right? Unknown: It could be sourced from Dennis. It could, it could have to be used for another debt project. Kelly Lappin: No free cash should be, should be Unknown: unrestricted, I think surplus capital and at some point it'd be helpful. You know, Brian, Kevin, he the finest director, be with us. But I believe surplus capital can initially be utilized to put against other like capital projects, right, right? And we have some of that here, if it's not, if there's surplus capital, and it's not utilized in that fashion, I believe it basically defaults free cash, defaults to free cash, but it's not restricted. It's not restricted for use capital projects. So there's a kind of a premium to try to corral that. You don't have to, but kind of corral that and apply it to new budgeted capital projects. Kelly Lappin: And the reason there's a little bit of a difference there is because if you could use it against you could match it against another project, you can use it right away without sort of affecting free cash. If it's going to roll into free cash, you're not going to see that. It's not going to get certified for another year, right? So there's a bit of a delay in seeing it show up in our in our financials. So, but once it's in free cash, it no longer has a specific restructuring on it's not tied anymore, okay, so that's where free cash comes from. So that is not you think about these borrowing is going to have an impact on the budget, because there's going to be debt service. How that lays out is going to depend on the debt instrument, right? Is the debt instrument a ban where it's just interest only for a period, so next year's budget's just going to have the interest piece versus a bond is going to be interest in principle, and it's a bigger piece. And getting further complicated. If you do a situation where you do a ban for your you might have to double up on your your principal payment in the first year. So that's going to affect how much is going into the budget in any given year. Is going to be based on that cadence of what those debt items are, how they were financed, what the payment on them is. So it's not it's not always straightforward. In many cases, if you're approving a debt project, you're not going to see it in the fiscal year budget that you're approving at that same Tom meeting. You're likely going to see it in the next meeting, depending on when they expect the issue so that all gets into what are you issuing? When are you issuing is going to affect when you see it in the budget, but ultimately, taxpayers are going to feel that in the future in their tax rate. Unknown: One other, this is something you've never had to deal with, I don't think. But another, I'm not going to spend a lot of time in it, but it's just it's ongoing right now. Free cat is likely going to be used with respect to the fiscal 26 approved Capital Budget Project, some of them to have the general fund for a period of time, roughly December, end of this year through June of next year, to fund about $6 million of those projects before fun anticipatory notes are going to be issued. And the benefit of doing that is that you don't have to pay any interest for that six month period. And still, your projects can go forward, but using the free cash in that fashion, which requires some paperwork and some accounting entries must be repaid before the end of the fiscal year to get it back into free cash, which then gets certified. And the town hasn't utilized this in recent history, if at all, but it's something that's going to be utilized to try to address a operating budget levy gap for fiscal 27 which, again, maybe we get to tonight, and one of the agenda items about sort of the current operating budget environment. But so it you know, the point is, there are a lot of traditional ways that the town has done business, but at times the town has needed to try to be creative and extend it. Can find that there are legitimate legal avenues to do things that we haven't here before done. And there's another one gets on here that what. Has done, been done in the past, which you'll get to in this list. But you know, the town kind of looks at all of its various pockets of financing before necessarily going straight to to the taxpayer, saying we need more money if we already have different resources. Kelly Lappin: So yeah, so before we move on to the rest of them, I would say borrowing and free cash tend to be the biggest two buckets in any given year. They I think they would always be on here. The rest of them, other other than the ambulance fund, not necessarily so free cash that I just want to set so free cash, because it's money right in excess from prior years, won't affect the tax rate, right going forward. So it's not a part of the operating budget increase, because it's already been paid for by taxpayers in their previous tax bills. That said you want your free cash balance in the town to be a certain amount, and I can't remember Unknown: what it is, 20% 20% target of the total operating Kelly Lappin: budget. So it's not an amending right
source of money. Like we can't just keep taking from it and taking from it. We tend to restrict it. Unknown: It's good financial practice. But Moody's who rates the town's debt, which they'll be doing here shortly. And the town is one of 13 communities, I think, with a triple A rating, which means we get a little bit lower borrowing cost. So you want to try it as best you can maintain the AAA rating. And they have a series of best practices, one of which is, take your collective reserve funds, including free cash, the debt Stabilization Fund, which is another recently set up reserve, which Kelly will get to in a minute, and special education reserve. And there's a couple others floating around, and they want that if you know, if you can around 20% of your total 100 plus million dollar operating budget. Amazing, they want free cash to be 20% Kelly Lappin: balance. So not what we're spending from it, but the balance of it. So basically, your savings account, right? Like, they want the town to have a certain amount of money in reserve at any Unknown: not what you're using here, but what's available. Oh, okay, we use we Kelly Lappin: can't just like, you'd be like, yeah, it doesn't affect the taxpayer. I want to take as much as I can from free cash, but we've got to maintain right, good fiscal practices in town, so it's not a ever flowing source of money. Unknown: Okay, so sorry. So the borrowing number that's in here is that what's planned to be borrowed this Kelly Lappin: year. That's the amount that's planned to be borrowed within the levy, okay, surplus capital we talked about a little bit earlier. So that is capital projects previously approved that were not used for one reason or the other, that we're able to match up to projects that are in the current list. Again, it's unspent funds from prior projects that have already been approved and already been taxed, unless they're debt, in which case they will be taxed. But it's not changing anything beyond what we already anticipated from a from a tax load, okay, receipts reserved for sale of real estate fund. This is an unusual one. This is not typically in here. And so this was, there's a realist, there's a fund in which I Brian, you probably know better than I where, where these funds came from, but this is Unknown: generally, if the town sells asset, real estate, assets that it owns, it'll take those proceeds and deposit them in this, again, separate reserve fund, called titled reserve receipts, reserved for real estate, sale of real estate, Weird name, but it's another reserve, but it generally come from prior sales of land, generally. And there are, there are some restrictions on what it can be used for, and the votes required to be able to use. I'm not going Kelly Lappin: to spend much more time than that, though, because it's not, it's not a common one that we're going to be Unknown: in this particular budget. It was used largely to fund the state book dam, absent getting the federal grant. And then there was a last minute change to the budget to move some money that had been in an out year for route 20 quarter design work. And the the quid pro quo for moving it up was to use that reserve fund as a funding source, but there's assuming this amount is used in the town doesn't get federal grant. That account probably has under a million dollars in it at this point, and. Kelly Lappin: Um, all right, capital stabilization was an account established, I'm going to guess probably five years ago. Maybe it wasn't quite that long ago, for purposes of putting money aside for capital, the idea being was floated, and I don't know that we ever really achieved this. But because debt service can be uneven for some of the reasons I talked about earlier, right, depending on how, how a project cadence is, capital spending that's in the tax rate in a given year can be uneven. And we had a number of years where the amount being spent on capital in a budget around debt in a budget was decreasing year over year, and it was getting right. It gets spent right. Whenever it was a decrease, you find there's another place for it to get spent. So the idea was, keep your capital budget item right, whatever that amount is, level year over year, and to the extent you don't use it because you didn't have projects set aside, any difference would go into the stabilization fund if that happened. I don't think that has happened in any years. One it Unknown: hasn't happened from that perspective, but the account has been funded through a separate funding article, meaning there's a hope, albeit unlikely, in the next decade, for reasons we'll talk about, but I would expect, and generally, it's been funded, but not always with initially, I think it may have been funded with taxation. The last few years has been funded with free cash. I believe, if it was done for the reasons Kelly was stating where, particularly the levy debt services is rolling off and you didn't have any other projects coming on, you try to level service that debt line effectively by taking whatever the drop off is and depositing in account and collect that through tax revenue. Kelly Lappin: Yeah, that was one of the thoughts that was never consistent. There was never a full agreement on on that, but that was one of the thoughts and setting it Unknown: up. And then if it swings the other way, then you have a place you might go where it doesn't immediately cause you to have to borrow money, additional money, or put it on the tax rate, and so you have money in, money out. Kelly Lappin: So I always think of this one as sort of, you know, like my my own project, savings funding home. Right? When I want to do a project that's going to be big, I start putting money aside ahead of time. That's sort of the concept here, right? Whether what the funding sources or were the reasons we have funding sources has changed over time. It's going to depend one year to the next, but there is a little bit of money. Again, it's not, I don't think it's a ton. I don't know. Kelsi, you know how much is in there, Unknown: in the top staples? Yeah, plus or minus a million dollars. Kelly Lappin: So again, it's not a place that's gonna like, solve it's about problems here, but there was a project maybe use 100,000 of that. Unknown: Yeah. I mean this in this year, my finance committee, it was small enough that we let it go. This was a town manager asked for $100,000 each of the next five years to do some repair and rehab work on athletic fields and recreation fields, athletic fields. And the finance director identified capital stabilization fund as a source to fund that particular line item. And I said it was 100 grand. We we let it go as a funding source. It didn't seem to make the most sense to us, but all Kelly Lappin: right. And then ambulance fees, we talked a little bit about it, but this is revenues coming from the town's ambulances. There's, historically, I think there's been a balance there, again, not a huge balance of funds in the ambulance fund, but we tend to try to match ambulance fund fees, projects and use of the ambulance fund with things that are for fire, right for the fire department, so that it's matched up. And in the case of debt, like I said, John, not a given that it's that it's working the same way that it would for the water department, but we have done debt where then the ambulance fund sort of reimburses the general fund for some of their bigger items, like an ambulance or A fire truck, right? Unknown: And you may have answers. I'm just making sure. And so borrowing outside the levy, where would that show up? It's on the borrowing line, so that that excluded debt versus levy debt. You'll see in the finance committee report, there's a reference to excluded debt and levy. Debt on probably the only place you're going to see it when the warrant
page 10 operating budget has a debt and interest line item that includes both levy debt and excluded DEP. So that's in the operating budget. Look at page 10. That's an analysis on the bottom section of that table of the town's annual maximum levy limit. And you'll see, if you look scroll down, you'll see a subtotal line label levy limit. Right below it, you'll see debt exclusion, yep. And basically, the levy limit is inclusive of whatever you need to fund your operating budget, inclusive of levy debt service, but exclusive of excluded debt which gets it bypasses the prop two and a half, two and a half percent a year limitation, but only the shoe. It shows you funding sources. So is this 4.6 Kelly Lappin: so if we were doing a project that was excluded, DEP, there would be, it would be, it's a whole article written up on it. It would, we would vote it separate from Unknown: just outside of that, okay, I'd say, traditionally, I think of late, that's probably the way it's going to go. Yeah, it has Kelly Lappin: been a while. Has shown up while we've done a couple of smaller ones, we we've put in the main vote by Unknown: typically large dollar mouse, ie, 3 million, 4 million and north end up in a separate article to give the town a bit more time to debate that project the town meeting. But that 12 million there doesn't include that other DEP, we didn't have any excluded debt, new excluded debt in fiscal Okay, so we would show up there if there was in the fiscal year. Yeah. So that was my confusion. There was Yeah. So if this estimate, if we had, if we had proposed issuing excluded debt, its debt service would have shown up where the 4,000,006 46 is, yep. So you can see that line item is kind of popped up in 24 because we must have issued some excluded debt, and then it's been kind of trending down, okay, but we do have some projects on the horizon that would you would expect, we'll use excluded debt. It was more than I just expected to see the line there. But it's because, okay, I suggested to the finance director recently that both here and again, I'm not sure it would end up in the capital plan anyway, but in the operating budget, if you look at I looked at page 45 of the warrant is your total debt and interest line item, which, again, is debt service for both Levy and excluded debt. I've suggested to the finance director, he might consider breaking that line item up into two components with a subtotal, because the discussion about letting excluded is likely going to be at the forefront in the next three or four months. And so whether he takes me up on that, yeah, Kelly Lappin: try to focus on the understanding and worry about the presentation right a little bit later date. But the one there's probably more than one item that's not here that I want to mention, but there's one in particular, and that is, if you look in prior year warrants, you'd see a category called cash capital that was probably the most straightforward, and that it's a tax right? It's amounts that your project, you were going to fund, that you're going to have included in the budget as tax. What we historically had done was road work was was cash capital. That changed a couple of years ago to borrowing, but we have historically been years where we had cash capital in there. Right now it's not again. Sometimes I don't necessarily see it returning in the years where we're facing overrides. Unknown: And I think the discussion, I think I understand why it found its way, because it wasn't always funded through taxation. If you go back a bunch of years, it was borrowed and and there were a number of years where the town was generating excess free cash year over year, and the good portion of the town was saying, wait a minute, why don't we slow our taxes instead of building up these reserves? And so I think there were a number of things that found their way into the budget to try to compress what was otherwise then available to pay for everything else. And by putting, my opinion, by putting the funding of road improvements, which generally, May, I don't know what the timeframe Tom is in Wayland, but generally, to put a new blacktop down, you would hope it lasts 1015, years anyway. And so that would seem like that's a long. Term makes sense. Maybe a borrowed over a period of time, and once you start borrowing it every year, you're eventually going to end up with a portion of that debt service in your operating budget. So you probably get, Kelly Lappin: you get back to the same place you're just buying yourself, like five, six years. Unknown: We moved a place, and we moved it out a couple years ago, just because we were starting to lose our levy capacity, and so we were looking for in that particular it wasn't that issue. It was a concern that the tax year over year tax increase was too high. It was closing on 8% and so we were looking for ways to try to drop that year over year, tax increase and the roads came out of the operating budget, and it's now the finance director is okay with that, as long as we committed to borrow it each year going forward,
Kelly Lappin: spending time in the bottom section, yeah, I am. I just was getting hung up. It looks like there's an errata in the total funding sources that that 12 million is really supposed to be 9,000,007 85, I think it was. I think you guys changed the format and separated water. Unknown: Yes, so Rada was Tom chair. Kelly Lappin: Okay, so the bottom section is those Unknown: numbers don't add up to 12 million. Okay, that was fixed the town meeting, yeah. But I was, Kelly Lappin: since I wasn't involved, I was like, Wait a minute. Okay, so the bottom section is the bottom section because Unknown: I think it's still worth doing it. But I just asked the town manager question, Michael, have you had any I know you've been busy with a bunch of things. Have you had any chance to get your own clarity on whether this committee, in addition to the general fund capital, will be expected to deal with both enterprise fund capital and CPA capital? And if not, that's fine, we'll just come back to it another time. But I Michael McCall: don't know if I have an answer for you tonight, but I do think that is part of the budget that we present to Tom meeting, because it's included at the end of the capital budget. You do see those called out in separate sections, and I would think it would be prudent to have second set of eyes looking at those requests. But I can think about that for you.
Unknown: Yeah, just the biggest one it'll be relevant to is the MWRA happy hollow. Well, project for example, which has already been vetted by Kelly Lappin: multiple it's MWRA. But it's also going back to my earlier comment about resources, are both financial resources and people resources. Those projects all require people resources the same way the others do. So it's hard to it's hard for us as a body to sit here and say, yep, we've got room and space to do these without considering CPA and water fund projects. So the bottom section, or actually, yeah, bottom section of this page is water, wastewater and the transfer station enterprise funds. So these are projects for those specific funds that are going to be paid from those funds, either by directly paying, right, directly paying. And there aren't any on here, but they could the same concept as cash capital, right? It's coming out of the fund directly. So if the project costs 100,000 you take $100,000 out of those funds, or you're borrowing, and the debt service is being paid by the fund, right? So these are considered self supporting funds versus tax levy most of the time, most of the time, with the exception of that line item. So if you'll go down right, water enterprise fund borrowing, is debt service going to be paid by the water Enterprise Fund, wastewater borrowing, the debt service is going to be paid by the wastewater Enterprise Fund. Surplus capital is the same as what we talked about previously, except likely it was surplus. It should have been surplus capital that were capital projects that were approved to be paid from these funds, so they can use it for projects that can come from these funds. General Fund free cash subsidy is the exception, right? So this was dollars coming from the general fund, I believe, to pay for that compact or replacement at the transfer station Enterprise Fund, because I'm guessing the transfer station enterprise fund didn't have enough money to pay for the project, and so that's the exception on this page. Unknown: The other comment I mentioned here is that, unlike the discussion above, on the differentiating levy debt. Or excluded debt. None of that applies to debt issued to the extent it's going to be paid for through water rates or wastewater management rates or transfer station fees. It's general obligation of the town, but it doesn't affect the town's levy limit because it's separate. And these are in the parlance of municipal government, these are, they're a little bit more than accounting entries on the town's books, but they're a separate accounting fund that are expected again, to generate their own revenues and pay their own expenses and have a balanced budget and or grow surpluses, like the town surpluses, to kind of cushion for unforeseen expenses as we go forward. Bradford Carver: So I go back and check, but this so the $3 million is that part of the operating budget, or is it just not part of it, because it's the Enterprise Fund. Okay, so Unknown: last year there was a debate, which I unfortunately one that was championing the debate. There's an article, a separate article on page 28 of the Warren enterprise fund budgets. And you'd say to yourself, that's probably where you'd find the operating budget and the capital budget for the enterprise funds. But historically, the enterprise for not ever and ever, but for some number of years, the Enterprise Fund, operating budget and capital budgets appeared under the omnibus budget article, and we're all voted kind of at the same time in a combined fashion. And town council inform the town a couple years ago, at least as related, the operating budget wasn't supposed to be doing that. Needed to vote on the operating budget anyway, separately. So from that point forward, this separate article was created covering just the operating budget. Last year, I questioned a question of two years ago wasn't enough time to do anything about it. Last year, I questioned, why not also, for the same reason, put the enterprise fund capital budgets over there. And town council came back and said, Well, you have a point. And yeah, you could do that. You could also separate it out in the omnibus budget and have a separate motion that's dedicated only to the enterprise fund capital budget, which is what we ended up doing last year, or in the spring or three you could create a separate yet another enterprise fund article that dealt solely with the capital which Finance Committee wasn't too interested in. My hope is that the current finance committee will re look at this again this year and have another discussion about whether it makes sense to pull the capital for the enterprise funds and just deal with all of that stuff the Enterprise Fund budget article, but at least Town Council is okay with pulling it apart under the omnibus article, but we had to do a separate motion, so we had Four different motions under this article at town meeting, which got a little bit unwieldy. That's more than you probably needed. Kelly Lappin: So we've spent a lot of time on one specific area. I do think it's important, because I think it's the found, sort of the foundation of like we're going to be talking about projects, there's got to be a place for the money to come from, and we need to understand what what that impact is. Unknown: I want to ask you a philosophical question that we should you just hit the button of the TV for us. Yeah, continue watching. Sorry, TV screen itself
and there's a remote
so obviously, we're talking about a lot of detailed financial items, which are again important generally to the process. As I think about, sort of just kind of a very high level Capital Planning Committee. In my mind, I could certainly say, well, our job is to and look out into the future longer than has historically been done to try to identify and begin to report on on a consistent basis. ADU projects, needs, wants and let the financing be dealt with, with the finance director, the town manager, the finance committee, having said that the town has followed, or certainly over the last number of years, a revenue based approach to capital funding, which is, what are our financial resources? There's lots of things people need to do, want to do, but we don't have unlimited. Resources to do that. And so I understand the concept that you need to have at least a feel for what do we have available in each and every year. One is staring us right in the face, fiscal 27 and then as you start to go out the next four years, maybe have a little clearer picture. And then obviously go out 10 or more years after that, lot less clear picture. Is it in the discussions that the working group had, is it your view that this committee will be working closely with the finance director at the outset, with the finance director kind of establishing, from his perspective, what those financial limitations, I Kelly Lappin: think the finance director and the finance committee, so what we anticipated is they're still going to need a guideline right of what is available or within the realm of possibility. So the way I view this, and I think it's consistent with what we talked about, Carol or Michael can correct me, right? We're looking at all the projects being proposed, right, evaluating them for priority and readiness, right? And then they need to be slotted according to resource availability, both financial and human. Unknown: Is that, is that in your discussions, is that
Kelly Lappin: I don't, I don't see collaborative this committee, yeah, I think it's got to be collaborative, because this, I don't think this committee should be taking on the task of financial, what the resort, right? What the ultimate affordability is right between the finance director, the finance committee, others need to be providing the guideline, right? And, yeah, is there going to be it to be collaborative? Because there's going to have to be some push pull, right? Because I think you would say you're basing purely on affordability. Then I don't know how you do MWRA, but clearly you have to have water, so there's got to be some back and forth. But I would expect that finance director, Finance Committee, are providing some guidelines, some guide posts around what's in the realm of possible, because ultimately they're the ones that kind of have to go to have to go to right in the town manager to town meeting and present it as a part Unknown: of so. And I agree with all that. So my concern is it's we have a number of chickens and number of eggs here. Finance Committee leads to three years I was on it. Waited and waited and waited. They were kept apprised of the prior year numbers they look at. They were kept apprised of process, but ultimately they were presented with a town manager recommended capital budget, and it included proposed sources, including the five year plan. And then the finance committee reviewed that and thought about it and agreed, disagreed, and eventually it came to either what was proposed or, you know, make whatever changes they felt they needed to make before they could then present a same information to the town for us to we can obviously start the process. Well, we can't. We can't start the process. We have to wait for the town manager to start the information or data gathering process or request process to find out what people are looking for in terms of the fifth year in the plan, plus any changes pose in the first four. Let's forget about year six through 15 at the moment, so that that hopefully is either started or will get started very quickly here. Otherwise we can't do anything. But it sounds to me, Kelsi, if what you just described is your anticipation, that would be a slightly different timing wise, slightly different responsibility of the FinCom, because it sounds like they would need early on in the process to be interacting with the finance director. So they jointly then present to us, okay, once you're done, however we do it? Either we're doing a collection or it's done by the finance director, he's always done and he presents us with his sort of pre vetted five year scenario, and then we start our work. That's another open question I have. I prefer that, but, but when we then ultimately have to come to the point of making recommendations to the town manager, you're saying, we kind of need to know what the revenue constraints are, because they likely will affect what we're thinking Kelly Lappin: my that's my opinion. Otherwise, I don't know how you slot and prioritize if you don't know the constraints. Unknown: I mean, we could know that from the finance director. He certainly has had his own opinion in that. And we will continue Kelly Lappin: if you assume, and if you know, if history of the last three years continues, that might be sufficient, right? Because the. Finance Committee didn't necessarily push back too much on on that recommendation, I would like to whether or not it was given a lot of thought, but Finance Committee prints right in the warrant in the report, a general guideline, I think right, and that's on page 16, on the type of funding sources, what they would expect me to use. I think you and I both know from experience that's a range, and it's general, and it and it changes right from year to year based on what's going on. So I'm happy to accept it from the finance director, right, as long as right, there's general comfort that it's not going to we're going to get that go to a bunch of work, spit something out the other side, and there's going to be a like, no, no, no. We can't afford that unless we get really good at this. And we know, well, if you, if you bring any of these things down, this is the project that moves out, right? So in a perfect world, we don't live in this one, right? We're ranking all the projects in every funding source. And you've, you've predetermined, if you cut me off short, this is the one that goes right. Unknown: So some of those funding sources, I think, and I haven't had time to review the final, final version of the DEP policy and the capital planning policy, both of which are included in the 150 pages Kelsi of town financial policies. But I believe that some of the at least constraints, whether they're parameters or not, I don't know, but there's some certainly constraints that are being proposed from a policy perspective on amounts of debt service relative to the budget, etc, but, but I think, I think what we're talking about now is in getting the FinCom Buy in much earlier, like since we're supposed to be reporting at the town manager by October 15, which isn't going to happen right this year anyway, but given which will probably run out of talk about in great detail tonight, but given what the next decade looks like on the operating levy situation, the town levy situation, there's going To have to be some level of discussion about, how does, how does the funding of Capital Square with what the town's gonna, on the other side, be trying to do to figure out how to eliminate a structural deficit that's going to be there for a decade, and, you know, it makes no sense for the town to be, you know, working on trying To solve, which can be very difficult, the structural deficit without the use of opine to override along the way and have us over here approving a bunch of projects with a bunch of levy debt that is simply adding, you know, adding costs to the operating budget that impact. Kelly Lappin: I don't disagree with you, Brian, I think I want to cut this off, though, because we're coming up on time here.
Yes, Carol, I recognize Carol Martin. Unknown: Thank you. Thank you, Madam Chair. Carol Martin, Lake Road, member of the Select Board. I don't know if you'd like to speak, Michael, but I think I would like to answer a couple of these questions. Maybe you'll hop in after me. Under the town manager act, it is the town manager who is now the CFO of the town, and His responsibilities include preparing the budget and the capital plan, which was previously under the Finance Committee, which we changed to coincide with the town manager Act last year when we updated chapter 19 two. So the flow, and you'll see this on page 69 of the thing under number 20 dash three, it tells you that you're going to prepare this capital plan with a term defined by the town manager, and the report will be submitted to the town manager. You're not working with the finance committee to get the buy in, Michael, you'll chime in here. You're working with Michael and obviously, most likely Brian, and whomever Michael designates as part of his finance team to come up with a plan, which will, then, once he's comfortable with that, send it to the finance committee for review. Brian, Kevin, just to be clear,
Mr. Kevin, I'm sorry the finance hop in here. Kelly Lappin: Yeah. No. Thank you for reminding us of that, but I would also say right, and I expect then that that Michael would do this right as town manager, still going to need right? He's presenting it, but the Finance Committee is still ultimately putting an opinion on it. So we still want to be connected, right? We don't want to be in a situation where there's a. A disagreement where the Finance Committee doesn't recommend Michael McCall: a non starter in your plan,
Kelly Lappin: collaboration across but agree. So we're going to take our we're going to take it from right our marching orders from a guideline from Michael with with Brian's assistance. But I would still like a head nod, right? That Finance Committee is not going to come Unknown: back. And a good example, and I'm not proposing this, but a good example would be, it could be the town manager proposes this with input from the finance director, or Ultimately, it comes from the finance committee, but they could come to the conclusion, based on what they're seeing in the operating Levy, that other than life safety, spending, has got to move out for at least a year. So we can understand which is what's currently trying to be done with fiscal year 27 is take some actions that will hold off a prop two and a half override until we get past collective bargaining, which is coming up. And so I could see, you know, a conclusion being we got to put everything off from the capital side, except for life safety, just to buy time. To Michael, your point, we'd hate to do a lot of work, and maybe it's not. It may. It's work has to be done anyway. And so it's just a question of, okay, everything we thought we might want to recommend doing a fiscal 27 here's the five items that we now. Here we we understand why we'll keep doing but everything else has to push out. But it'd be better to in the near term, if possible, have a, at least a sense of whether that's even a possibility. Is just an example.
So I didn't, I'd like to just finish my thought, and that is that certainly the Finance Committee wants to be consulted, but you'll all work out the process of who gets consulted first, to me the way it reads, you work through the town manager, who then is going with through Brian Kevin to the Finance Committee. I may not necessarily be your, your your number one contact. Kelly Lappin: So agreed. Yeah, already. Thank you for
Unknown: talking about process, do think, and this is important stuff, because we're at the outset here, and I want to just speed down a path. So Mr. Town manager, from a process standpoint, I've always found Brian, Kevin, a to be very detailed and thoughtful and pulling together what he presented to the to you, and then what you ultimately presented to the Finance Committee in terms of a capital budget for the next fiscal year, plus the remaining four years of the five year capital plan. And I assume that he once you sent out your memo asking for everybody to submit their CIP forms. He accumulated all that information in an Excel workbook, which he's provided as a blank and he's done his own prioritization. He's He's overlaid on that what he believes financially needs to be kind of the sourcing and what years. And then ultimately, I presume, Michael, that got presented to you before it eventually found its way to the FinCom. I'm just curious, do you envision anything changing on that process and, and, and he'll still do all that work and then present that work product to us before it then gets presented to you. Or are we? Are you expecting that? And he's expecting that we're somehow be collecting all that information, putting that Excel workbook together, making the initial prioritizations? I sort of hope that's not the case, but I'm just curious what clarity Michael McCall: you know, he and I talked today, and I, a little while ago, sent that memo out to all the department heads, asking them to fill in their CIPC forms. Because we, as you, point out, we've, we've had a lot going on. I would have liked to have done it about a week or two ago, and we've asked them to get them back within about 30 days, third week of November. So we're pushing them to get the information back to us. I envision that we would be sharing that with you at some point, whether he compiles it and we make I envisioned us getting that information and sharing it with you so that you could look at it and help us make a determined you make a recommendation that we, in turn, go to the FinCom with in we did this where I was the assistant town manager. We had this type of process. We had it. We were starting it in south bridge when I. Left, we got a capital planning committee established, and we were going to do the same thing with the committee. You'd have additional sets of eyes with different levels of expertise coming in to evaluate these and so then you make your recommendations, and then we also would do a second check of those looking at our finances, but hoping to get a community based perspective of what we what we should be focusing on rather than what oftentimes would happen. At least, in my opinion, is it comes down to the manager and the finance director trying to shoehorn the right number of projects in based on the amount of money you have. Unknown: So I'm still. I'm not still. I think that that process question needs work. I guess the question I'd have though was so that that was the process up until a month ago. So is it. And I don't mean I get this a feeling to try not Hey, start your own review, see if you make different opinions, but do not waste all that five years of effort. Do we get a debrief of this is why I chose these five years of projects. This is what went into it, so that we're not just dismissing it and starting with what we read. Yes. So I Kelly Lappin: would say what I'm gonna I'm gonna say, from my opinion, what was missing in the prior process. So because we have a new committee, why do we have a new committee? What was, what I think was missing in the prior process? And I hope, I hope, right, Brian's still going to do that step of compiling it and and providing it to us, right? The walkthrough of, okay, this is what was requested, and this is what I'm I'm thinking we should slot in. And here's why. That was something I didn't feel in the time I was on FinCom that there was ever enough time or focus on of and what we what? Because there wasn't. What often happened was there would be last minute ads, right? There would be things like, Oh, well, the middle school needs a new boiler. And it's like, well, that was in the plan and got pushed back. Why does it, why did it get pushed back? Right? So having those discussions on this is what we're doing, and this is why, and this committee having some input right, from a community perspective, of like, yeah, have we thought right? Maybe we have different opinions based on our different backgrounds and that we have an open meeting discussion process around those projects to get to, ultimately, what's the recommendation? Maybe it'll be exactly what Brian Right gives us to begin with. But I think there's, there's some work that we can add from our various backgrounds on why, right? And that's something in years of doing the warrant and the write ups that follow the section we were just in in the warrant of each project. I mean, when was I learning that stuff, when I was writing it to put it in the warrant, versus at the earlier stage in the process of being presented the capital projects and debating whether or not they fit, both from a resource standpoint, human resources, financial resources, but also is what we were missing was, why is this the highest priority? Is it just because the amount fits can be paid from this funding source, and we have that much in this funding source, or is it because of the whole list of projects we're putting on the docket? This one's the most important from health and safety perspective, whatever that may be, that was the step that I thought was most critically missing, and why I was on the capital working group, and why I'm here today, right is because I think that's that's where the added value needs to be inserted. And maybe there's other things along the way we're going to identify, but that's the piece that I think is most critical based on past experience, Unknown: and we can certainly, although, again, unfortunately, it's probably premature based on experience. If we thought that the four years of last year's five year plan are static, we could certainly invite in, depending on hours and getting permission from the town manager the various department heads that put in those requests that are now in the five year plan to go through each one and what the rationale in their minds for why they needed it. You what you will likely find, if you look back in what we saw on the Finance Committee would be what was requested in which years you will likely see them requesting things in different years as to where it finally got slotted in. And so you may and it's fine you may get and it's probably appropriate that this committee get a let the department heads have a an ability to say, Okay, here's here's what we wanted, here's where it got put. But it may be premature, because what Michael has asked them to do is add the fifth year plus, right? Let us know of any proposed. Changes to what's already in the plan. And so the question is, do we then have to wait until they've submitted? And then, you know, Brian can certainly, from a staff level, accumulate the information, but as quickly as we can get the requesters in front of us to walk through to your point, so we could then begin to evaluate. Kelly Lappin: Would ask, I know, Michael, you said you just sent it out, and they have, would you say, 30 days Michael McCall: to less than we're trying to get that by the third week of October. Yeah. Kelly Lappin: So to the extent I would ask that, to the extent you have a couple of A plus students who are on the front end of that, you know, not naming names Tom, we will, we will get, we get to talk earlier. Yeah, we that. We don't wait until we have a consolidated plan. We get to talk to whoever got to submit first, right? We're talking to them earlier. Bradford Carver: And I guess a related question, I think I already know the answer based on how this conversation is going. I mean, if, if the school submits a request for the middle school and says a roof is going to cost $1.5 million is it our task also to say, Well, that seems remarkably low or remarkably high? How did you come up with that number? Is, are we supposed to be vetting the numbers that are presented. Kelly Lappin: I think it would be good if there was some level of vetting. And I don't, not in a non trusted way. But just like, hey, talk to us about where this estimate came from. Because I think different department heads do that in a different way, right, some depending on, you know, if it's equipment, you know, I talk to the dealer, this is what the current quote is. Here's right, versus the Council on Aging right, where the pmbc is involved and they are, they are checking right and kicking the tires on the itemized cost and the inflation and and Unknown: permanent, permanent, municipal. It Kelly Lappin: depends on the project. Okay, how much of that we need to do, but I don't think it hurts to have like, tell me where these came from. Unknown: Well, again, a good example of that in the fiscal 26 budget was there's this crazy fire sensor switch at the middle school had to be replaced. It's causing all sorts of problems. Kind of got 200 last minute requests, $350,000 I still don't know why it changed, but back in July, and I'm on a budget working group, Brian, Kevin, he said, Oh, by the way, we don't need $350,000 it's going to be $50,000 well, that's $300,000 of possibly another project that got delayed, that could have been plotted into the plan. I don't know the particulars, and anytime you save money, that's great. I prefer going that direction. Another example would be up until last year. We're on a path to have to refurbish, rebuild the wastewater management facility at the high school, which wasn't doing what it was supposed to do, at an estimated cost. And Tom holder, I know Tom is, I think it's now in the building facilities management side, but it's a five and a half million dollar cost, and it was carried in the five year plan, and then last year, it got pulled from the plan because the town's engineer is working on a strategy to use a more traditional septic system bleaching field solution that, guess what, hopefully will cost a lot less than five and a half million. Well, that's good, right? But it's unclear whether that is going to pass muster the DEP, but having the ability to have that discussion, I think, is important to understand what's what's the risk of those kind of things moving sideways, anything that you can save money do more efficiently. I'm all for it's the surprises on the other side or the last minute. You know, we just absolutely have to do this. Kelly Lappin: So Brian, I'm going to cut you off. We've, we've got a lot we're not going to get to and I want to, I do want to move on to some of the other agenda items. So what I'm going to do now is we covered a small piece of what I had in the review capital information items. You guys had some great questions, like I said before, your questions don't need to end, right? You can, you can send, and you can send questions directly to me, right? And I'll make sure that we're addressing them at the next meeting. But I'm gonna hold up right. We're not gonna get into the projects that are in the existing capital plan. I think the I will work with Michael to slot out right, based on when you think things are coming in, to slot out, when we can talk to folks right where it makes sense. Don't think it's going to need to be every person submitting right? It's it's going to be based on what the highest priority and biggest dollar amounts are first, or what's ready first, but we can work out a schedule of how we're going to achieve that right, and then I think it makes the most sense to do it at that point, because then we can take projects that were previously submitted for a given department, what they're currently submitting, right, and go through the Okay, what changed and why? Why do these numbers make sense? Why are these the priority projects over other projects? And I think the hardest part of getting a handle on how that priority measures against priorities of other departments, right? That's, that's the piece. I think we're really here to help connect. So I want to move on, and we can always, like I said, I'm going to keep this as a standing more general item, that we can always have meetings that we talk about, any questions you guys have on the existing materials that I've provided that are from the warrant, you know, various template spreadsheets. But I want to move on to the item that is the next item, which is the capital relevant information from the financial presentation made to the Select Board. So, Brian, you alluded to this a couple of times, and I know you're very close to it because you're on the budget Working Group. Would you mind? I mean, I can do it, but would you mind giving an overview of the because they're both items relevant, relevant to capital? Unknown: Sure. So the finance director set up a working group, both last year and this year. May have done it in prior years and gonna probably do it anyway, but at the urging, the finance committee started to forecast out at least one year on the budget without actually starting to create the budget, and we encouraged him to go out at least three years, if not more. And so we started meeting in July, he presented to the working group of five year operating budget forecast, and based on that operating budget forecast, it was unclear whether fiscal 27 was going to have sufficient levy limit to avoid potentially significant budget cuts and or going to the talent prop two and a half override, which we haven't had to do since late 2000s it's the last one. And as we got into it, it became, I think, clearer to the group, particularly the school side, who, prior year, had towed the line and held down their budget growth, including not refilling certain positions. To achieve that, to stay, hopefully stay within the levy limit, and after certain items cut the town's way because we don't know, certain big items like health care, insurance premiums state aid don't come until January, February of next year. The Finance Director has to slot in a conservative estimate, and last year, they both provided positive surprises, so we were able to hold the line on the budgets that were pre agreed to budget Max limits, and we went from anticipating zero unused levy to we ended up with close to 2 million unused Levy. And had people known there was going to be 2 million of additional unused Levy, I suspect there might not have been as much willingness to constrain the spending. Okay, but we also knew that was just fiscal 26 if you look fiscal 27 eight and nine, it was clear we have a structural issue, because our budget growth over the last decade has been 4% last five years, it's been four and a half percent year over year. And you know, you have compensation growing during certainly the post covid years popped up. We're about to enter into a new three year collective bargaining session. And so it became pretty clear that we're going to we were going to come up short with fiscal 27 even when we added back in partially some of the what we expected were conservative estimates. And then we asked the financial record to go ahead and run it out for until 2037 and that wasn't a random year. We picked a year after the town's retirement funding of its past unfunded liability with is projected to be fully paid off. Ma, it's required by state to be paid off by then, unless they change their unless they change rules, which they've done once along the way in every communities you know, maybe 50% funded. So that line item in the entire budget is a pretty big dollar line item, and it's scheduled to grow. That's one of the structural issues. But it goes. Way at the moment in 2036 and so we asked him to project out to the year after that. And what we saw and what the Select Board saw last week is a graph that you can find in the Select Board Meeting packet for last Thursday's meeting, a graph that shows three years of surplus, unused levy through fiscal 26 a decade worth of red getting from going from 2 million to 6 million. And it's a little misleading in the out three or four years, you're six through 10, just because of the way the finance director dealt with excluded debt in the past, but there, at the moment, there are no real easy fixes, other than, you know, continuing to look for efficiencies in the town operation, which town has been doing, and trying to find everything it can possibly having to make budget cuts, and then figuring out a strategy for when to approach the residents with prop two and a half overrides, and whether you do one every year or bundle them do kind of three years at a time, yet to be determined. And so the thought was there was a recommendation from the town manager and the school superintendent that it probably be great if we could get past fiscal 27 without having to do an override, because it's going to get messy in the collective bargaining process. You'd rather kind of know what the agreements were so we can settle them in 12 months as well as next spring, we have some potentially big financial issues to deal with. The $38 million long term water supply project is going to go to town meeting for approval, subject to what we review and recommend in the town manager and what town manager recommends to the Finance Committee and what they ultimately agree to present town, there's currently about a five and a half million dollar debt exclusion that would be required next spring ballot to make repairs to this building and and then there were certain strategies that this group came up with try to Avoid and put it off for one year the potential override and those required input and ultimate buy in by the Select Board, which ultimately they did last evening, one of those is to go to the voters in November or December and asked to re characterize the remaining $5.2 million of levy debt on the DEP W facility near the town dump, backside of it, which was originally borrowed as levy debt, and if the town so agrees that the ballot change it to exclude a debt for the balance of that loan, because that's chewing up, at the moment, about $700,000 of levy limit. And so in every year it goes down, but the next three years, it's six, $700,000 a year. So it's not only a fix for fiscal 27 but for how much, how big the overrides are for the rest of the years. The second thing was, as Kelly mentioned, and kind of passed by pretty quickly when you borrow bonds for any of these capital projects. Right now, Brian was planning. Spirit is planning in November to issue $16 million of bonds, you have to start paying principal back, typically a year later, and then interest as well. And typically, what happens is you end up borrowing in one fiscal year, and the accounting for the principal payment occurs in the following fiscal year, along with 12 months of interest plus anywhere from four to six months of additional interest based on the time you borrowed the funds originally. So you borrow in November, you've got six or seven months plus a full year. And so what you see, typically in the DEP maturity schedules, is a there's a bump in the first year of debt service because of the extra interest, and then it goes down the following year and then is amortizing, typically over whatever the term of the debt is. And so we discussed and Brian agreed and presented sucker, and they've agreed to borrow half of what was going to be borrowed solely for water and wastewater management projects, because they're in process, ready to go. Have no impact on the levy, but use bond anticipatory notes in part, and general funds, free cash in part for a period of time, followed by bond antic notes for a period of time, and then bond that other 8 million a year from November, which pushes out that. First principal payment into fiscal 28 so that between the conversion of levy debt to excluded debt saves 700,000 a levy the putting off of half of the bond borrowing saves about 850,000 of levy delays, delays. It's got to be paid, and that's about 1,000,007 and we were running about 1,000,008 to million nine shortfall. And the town manager and the school superintendent are work to try to find another three to $500,000 of budget savings. So depending on what happens at the ballot in November, December, if there's a favorable vote, they can then build a budget on that basis, which won't need a prop two and a half operating override in the spring, and then there's clearly going to need to be overrides in the following nine years and and so that's kind of where that is at this point in time and again, some of these big budget, items that will be known in January, February, may or may not cut the town's way. Health insurance is another big one. Last year, the town was budgeting a 10% year over year increase, and it had a 2.6 2.8% increase because the consortium the town belongs to used part of its million dollar Trust Fund to buy down. Kelly Lappin: I want to, I cut you off, Brian, because I think, I think you've gotten to the relevant point. So the reason I wanted to discuss it with the committee is only so that they're aware, right, that challenges, there are challenges, and those structural challenges are being planned, at least for FY 27 to be met by doing things right, different than than previously planned, related to capital, right? So they're both capital, one of them the the reclassifying the debt of the DEP W building, you could argue, probably should have always been excluded debt. There were reasons at the time my understanding why it wasn't excluded debt at the time my you know, their rumors effectively, right? But had to do with getting that that vote through, so that that building could be built, because the prior building was in not great shape. Whatever those reasons are, what we're asking now is the town, and this is what matters, right? We're asking the town to reconsider that decision and move that for the balance of the debt of the levy. Unknown: At the time, the FinCom unanimously recommended it be done as excluded debt required, as I said earlier, four votes, and select board put it on the ballot. Only three voted in favor, two voted opposed. And therefore the project continued forward to town meeting, but it got funded with levy DEP, which is not typical for projects of $11 million and at the time, when you read the Tom warrant, the FinCom comments said, you know, we could come the town could come back to the voters in a later year, if it can get two thirds of the then select board and majority vote at the ballot to convert it. And here we are. Kelly Lappin: So Brian, you're saying last night at the meeting that was Unknown: the, yeah, there were four votes to put the question on a ballot. They are going to hold a special action sometime mid to mid November to up to December 20. They haven't set a precise date yet. Okay, so it's going to go to the voters to make that decision. They still haven't heard yet from the FinCom, which, under their policy, they're supposed to hear from them before they took vote. But assuming the FinCom, and the chair of the FinCom sits on the budget working group, and he has seemingly himself, been supportive of the notion, okay, but if the FinCom were to come back as a committee saying we don't agree with this. It's possible cycle. It could not move forward Kelly Lappin: to the FinCom originally. So, you know, I'm Unknown: just saying it for the moment. It's on track to move forward, okay? And on the financing piece the finance director is holding is called Moody's next week. He's now, I believe, going to move forward and only tell him he wants to borrow 8,000,016 permanent basis. He's He's progressing on that plan, and that'll all get done in November. Okay, all right, which is different from, Kelly Lappin: yeah, I think that's typical. Time enough on that topic unless, I mean, you guys could ask that one. We can say that for next time when. Unknown: But I do think that at some early point in the process, we need to get input, at least in the town manager as whether he views those fiscal challenges on the operating side. Plan to have any bearing on what should or could be recommended on the capital side, given that any debt, Kelly Lappin: I would expect it would right, because any debt service is going to affect the budget, and it's going to eat feed right into that Okay. On the next item was to review the capital and DEP policies. However, those were approved. Once I sent you are not the ones that were approved. There were some changes. I'm going to push that off to our next meeting, so that you guys have time to read them and any changes and we can talk about it. I don't. We don't have, not anything that we have input into if they've already been approved. Yeah. Unknown: I mean, there's only one item I called out, and it's still in the final version, which basically has the process for gathering the capital data, says that in October, the town manager will send out, well, that isn't going to work. Yeah, that doesn't line up with that. We make our October so I suspect at some point in the future when they get around to editing the policies. And in the meantime, we're just going to have to rely on the town manager to acknowledge that he's got to get going in July or August next year. So I Kelly Lappin: would ask that I will send those more recent versions out that you come to our next meeting with any questions or concerns, because if there's already, we likely have to suggest an edit for the next time it's updated or in the meantime, hopefully honored. Unknown: But do you know again, you, I think your working group vetted at least the dead policy. Did you vet both of them? Kelly Lappin: I believe we did earlier on. There Unknown: were, they're not in the final versions, but they were in both policies. There was a table that was computing certain parameters, percentages of operating budget, and I was having problems figuring out where all the numbers came from. So I reached out to the finance director and said, I can figure out where some of these come from, but I can't others. And then I noticed they got those two tables were pulled and so I was just curious, if you recall any, because he didn't put together. I don't, I have to look at it and then. But they're not in, they're not in their final Kelly Lappin: version, okay, all right. Any I don't have any other topics that I didn't anticipate. Does anybody else have anything that came up recently that tonight, Unknown: this topic, when you're going to set the next meeting? Could we just talk about one potential, probably a little longer term agenda item. And again, it's just, if you have nothing else to do, you can read town reports. There was a committee set up a number of years ago, all the Wayland real estate plan, the rap report, the rap report, which inventory to all town real estate, land and projects. And it's a tremendous report, tremendous, lot of work was done. And I was wondering if we could, at some point, slot in Anette Lewis, who worked on that is just an example to come in and at a very high level, give us a sense of what she believes that the value of that report could be to a committee like this, because it's the last big planning document, because you'd like to think we can both zoom in on request, but zoom out to say, how does that fit with some or number of different plans. There's a recreation field plan, there's there's a town master plan was done in 2004 even in 2011 that has been reviewed since you'd like to think you're making decisions in accordance with plans that have a lot of work done in. And the rap report was one of them. And I would a hate to see us as this would be more likely important when we get into start talking about year six through 15 or Yeah. So shall you add the Tom master plan to that review? It's kind of, I mean, it's so old I just and it's, it's only available electronically. You can get, you can get it through links on the planning department website. Apparently, it's a very thick volume, one of which is at the library and one of which is in the planning office. But planning department website has a link for each chapter in the town's master plan. And then there's, he has a link to the 2011 there's a separate committee set up to review the progress on the master plan, and that report, you can pull down the wrap reports on the Planning Board website as well the Planning Department website, so they're heavy duty long documents, but I just think further down the road as we get into long range planning, yeah. Kelly Lappin: I take it under consideration, Brian, but not, not in the near Unknown: Yeah, I agree. We have a lot to do just Kelly Lappin: to get through this year. Yeah, but I will. I'll see if I can find, I can find the links and send you what there is. I is the master Kelsi is the master plan being updated. I thought I read something about the master plan being updated. I don't. I'd have to check out Michael McCall: maybe the route 20 master plan. But I don't Unknown: think, okay, not the town's housing production plans got to be updated. Okay? Yeah, plans and we're a planning committee. Okay, thank you. Kelly Lappin: All right, can we talk about date and time? Next couple one we're done. I don't think I ever came out of a finance committee meeting. Okay? And dates and times for our next meeting. All right, awesome. Well, I'd like to get some some consensus, but I also don't have those here, so Unknown: I can circulate an email with a couple, yeah, I'm Kelly Lappin: actually, yeah, I'm gonna circulate an email. Part of Unknown: it just depends what you think the next meetings or topics will be. It may be more of this type of stuff, yeah? Kelly Lappin: So my thinking is that probably some more of background stuff needs to be done still before we and while we're waiting for information from the department heads on their requests. But Michael, I'll, I'll send you a note just if you want to help me figure out when we think we might have the various departments ready to talk about, but I think we've got work to we have work to do in the meantime. So I'm thinking in I gotta just look at my calendar, because I don't know if I can do next week or the fall. I would like to go every other week. I do not want to be in every week. Are we still six to eight Unknown: or are you getting requests from the ex officio staff members to try to do something like Kelly Lappin: to stick to six to eight until we're asking folks to come in here, right? So while we're doing still doing background stuff, getting to speed on what is out there, I think we can stick with six to eight, but then when we're asking the ex officio members to come in, we got to try and accommodate right at least, at least every other Unknown: two of you that work. Would I think? Liz, I can't. Liz, I think, and hopefully you'll reach out to Liz and just say, watch the table. Yeah, would be doing like, 830 in the morning meetings be easier than doing five o'clock at night meetings or neither one is particularly
Kelly Lappin: your job, sure, so if I'm taking time off during the day, I have to account for that as time off. So it's indifferent to me, right? Yeah. Unknown: I mean, I I have to yield to those that are working. I can, but I'm also sensitive to how we address, Kelly Lappin: yeah, I would like, I'm guessing this next meeting, we're not going to have necessarily things back from the departments. So if we were to do not this next week, but the week after, so I'd stick to six to eight for that one, and then when we're ready to have folks come in, we can do something earlier. Unknown: Right now, you're you're gonna look but you're thinking, Tuesday, I'm thinking it's a little tough Kelly Lappin: to do it every week, and that's a lot given how much have done this, the information is Unknown: something I'm trying to think Tuesday night is the best night given the last two weeks, I'm going to Tuesday or Wednesday for that time slot. Bradford Carver: So, yeah, I should, I had to move a couple things around, but that's I can do Kelly Lappin: those. Okay, let me look at my calendar and email. Okay, I Unknown: have other opportunities. But just since we're here. Those are easy, I think, to say, Yeah, I mean, I agree, every week, a lot, but if we want to just do a couple, like, two, three weeks and just kind of grind through it, so be Kelly Lappin: it. I would rather save it. We're gonna, we're gonna be doing more meetings. I would rather save it from when we're talking to department heads and and moving that accordingly, right? I don't want to spend every week taking you down or down the background rat hole. Unknown: So that's for us. It's new. So, Kelly Lappin: you know, yeah, I am just sensitive to how, how much. Any one person can absorb right? That much information. Bradford Carver: Very helpful for me. Because actually, I, Brian, had some of the questions you had about process, and you know what exactly our tasks and roles are, is very helpful. Okay, I just Unknown: worry we're gonna get into the actual review of the data, that we're still be asking fundamental questions, and it's gonna, Kelly Lappin: yeah, you might be, but that's okay too, right? Unknown: I'm not better to ask question. You all are gonna be on the committee for a while, hopefully, and so you got to get the foundation, and again, it, it takes at least a year, yeah, when you step into one of these committees, to get used to the processes and get Kelly Lappin: it all down before we start looking at Capital. Six years into being on FinCom, I think I had, you know, like, 50% of it, and Unknown: I know you want to adjourn, but the reason I was pressing on the finance director's continued role is I've been on a number of committees where folks like Kelly have ended up having to hands on, do a lot of stuff while they're working a job. I have had similar experiences, and it's not a lot of fun, and probably Kelly had to think about coming back to do this. So you have things, they have things, not that staff has an overload of work too, but if you have things traditionally have been by the staff, I would much prefer to see them up to a point, to the accumulation and the creation review materials that we could then spend our time vetting stuff and talking about it. That's why I was pressing on that a little bit. Especially they're just going to redo it. Just going to redo it their own way. Kelly Lappin: Okay, everybody, any other ex officio members? Anything you want to add or comment Unknown: on? Thanks for attending. Want to go home? Please. Please excuse me. Please include me on that date. Email. Thank you. Yeah. Are you our liaison? Carol now, yeah, she's our liaison. I am okay. Thanks for attending, Kelsi. Hope you're feeling all right. Kelly Lappin: I got a little cloth that's all right. I get a motion to adjourn. So moved second, second. All right. All in favor, aye, we are adjourned at 808. Recording stopped. Thank you very much.
Unknown: Tom older who is an ex officio member depw Director, and Carol Martin was on there, but dropped off. Kelly Lappin: Okay, so Tom ex officio member is participating via zoom. Kelsi powers is attending in person as an ex officio you. Ex officially ex officio member, are you not presenting? Okay? All right, and then members of the voting, members of the committee here are here in person, myself, Kelly Latham, Brian ARPA, he Brad Carver and John Klein, Unknown: manager joined and Carol Martin.
Kelly Lappin: All right. And so we also have Carol Martin with our Select Board Liaison here on Zoom, and Michael McCall Unknown: Tom manager on Zoom. Kelly Lappin: Okay, so I'm gonna review the agenda for six o'clock. Via are they? Unknown: Robbie, are those three? Can we move at least the two ex officio members? Are they full participants? Kelly Lappin: Oh, it looks like they're
Unknown: just you bring them over to full participant status. Kelly Lappin: So Michael and Tom, it's up Unknown: to you if you want to invite Carol in as a participant versus
Kelly Lappin: you can invite Carol over to she'll still have to ask to be acknowledged. All right, so agenda. We've done the call to order. We're reviewing the agenda. We'll do announcements in a minute. So 605, public comment and members response. 615 review and vote to approve the minutes of our meeting of September 9. 625, review existing capital information, which is primarily from the warrant and address any member questions. 725, summarize and discuss capital relevant information from the financial presentation made to the Select Board on 924, 740, review draft capital and DEP policies under consideration by the Select Board. Those I believe, Brian, you know, have been approved by the Select Board. So we can flip to the to the approved ones, and then 750 topics not reasonably anticipated by the chair. 48 hours posting and setting the time of our next meeting, and we should adjourn hopefully by around eight. And times are approximate, Unknown: as is order Kelly Lappin: Fay, so any announcements from any members, I'll start Brad, okay, all right, good, and then we can go into the agenda. So let's start public comment. Oh, sorry, nope. So public comment, do we have anybody else online? No one else in there. So soon, there's no public comment, right and now we will move to reviewing and approving, vote to approve the minutes of September 9. So Brian had sent those out right after our meeting. Did anybody have any comments edits to get Brian on those, what changes. No need to discuss. So can I get a motion to approve those second All right? And so you could just do an All in favor, right? All in favor, aye. That's everybody. We're good.
Unknown: I wouldn't say I, but I
Kelly Lappin: Okay, those are approved, and now we'll move to reviewing the existing capital information. So I had sent the committee members whole bunch of existing resources, things that were already out there, most of which were from the warrant, as well as some other items related to capital. And so I asked everybody to do their own homework. I know I bombarded you with a ton of stuff, so I understand if you didn't look at every single thing and under you know, got it all committed Tom. Right now, but want to start with, if anybody had specific questions about any of those materials, we'll try and address and if not, and we just want to do kind of an overview between Brian and I. We've got enough experience we can talk through the landscape to give you sort of that baseline understanding of what's not necessarily every single project, but how does this right capital come together and how does it work? So start with questions. Unknown: I don't have any particular Bradford Carver: questions other than I think, because I'm new to this, I don't have the financial background you guys have, I think, an overview of how it works, how the sausage is made, yep, would be, would be helpful for me to put everything in context. Kelly Lappin: Sure I would expect that anything else. Unknown: I had two specific questions, and I may have just missed it when I looked at the budget, how are grants shown in the offsetting capital requests? And if they are, and the other is just, I think, how is carryover? We didn't spend it, we didn't finish the project in the prior year. How is that shown in the budget? Or is it Kelly Lappin: good? Questions? So grants? Brian, correct me if I'm wrong. Usually the request at Tom meeting, if there's it depends on the type of grant. Michael, you can correct me too, right? So in many cases, we have to appropriate, as a town depends on the grant, but we have to appropriate the full cost, right? In some cases, so like reimbursement for the schools, we appropriate the full crop, the full cost, and then we get reimbursed, because it takes some time. So most of what you see in the plan, I can't think of very many that are in the plan right now that we were discussing or anticipating grants. The only one that comes to mind is snake Brook dam, which we have talked about definitely more that there's a couple that definitely had it that had grants in the write up,
Kelsi, I was just gonna say if you look to the 2025 warrant item number six, which is a stormwater Asset Management Program, this one is actually a reimbursable grant. So we had to put up the money upfront the 206 950, but the town anticipates being reimbursed for 124,001 70. So that's when it comes to all the lot of the grants, especially with capital. It will be like mentioned within the description and justification, or if it's fully grant, it would be under the total funding sources, which is listed on pages 48 and 49 of the annual town meeting. It actually breaks out all the summary of the funding sources. So if there are, if it's like a front loaded grant, where they give us the money in advance to pay for whatever capital it'll appear on there as as part of the funding source, if it's a reimbursable grant, such as item number six, usually that comes through in the description and justification of of the information that's being given to us by the department.
Unknown: Particular item that you're mentioning, Kelsi, this water item is a good example for a different reason. It was not in the five year capital plan the finance committee got pretty well along in its review of the fiscal 26 capital budget and the five year capital plan. And the Tom holder, who's online here, DEP W director, came to the Tom manager and the Finance Committee and the finance director, and said, Hey, we have this opportunity to get whatever it was, 40% 60% reimbursement from the state, but we don't have this in our plan or in the capital budget. Would you consider? Can't remember if we had already voted it and we had to reopen it. But that's an example of there's a plan, and then there's exceptions to the plan. In that case, you know, getting a good chunk of what otherwise going to have to get done paid for by the state, certainly there's a good rationale to bring in. So I think that particular one is a good example. On the the other one that Kelsi and Kelly mentioned, the state Brook dam project has been lingering around for three or four years. It had an initial appropriation from the town meeting two or three years ago, it was inserted into the fiscal 26 capital budget. At the same time, the town had submitted several grant requests, both state and federal, and have been unsuccessful through several funding rounds. And then, you know, we got it approved at town meeting, so in theory, they can move forward with project, but they were still hopeful of getting state. In federal money, and in fact, the state just came through with $884,000 and I'm not sure how likely it is, but there's they're still holding out hope that the federal government might come through with a good chunk of that other million four but at some point they have to get going on that project, because there was also part of it funded with ARPA funds, and those funds have to be spent by the end of fiscal by the end of calendar, 2726 I mean ARPA, American rescue plan Act funds federal government back. And so you had to commit it to certain projects that were qualified, and then you had to go ahead and then spend it no later than the end of calendar, 26 so the town manager is working with Conservation Director and trying to make sure that things get going so we don't, you know, lose The ability to use the ARPA funding. And think they're either going out or have gone out to bid, or hopefully final cost estimates for the project. We went out to bid last week. Okay, so it remains to be seen whether that whole bundle of money is going to be sufficient again over the last number of years, there's plenty of examples where the project gets approved, really get done in due course, and then they can finally get the estimates in and inflation, whatever competitive bidding environment they've got to come back to town meeting for more, more money. So hopefully, hopefully there's enough money that's now been approved to get that project done. But so it's an expanded answer to your question, but it's an example of it's covered a lot of areas. It's an example of the fluidity of process, despite the objective of trying to lock in a plan. So going back to the budget, does so does it have to be approved, assuming we won't get the grants in all cases? I think Kelly Lappin: it depends on the you can correct me, Kelsi or Mendel. It depends on the type of grant, right? So if the grants already approved, and at the front and front loaded, and it's, I think it's possible that we could do an article without right, with that subtracted, but if it's a reimbursement, you have to Unknown: do it, yeah, okay, so in the budget, unless it's up front, we would assume the full cost is in there. So the reimbursement then goes into the free capital budget, yeah. Where does it go? When you get it, it gets matched against the capital project and whatever funds have been appropriated through borrowing or use of other sources just don't get used, right? I guess I might go in that right, assuming it could be a year later that project closed. Is it just want, like, I'm just more from a budget? Is it washed in the budget, or does it actually get it close to that budget and reduced? Kelly Lappin: So what happens is we do something called capital close out. So when the project's done, and I've been managing the capital project since John a capital project since John Bugbee left as the former assistant manager, if there's any monies that is left over, it gets released. So I send a memo back to Brian Keaveney, and it some it appear sometimes that money, I don't know how he held it, because in my mind, it just goes back to the general fund, but, but it depends. So some of it is is earmarked as like surplus capital. So you can see in the summary for funding sources, especially for this so we had surplus capital, so unspent funds from completed capital projects in the amount of 590,000 zero, 42 so some, in some cases, it'll just go back to the general fund, which then just gets appropriated as free cash the next year gets certified, or it gets held over and is used again to pay for more capital projects in the intervening years, and is noted as surplus capital. But this surplus capital doesn't explicitly say what projects it comes from. It just kind of sits in its own and it depends what the depends what the original funding source for a project was. The funding source is debt, right? You can't then take that, that surplus and use it on a project that's not eligible to be DEP, right? So if there is some matching, that has to happen, but usually that comes from the finance director, right? When they're doing capital budget to say, hey, here's the projects that are getting closed out. Here's where the sources of close outs on how they can be used. Unknown: So again, last year, if you look at the in the warrant on page 36 there's the, at least the anticipated motions that were to be made at town meeting under the omnibus budget. Uh, operating a capital budgets. And Kelly's point, in addition to just surplus capital, which Kelsi was alluding to, we had surplus bond proceeds that require, if she said, very specific uses. That is, they have to be projects that would have otherwise qualified for debt financing at the same term. And again, the finance director has a lot of input and into what it could be used for. And so, you know, there's more on the back end. I mean, I assume that's thoughts that we basically deal with, unless it's extremely Kelly Lappin: deal with it if it's available. So I would say we don't plan for it, right? So when we're because, when we're in, we're going to be looking at capital projects. We're planning for it. We can't plan on the fact that there's going to be surplus from other projects. So I think that happens. Typically, it's at the tail end of the process, like, we've got a plan together, and then there's some, hey, we've got surplus we can use it for for this, and take it out of whatever we were gonna we're gonna propose, my experience has been more often than not, it's been last minute emergency projects that have come up and you've needed to rejigger so you've used surplus capital Unknown: to help Close the Gap. Is that a Kelsi? Is that, I assume the finance director, sort of annually goes through that analysis with department heads, trying, trying to end the school department, trying to get a sense, because, like, three years ago, they closed out over a million dollars of projects that were done. And at these excess proceeds have been appropriated to Kelly's point. They then got used to fund that year's capital budget. The next year, I think it was only, like $50,000 or something. And then last year, it was $590,000 and so I'd assume, as a process policy, you know, I would think we would least want to know that that is happening. And I think last year, the finance committee was given the camera was an Excel spreadsheet or from the Tom accounting system. But there was an analysis, literally at every capital open capital project, of which there were 8090, projects. And then had across the page to be closed out, and then kind of accumulate up all those amounts. And each of those close outs require either a department or a committee to sometimes have to vote that it's done, done, and they are giving up those proceeds. But it makes no sense to have that usable capital sitting around. So hopefully that'll be just part of sort of keeping an eye on the inventory of open projects. Kelly Lappin: Yeah, I, if I may, Madam Chair, yes, we try to meet, I try to meet with the department heads quarterly to go over that and to get their statuses of how, how the projects are going along, and if they need any assistance, and how much, if they think they're going to get any money back or and those meetings are also like to close out, because I have a couple of projects that are in the tail end, and just making sure that they're done, and when they're done, we can be done with it, with school projects. The school committee has to meet to close those out. So those can time. Take some time to allude to your point, but I do try to meet with the department heads that have capital on a quarterly basis to go over it. And if I have time, I try to meet a little bit more often than that. And then I report that back to the town account and final structure. And he does the actual Mach nation of closing out the process, and then I just keep the records. Unknown: So does it make sense to tie that debrief out to us when it's quarterly? Here it's a status of the projects, just from a planning standpoint. We know these are not voted on. These, these are closing to have up or down. What is the inflation threshold for not having to go back and vote? I know we talked about this last time. I just didn't write it down. Kelly Lappin: Oh, for not having to go back and vote. I don't know that there is an inflation threshold. It's if there's no money left, Unknown: right, you got it. Is there an overspend threshold? Or is it to the penny? Or the way Kelly Lappin: that it should work is that the overspend is built into the project that we had approved. Unknown: So I plus zero? Well, Kelly Lappin: I don't know that it's plus. It depends. I would say any major building project has has allowance in it for overages. I'm not going to say that every single Michael or Kelsi, you can speak to this, that every single truck that DEP W has on there has, you know, a certain amount of overage in their amount. But I don't think they it's not to the penny, not to the dollar, necessarily. Unknown: But is that in the approved amount, or is that, is they asked for amount and the actual request says, plus 5% okay, it's in the approved whatever amount we is approved in the plan is the amount. That's the four. And it's for a Tom meeting. Tom meeting is approving individual line item projects. So if you're over on one, you can't department like just pick on DEP w if the truck ends up costing more than was appropriated my knowledge Tom, you can correct me, they can't spend excess funds they have in another line item that happened that was also appropriated at some other town meeting. My knowledge that that's not possible. So it behooves everybody, as best they can to build in, certainly an inflation factor, contingency factors, but and mostly that's during the covid years, due to bunch of issues, the town got fairly behind on getting to and starting projects that got approved, and as a result, and given the passage of time, there were a number of projects that ended up it was clear they're not going to have enough money to tweet it, and so they had to sort of wait until the next available town meeting to go back and ask for additional appropriation. The fire station two is a good example where I think there was at least three the initial appropriation and at least two more after that. And part of that was passage of time. Part of it was unforeseen circumstances beyond the contingency. And there's plenty of those examples that have occurred when I was on the board of selectmen. It was around the time the public safety building was built, I think I stood before Tom meeting at least three or four times, asking for more money. And that's just not the way you want to Kelly Lappin: but one of the goals of having this meeting is that we hopefully have better right, with better control over that from a planning perspective, right? That it's planned for that projects being monitored, which Kelsi is doing, right, a great job. Can't say it was always being tracked quarterly. I can't even say it was being tracked annually. So staying on top of projects and making sure that they're moving forward, right, is going to help with that. The goal would be that we're not we're in minimal situations where we have to go back to the town and ask for Unknown: more money, right? Lisa, and it would be helpful. Of all of us, I suspect you probably have a bit more of the project management background, if I recall, from your resume. Yeah. So if there's things that you've done in the private sector that conceivably at least could be discussed here, it may not fit in the municipal world, given restrictions, but I know when we deal with financial matters, I tend to bring up things from my time in private sector, and again, they don't always translate into municipal finance. But, you know, I think towns should always be open to looking for different ways to go at these projects, to ultimately get them done efficiently, cost effectively, etc, etc, so and just have an accurate budget. I mean, I think that's the just know where the when the money's going, right. Yeah. Can I ask you that question? Then, yeah, this leads to laundry list, unfortunately. So from a budgeting approval standpoint, I just want to make sure it correctly. If we approve it for 26 gets voted and but in reality, the spending gets delayed to halfway, gets 27 as many projects will carry over from a budget standpoint, does that line and move to 27 and if so, when Kelly Lappin: no so? And I think I answer in two parts. One, capital is not restricted to a given fiscal year. So once the project is approved, that project can be done, conceivably, over any period of time, with probably some restrictions around debt and how you issue debt. But projects can and have extended far beyond when they were intended to be done. And Brian gave a good example during covid, right? Because of priorities on things that needed to be done in order to get buildings open, ADU freeze during covid, and also because, I'm sure you're fully aware right, materials that work hard to get extreme inflation in the building sector, stuff like that. Things got more delayed, but no, they don't have to be used in that year. One of the things we talked about in the capital planning working group before, when we were getting the article ready to go to town meeting, was the idea of when something we weren't necessarily doing publicly, maybe it was being done behind the scenes, but when a project's being proposed for approval at a town meeting that we have a schedule associated with it of when do we think this project is going to be completed? Certainly, big projects have big buildings, have that associated with them, but lay half an expectation for everything. When we expect to see this closed out so that we can have a little bit of accountability over it. But I think also kelsi's process of meeting with everybody is it also helps foster that. Like, all right, it's there. Why isn't it moving? Can we get it moving? But for the reason that that Brian said, I would like to avoid going back to town meeting, I would like the town to have to avoid, to be able to avoid going back to town meeting. The longer something goes on for, the more, the higher the likelihood you go back to town meeting, right? Because the longer it goes on for, the more likely the cost have increased beyond what you've beyond what you've budgeted and had approved.
Unknown: Can I add? So then, how does that affect the free cash, or the surplus cash that's in there, versus the DEP? Because I assume you're not going to take the debt on if the project hasn't started. Kelly Lappin: Yeah. So I think that was the second part I wanted to talk about. So I think maybe it makes sense to talk a little bit about funding sources, and I'm going to point you to page if you have the warrant open page 49 on top of page 49 just as a good place to start. This isn't the be all, end all, but it's a good place to look. So this was the FY 26 capital budget, summarized that box at the top by what the funding source was. And so thinking, maybe if we walk through each of them, and there's people that probably aren't on here, and talk about what they are, that might help a little bit. So borrowing, so debt issuance, you're right. So debt issuance, town meeting is approving that we do a capital project, and we do it with debt. The actual debt issuance is handled by the treasurer's office. So finance director oversees the treasurer's office in conjunction with the Select Board, so they're actually approving, right, signing the paperwork for the DEP placement. That doesn't necessarily happen right right away after town meeting. As I recall, we typically do debt issuances either November February, depending on advice from our financial advisor and the timing of the project. So we're not going to go out and issue debt if we're not ready to start the project, and it'll also come down to how projects get grouped, and whether or not we have cash to kind of pull things over on hand so that we don't need to issue the debt right away, because you're not doing it right every month. So there's grouping projects together. Unknown: A couple of sidebar comments there. There's two ways to finance the project. One is short term financing with bond anticipatory notes, which are generally interest only payments. And you'll typically use that type of financing where you're not ready to do a full bond offer. You don't have enough projects, enough dollar amount to make it, you know, economically feasible. And so, you know, the Treasurer and a finance director might, you know, and we have some outstanding now in town that'll partially fund projects to get them going. And then once there's a critical mass, as we're about to come up on here in November, a critical mass of water projects, for example. They're now currently partially funded with bond and participatory notes. Then long term bonds will be issued, takes out the short term financing is to when the financing long term is put on. I mean, so in the short term case, well, albeit, they could issue that whenever. They tend to also try to do that periodically, so they're not constantly in their grouping. So it's not for a project, it's just for that, typically, for a group of projects, Bradford Carver: right? But just so I'm clear just but it's for the full value of the project. Unknown: In the bond anticipatory notes, sometimes yes, sometimes no, when you get to the bond issuing the long term bonds, typically, that's the full authorized amount to borrow, unless there's been some change. And we have a couple of examples in the fiscal 26 capital budget that you know it's probably too detailed to get into tonight, but there are always exceptions. But just picking up on one of the points Kelly made, you would think that unless you're ready to go with Project, particularly when you're talking about issuing the long term bonds, it would behoove the town not to issue bonds too far in advance, because you obviously start paying at whatever 4% today, and you might be invested proceeds probably are being invested today at around 4% but if you look back three to four years, you might be paying two and a half to three and a half percent and making nine. Think so it's costing the town well. When the Council on Aging building was set to get going, there was 11 million plus or minus of bonds voted for that project. There's bunch of other projects grouped in and I think it was at least a year, if not more, before any of those bond proceeds got spent on the project for various reasons, and we'll talk about the DEP policy later, but it reminded me of an issue that came up with a public safety building years ago, where they had likewise borrowed in advance of spending down the money at a pace the federal law requires it. The tax code requires you to spend it down at and if you don't spend it down fast enough, the town has to pay a rebate to the federal government. And I recall back with the Public Safety building, the town actually had to cut a check because there's interest arbitrage going on between what the lower rates on Muni debt versus what you might be earning in a taxable investment, and it just depends on the markets. So I do have an open question out to the finance director on the Council on Aging bonding of 11 million because I believe it was sitting there beyond the point where it was supposed to be starting to be spent, and it's not my job to police that, but having lived through it many years ago, you know you don't want to have to wait for the arrest to show up at your doorstep and say, Yo, us money. So I think I think back to Kelly's point. When these projects get brought forth approved, having a good sense of what the timeline is, and that people are actually committed to getting it going, and they're closer to be able to do that now than they were two or three years ago, because there was 90 projects stacked up that needed to get completed. And so I think that's always the goal. Yeah, and there's some big projects coming down the line. That's why I say that there's where large projects in the 20 year schedule that could be over five or six years. I mean, you don't, you don't need to borrow that right away. Especially, think the market's gonna change Kelly Lappin: and you won't, necessarily. I think if we get to looking at the actual like DEP schedule, you'll see projects that got issued in pieces, right? That were bigger projects that got issued in pieces. So it is possible to do that. One of the things that Brian just said, I just said it at our last meeting, is the job right, that we're facing as a committee in conjunction with the town manager, right is not just how much money and where the money comes from, but resources to do the project. So one of the problems that the town definitely suffered from was appropriating funds for projects, approving projects that there was no way could be done in a reasonable period of time. And so that created the cycle of, we got to go back to town meeting and get more money. It's like, well, probably knew we weren't going to get this done for for three years, right? Why did we slate it that way? And there's reasons. I mean, I know Tom holder has told me before, right? Sometimes you need to have the project approved in order to start the process right? So there are reasons to do it, but that's goes back to if there's clear expectations at the outset of this is the project, this is the timeline for the project, then there's something to hold accountable to. And we're not in a situation of, I thought we were starting. We issued the bonds, and we haven't used any of it or Unknown: suffering the projects into preliminary, you know, do the do the assessments for the quarter million and then move on breaking it Kelly Lappin: into pieces? Yep. And Unknown: what we've seen in the last two or three years, because of what Kelly described, is that finance director recommended to the town manager, who then recommended the Finance Committee, even though the five year plan called for certain projects to be coming up for that particular year's capital budget, to just push them out, literally push other than life safety type thing. Push everything they push things out, like a year, push the whole schedule back a year. And so that that I would assume would be part of our review process. I'm not clear on whether we're reviewing or doing, but we'll talk about that some other time. Yeah, I think Kelly Lappin: right now, I'm just trying to make sure we've got enough foundational knowledge to deal with projects when they come in. So talked a lot about barring already. Unfortunately, I don't think we're completely done. So Brian differentiated part of the borrowing nuances. I think the other piece that's important to understand is that borrowing can happen in sort of, I think, three different flavors, right? One is within the levy. Yeah. And I'll talk about what the levy is in a minute. Second is excluded or outside the levy, right? And then the third is through self supporting funds. So probably going to get a little tricky, because when we talk about water historically, we would have said it on the self supporting DEP, right? The water fund is going to pay the payment on the debt. When we get to talking about MWRA, we'll probably flip that on its head and have discussions about whether or not that's self supporting, Unknown: maybe ambulatory. That was still positive, right? What was that ambulatory? And those service fees that we got Kelly Lappin: there? Oh, ambulance fees. Yeah, so that's another so that's not debt, but it could have debt. So that's another, another way, typically, though, I think the way we used ambulance fees before is the town took on the debt, and then the ambulance fund reimburses the town for the debt. So it's a little bit different than the water fund, where the water fund the debt falls under the water water enterprise fund, and they're paying the DEP, so little bit different. So the levy,
Unknown: yeah, keeping up on all this. And I'm going to tell Kelly Lappin: you guys the same thing I see at work, like we're saying it. Will say it as many times as you need us to. You can ask the question as many times as you want in as many meetings as you want. Okay, Levy. Are either of you familiar with the levy? Okay, so I'm gonna, I'm gonna put taxes, Yeah, same taxes. I'm gonna butcher this, I'm sure. But I'm gonna try to do this simple, as simple an explanation as I can. The laws of Massachusetts say that the town cannot raise taxes more than a certain percent. That is a half percent plus new growth. I'm not, I'm not getting into the detailed explanation. I will. I can send you guys, there's a good presentation on the State's website that explains how the levy works, and I I can't do it as good as that presentation, so I will send you the presentation. But that's a constraint that the town has the fine finance committee and Tom manager. Everybody are going to face when they're doing the budget. You can get around that in a couple of different ways. You can vote, as a community, we're going to override. We agree as a community that we're going to do more than that, than that limit for a given year. For many years. Recently, the town hasn't been up against that limit we're we're running into it possibly this year, right? So it hadn't been an immediate issue, but it had been an identity issue, and at least in the time I lived here, which has been a while, we had had an override vote for that purpose. For capital projects, you can vote to exclude a project's debt from the levy. So it's basically like an over. It is an override, but it's specific to that project. So you're voting rather than voting to say, hey, tax, the tax levy can go up by more than than the limit, but would otherwise be allowed. You're saying the cost of this specific project is excluded for the life of the project. So you're taking that piece out whatever the debt service is for that project. You're excluding it from that limit. And does Bradford Carver: it have to be a capital project, actual physical product project, or can Unknown: it be to be excluded Kelly Lappin: the town, in theory, could do it for, I think, for anything, but we don't, right. We have a policy to have it be a bigger over a certain threshold. I can't remember. We used to say two and a half. I don't know what we what we're at, is it still two and a half. It's so over two and a half million projects that you would have in town that were done as excluded debt, big ones that I can think of the high school when it Unknown: was it's with respect to debt that's associated with a capital that's funding a capital project. And I think Kelly's saying that traditionally, the town has used that mechanism generally for larger capital projects, just because, if you had to include both debt services levy debt and excluded that both those debt services appear in the town's operating budget, but for purposes of not running into the state's prop two and a half limitation, any excluded debt service gets taken outside of that silo of calculation and then kind of added in, again, if you will, to what ultimately gets taxed to the residents for the period. Time that debt is outstanding, once that debt is fully paid off, that's been excluded, that override piece for that goes away. Bradford Carver: So for something like the NWA project, which I know is big on the horizon, is that something you could do through excluded debt Unknown: that's going to require probably a separate and probably not tonight, but a separate discussion, because there's different options for how to handle the paying of the debt associated with that project. Kelly Lappin: But it could Yes. There's a lot Yes, but it could Unknown: be excluded debt in a couple different ways, Kelly Lappin: and it requires so an excluded debt vote requires a vote here on building right? Taxpayers come out and vote, and it's 50% for the exclusion at the ballot box, yes, and then you're still going to go to town meeting and vote the project right, and debt is a two thirds majority vote at Tom meeting. So it's, a two step process, right? The first step is, is it going to be excluded or not? The second is, are we going to actually approve the project? Unknown: That rule is for generally, all capital, including this, MWRA happy hollow, well, project with one exception, which I don't want to get into tonight, but there is a special rule that's currently being debated by select board or considered by the cycle back to that also get it characterized excluded DEP without going to the ballot. Michael McCall: Yeah, you didn't mention, you mentioned those two steps, town meeting and the ballot, but there still is the vote of the Select Board, unless I missed you saying, Yeah, Unknown: put the question on the ballot. The Select Board has to vote. Board members have to vote in favor. Put a debt exclusive question on a ballot. It's a super majority and and so there's, there's a lot of you have to get over and the town, my recollection, having looked at the last 20 plus years of both prop two and a half operating overrides and debt exclusion overrides, I don't think the town, with one exception, which is the first go around in the high school, the town hasn't failed to pass a debt exclusion question of the ballot. And generally, when that happens at the ballot, since we generally voted before town meeting, you can do it after. It's generally also been passed the two thirds vote at town meeting on the operating side, which we're not talking about tonight, there's a different threshold to get it on the ballot at a different threshold town meeting, because you're generally operating but all these things are very, sort of specific, particular, and I'm not sure it's sort of this. It's important for you to have kind of a background knowledge of that. I don't necessarily think this committee is going to be involved in. Who's making what decision on what's excluded, we may make a recommendation as to what projects warrant using excluded debt versus levy debt, which traditionally has fallen upon the Finance Committee to do in the past, but beyond that. So it's important to try to grasp and as Kelly said, there's no doubt that we're going to have to come back to this and and if she can pass out to the rest of you the primer, I think that'd be helpful to kind of read through it. It's a video, whatever. Yeah, I think the important Kelly Lappin: part, because I agree with Ryan, I don't know that it's our right, we might make a recommendation. It's not our job to decide excluded or not. And at the end of the day, the cost the taxpayers the same. So it's it's dealing with, you know, override land and whether or not there's an override, but you're going to pay the debt service in either situation. So in terms of, can we bear the load as a town, that doesn't change. So I don't know that it has too much impact on what we have to do as a committee and deciding where it fits, other Unknown: than understanding, albeit it hasn't happened often in Wayland in the last 20 plus years. If you get a no vote, that project can still go forward, but it would have to go forward with levy debt, which would eviscerate the operating budget, right? Means the only way to accomplish that would be to cut services which are Kelly Lappin: poor, vote overrides every year and vote Unknown: operating different threshold, so which is also difficult. So what does it show in the summary for outside Kelly Lappin: the living so there wasn't in in this particular warrant, there wasn't that this year. We didn't have any excluded debt in this particular year. Unknown: Was it unusual to have free cash then as well? Is that kind of why? Kelly Lappin: No so free cash is ever so. Why don't we? We'll step through the rest of the categories and then go back to the ones that aren't in here. Unknown: We. Free cash is never free. I get it. That's taxpayer money. That's taxpayer money that's sitting in a reserve, right? Kelly Lappin: So free cash is taxpayer money that is sitting in reserve, which is essentially the result of either right under spending of prior year budgets or more revenue that came in than was anticipated in the budget. Right? Unknown: It could be sourced from Dennis. It could, it could have to be used for another debt project. Kelly Lappin: No free cash should be, should be Unknown: unrestricted, I think surplus capital and at some point it'd be helpful. You know, Brian, Kevin, he the finest director, be with us. But I believe surplus capital can initially be utilized to put against other like capital projects, right, right? And we have some of that here, if it's not, if there's surplus capital, and it's not utilized in that fashion, I believe it basically defaults free cash, defaults to free cash, but it's not restricted. It's not restricted for use capital projects. So there's a kind of a premium to try to corral that. You don't have to, but kind of corral that and apply it to new budgeted capital projects. Kelly Lappin: And the reason there's a little bit of a difference there is because if you could use it against you could match it against another project, you can use it right away without sort of affecting free cash. If it's going to roll into free cash, you're not going to see that. It's not going to get certified for another year, right? So there's a bit of a delay in seeing it show up in our in our financials. So, but once it's in free cash, it no longer has a specific restructuring on it's not tied anymore, okay, so that's where free cash comes from. So that is not you think about these borrowing is going to have an impact on the budget, because there's going to be debt service. How that lays out is going to depend on the debt instrument, right? Is the debt instrument a ban where it's just interest only for a period, so next year's budget's just going to have the interest piece versus a bond is going to be interest in principle, and it's a bigger piece. And getting further complicated. If you do a situation where you do a ban for your you might have to double up on your your principal payment in the first year. So that's going to affect how much is going into the budget in any given year. Is going to be based on that cadence of what those debt items are, how they were financed, what the payment on them is. So it's not it's not always straightforward. In many cases, if you're approving a debt project, you're not going to see it in the fiscal year budget that you're approving at that same Tom meeting. You're likely going to see it in the next meeting, depending on when they expect the issue so that all gets into what are you issuing? When are you issuing is going to affect when you see it in the budget, but ultimately, taxpayers are going to feel that in the future in their tax rate. Unknown: One other, this is something you've never had to deal with, I don't think. But another, I'm not going to spend a lot of time in it, but it's just it's ongoing right now. Free cat is likely going to be used with respect to the fiscal 26 approved Capital Budget Project, some of them to have the general fund for a period of time, roughly December, end of this year through June of next year, to fund about $6 million of those projects before fun anticipatory notes are going to be issued. And the benefit of doing that is that you don't have to pay any interest for that six month period. And still, your projects can go forward, but using the free cash in that fashion, which requires some paperwork and some accounting entries must be repaid before the end of the fiscal year to get it back into free cash, which then gets certified. And the town hasn't utilized this in recent history, if at all, but it's something that's going to be utilized to try to address a operating budget levy gap for fiscal 27 which, again, maybe we get to tonight, and one of the agenda items about sort of the current operating budget environment. But so it you know, the point is, there are a lot of traditional ways that the town has done business, but at times the town has needed to try to be creative and extend it. Can find that there are legitimate legal avenues to do things that we haven't here before done. And there's another one gets on here that what. Has done, been done in the past, which you'll get to in this list. But you know, the town kind of looks at all of its various pockets of financing before necessarily going straight to to the taxpayer, saying we need more money if we already have different resources. Kelly Lappin: So yeah, so before we move on to the rest of them, I would say borrowing and free cash tend to be the biggest two buckets in any given year. They I think they would always be on here. The rest of them, other other than the ambulance fund, not necessarily so free cash that I just want to set so free cash, because it's money right in excess from prior years, won't affect the tax rate, right going forward. So it's not a part of the operating budget increase, because it's already been paid for by taxpayers in their previous tax bills. That said you want your free cash balance in the town to be a certain amount, and I can't remember Unknown: what it is, 20% 20% target of the total operating Kelly Lappin: budget. So it's not an amending right
source of money. Like we can't just keep taking from it and taking from it. We tend to restrict it. Unknown: It's good financial practice. But Moody's who rates the town's debt, which they'll be doing here shortly. And the town is one of 13 communities, I think, with a triple A rating, which means we get a little bit lower borrowing cost. So you want to try it as best you can maintain the AAA rating. And they have a series of best practices, one of which is, take your collective reserve funds, including free cash, the debt Stabilization Fund, which is another recently set up reserve, which Kelly will get to in a minute, and special education reserve. And there's a couple others floating around, and they want that if you know, if you can around 20% of your total 100 plus million dollar operating budget. Amazing, they want free cash to be 20% Kelly Lappin: balance. So not what we're spending from it, but the balance of it. So basically, your savings account, right? Like, they want the town to have a certain amount of money in reserve at any Unknown: not what you're using here, but what's available. Oh, okay, we use we Kelly Lappin: can't just like, you'd be like, yeah, it doesn't affect the taxpayer. I want to take as much as I can from free cash, but we've got to maintain right, good fiscal practices in town, so it's not a ever flowing source of money. Unknown: Okay, so sorry. So the borrowing number that's in here is that what's planned to be borrowed this Kelly Lappin: year. That's the amount that's planned to be borrowed within the levy, okay, surplus capital we talked about a little bit earlier. So that is capital projects previously approved that were not used for one reason or the other, that we're able to match up to projects that are in the current list. Again, it's unspent funds from prior projects that have already been approved and already been taxed, unless they're debt, in which case they will be taxed. But it's not changing anything beyond what we already anticipated from a from a tax load, okay, receipts reserved for sale of real estate fund. This is an unusual one. This is not typically in here. And so this was, there's a realist, there's a fund in which I Brian, you probably know better than I where, where these funds came from, but this is Unknown: generally, if the town sells asset, real estate, assets that it owns, it'll take those proceeds and deposit them in this, again, separate reserve fund, called titled reserve receipts, reserved for real estate, sale of real estate, Weird name, but it's another reserve, but it generally come from prior sales of land, generally. And there are, there are some restrictions on what it can be used for, and the votes required to be able to use. I'm not going Kelly Lappin: to spend much more time than that, though, because it's not, it's not a common one that we're going to be Unknown: in this particular budget. It was used largely to fund the state book dam, absent getting the federal grant. And then there was a last minute change to the budget to move some money that had been in an out year for route 20 quarter design work. And the the quid pro quo for moving it up was to use that reserve fund as a funding source, but there's assuming this amount is used in the town doesn't get federal grant. That account probably has under a million dollars in it at this point, and. Kelly Lappin: Um, all right, capital stabilization was an account established, I'm going to guess probably five years ago. Maybe it wasn't quite that long ago, for purposes of putting money aside for capital, the idea being was floated, and I don't know that we ever really achieved this. But because debt service can be uneven for some of the reasons I talked about earlier, right, depending on how, how a project cadence is, capital spending that's in the tax rate in a given year can be uneven. And we had a number of years where the amount being spent on capital in a budget around debt in a budget was decreasing year over year, and it was getting right. It gets spent right. Whenever it was a decrease, you find there's another place for it to get spent. So the idea was, keep your capital budget item right, whatever that amount is, level year over year, and to the extent you don't use it because you didn't have projects set aside, any difference would go into the stabilization fund if that happened. I don't think that has happened in any years. One it Unknown: hasn't happened from that perspective, but the account has been funded through a separate funding article, meaning there's a hope, albeit unlikely, in the next decade, for reasons we'll talk about, but I would expect, and generally, it's been funded, but not always with initially, I think it may have been funded with taxation. The last few years has been funded with free cash. I believe, if it was done for the reasons Kelly was stating where, particularly the levy debt services is rolling off and you didn't have any other projects coming on, you try to level service that debt line effectively by taking whatever the drop off is and depositing in account and collect that through tax revenue. Kelly Lappin: Yeah, that was one of the thoughts that was never consistent. There was never a full agreement on on that, but that was one of the thoughts and setting it Unknown: up. And then if it swings the other way, then you have a place you might go where it doesn't immediately cause you to have to borrow money, additional money, or put it on the tax rate, and so you have money in, money out. Kelly Lappin: So I always think of this one as sort of, you know, like my my own project, savings funding home. Right? When I want to do a project that's going to be big, I start putting money aside ahead of time. That's sort of the concept here, right? Whether what the funding sources or were the reasons we have funding sources has changed over time. It's going to depend one year to the next, but there is a little bit of money. Again, it's not, I don't think it's a ton. I don't know. Kelsi, you know how much is in there, Unknown: in the top staples? Yeah, plus or minus a million dollars. Kelly Lappin: So again, it's not a place that's gonna like, solve it's about problems here, but there was a project maybe use 100,000 of that. Unknown: Yeah. I mean this in this year, my finance committee, it was small enough that we let it go. This was a town manager asked for $100,000 each of the next five years to do some repair and rehab work on athletic fields and recreation fields, athletic fields. And the finance director identified capital stabilization fund as a source to fund that particular line item. And I said it was 100 grand. We we let it go as a funding source. It didn't seem to make the most sense to us, but all Kelly Lappin: right. And then ambulance fees, we talked a little bit about it, but this is revenues coming from the town's ambulances. There's, historically, I think there's been a balance there, again, not a huge balance of funds in the ambulance fund, but we tend to try to match ambulance fund fees, projects and use of the ambulance fund with things that are for fire, right for the fire department, so that it's matched up. And in the case of debt, like I said, John, not a given that it's that it's working the same way that it would for the water department, but we have done debt where then the ambulance fund sort of reimburses the general fund for some of their bigger items, like an ambulance or A fire truck, right? Unknown: And you may have answers. I'm just making sure. And so borrowing outside the levy, where would that show up? It's on the borrowing line, so that that excluded debt versus levy debt. You'll see in the finance committee report, there's a reference to excluded debt and levy. Debt on probably the only place you're going to see it when the warrant
page 10 operating budget has a debt and interest line item that includes both levy debt and excluded DEP. So that's in the operating budget. Look at page 10. That's an analysis on the bottom section of that table of the town's annual maximum levy limit. And you'll see, if you look scroll down, you'll see a subtotal line label levy limit. Right below it, you'll see debt exclusion, yep. And basically, the levy limit is inclusive of whatever you need to fund your operating budget, inclusive of levy debt service, but exclusive of excluded debt which gets it bypasses the prop two and a half, two and a half percent a year limitation, but only the shoe. It shows you funding sources. So is this 4.6 Kelly Lappin: so if we were doing a project that was excluded, DEP, there would be, it would be, it's a whole article written up on it. It would, we would vote it separate from Unknown: just outside of that, okay, I'd say, traditionally, I think of late, that's probably the way it's going to go. Yeah, it has Kelly Lappin: been a while. Has shown up while we've done a couple of smaller ones, we we've put in the main vote by Unknown: typically large dollar mouse, ie, 3 million, 4 million and north end up in a separate article to give the town a bit more time to debate that project the town meeting. But that 12 million there doesn't include that other DEP, we didn't have any excluded debt, new excluded debt in fiscal Okay, so we would show up there if there was in the fiscal year. Yeah. So that was my confusion. There was Yeah. So if this estimate, if we had, if we had proposed issuing excluded debt, its debt service would have shown up where the 4,000,006 46 is, yep. So you can see that line item is kind of popped up in 24 because we must have issued some excluded debt, and then it's been kind of trending down, okay, but we do have some projects on the horizon that would you would expect, we'll use excluded debt. It was more than I just expected to see the line there. But it's because, okay, I suggested to the finance director recently that both here and again, I'm not sure it would end up in the capital plan anyway, but in the operating budget, if you look at I looked at page 45 of the warrant is your total debt and interest line item, which, again, is debt service for both Levy and excluded debt. I've suggested to the finance director, he might consider breaking that line item up into two components with a subtotal, because the discussion about letting excluded is likely going to be at the forefront in the next three or four months. And so whether he takes me up on that, yeah, Kelly Lappin: try to focus on the understanding and worry about the presentation right a little bit later date. But the one there's probably more than one item that's not here that I want to mention, but there's one in particular, and that is, if you look in prior year warrants, you'd see a category called cash capital that was probably the most straightforward, and that it's a tax right? It's amounts that your project, you were going to fund, that you're going to have included in the budget as tax. What we historically had done was road work was was cash capital. That changed a couple of years ago to borrowing, but we have historically been years where we had cash capital in there. Right now it's not again. Sometimes I don't necessarily see it returning in the years where we're facing overrides. Unknown: And I think the discussion, I think I understand why it found its way, because it wasn't always funded through taxation. If you go back a bunch of years, it was borrowed and and there were a number of years where the town was generating excess free cash year over year, and the good portion of the town was saying, wait a minute, why don't we slow our taxes instead of building up these reserves? And so I think there were a number of things that found their way into the budget to try to compress what was otherwise then available to pay for everything else. And by putting, my opinion, by putting the funding of road improvements, which generally, May, I don't know what the timeframe Tom is in Wayland, but generally, to put a new blacktop down, you would hope it lasts 1015, years anyway. And so that would seem like that's a long. Term makes sense. Maybe a borrowed over a period of time, and once you start borrowing it every year, you're eventually going to end up with a portion of that debt service in your operating budget. So you probably get, Kelly Lappin: you get back to the same place you're just buying yourself, like five, six years. Unknown: We moved a place, and we moved it out a couple years ago, just because we were starting to lose our levy capacity, and so we were looking for in that particular it wasn't that issue. It was a concern that the tax year over year tax increase was too high. It was closing on 8% and so we were looking for ways to try to drop that year over year, tax increase and the roads came out of the operating budget, and it's now the finance director is okay with that, as long as we committed to borrow it each year going forward,
Kelly Lappin: spending time in the bottom section, yeah, I am. I just was getting hung up. It looks like there's an errata in the total funding sources that that 12 million is really supposed to be 9,000,007 85, I think it was. I think you guys changed the format and separated water. Unknown: Yes, so Rada was Tom chair. Kelly Lappin: Okay, so the bottom section is those Unknown: numbers don't add up to 12 million. Okay, that was fixed the town meeting, yeah. But I was, Kelly Lappin: since I wasn't involved, I was like, Wait a minute. Okay, so the bottom section is the bottom section because Unknown: I think it's still worth doing it. But I just asked the town manager question, Michael, have you had any I know you've been busy with a bunch of things. Have you had any chance to get your own clarity on whether this committee, in addition to the general fund capital, will be expected to deal with both enterprise fund capital and CPA capital? And if not, that's fine, we'll just come back to it another time. But I Michael McCall: don't know if I have an answer for you tonight, but I do think that is part of the budget that we present to Tom meeting, because it's included at the end of the capital budget. You do see those called out in separate sections, and I would think it would be prudent to have second set of eyes looking at those requests. But I can think about that for you.
Unknown: Yeah, just the biggest one it'll be relevant to is the MWRA happy hollow. Well, project for example, which has already been vetted by Kelly Lappin: multiple it's MWRA. But it's also going back to my earlier comment about resources, are both financial resources and people resources. Those projects all require people resources the same way the others do. So it's hard to it's hard for us as a body to sit here and say, yep, we've got room and space to do these without considering CPA and water fund projects. So the bottom section, or actually, yeah, bottom section of this page is water, wastewater and the transfer station enterprise funds. So these are projects for those specific funds that are going to be paid from those funds, either by directly paying, right, directly paying. And there aren't any on here, but they could the same concept as cash capital, right? It's coming out of the fund directly. So if the project costs 100,000 you take $100,000 out of those funds, or you're borrowing, and the debt service is being paid by the fund, right? So these are considered self supporting funds versus tax levy most of the time, most of the time, with the exception of that line item. So if you'll go down right, water enterprise fund borrowing, is debt service going to be paid by the water Enterprise Fund, wastewater borrowing, the debt service is going to be paid by the wastewater Enterprise Fund. Surplus capital is the same as what we talked about previously, except likely it was surplus. It should have been surplus capital that were capital projects that were approved to be paid from these funds, so they can use it for projects that can come from these funds. General Fund free cash subsidy is the exception, right? So this was dollars coming from the general fund, I believe, to pay for that compact or replacement at the transfer station Enterprise Fund, because I'm guessing the transfer station enterprise fund didn't have enough money to pay for the project, and so that's the exception on this page. Unknown: The other comment I mentioned here is that, unlike the discussion above, on the differentiating levy debt. Or excluded debt. None of that applies to debt issued to the extent it's going to be paid for through water rates or wastewater management rates or transfer station fees. It's general obligation of the town, but it doesn't affect the town's levy limit because it's separate. And these are in the parlance of municipal government, these are, they're a little bit more than accounting entries on the town's books, but they're a separate accounting fund that are expected again, to generate their own revenues and pay their own expenses and have a balanced budget and or grow surpluses, like the town surpluses, to kind of cushion for unforeseen expenses as we go forward. Bradford Carver: So I go back and check, but this so the $3 million is that part of the operating budget, or is it just not part of it, because it's the Enterprise Fund. Okay, so Unknown: last year there was a debate, which I unfortunately one that was championing the debate. There's an article, a separate article on page 28 of the Warren enterprise fund budgets. And you'd say to yourself, that's probably where you'd find the operating budget and the capital budget for the enterprise funds. But historically, the enterprise for not ever and ever, but for some number of years, the Enterprise Fund, operating budget and capital budgets appeared under the omnibus budget article, and we're all voted kind of at the same time in a combined fashion. And town council inform the town a couple years ago, at least as related, the operating budget wasn't supposed to be doing that. Needed to vote on the operating budget anyway, separately. So from that point forward, this separate article was created covering just the operating budget. Last year, I questioned a question of two years ago wasn't enough time to do anything about it. Last year, I questioned, why not also, for the same reason, put the enterprise fund capital budgets over there. And town council came back and said, Well, you have a point. And yeah, you could do that. You could also separate it out in the omnibus budget and have a separate motion that's dedicated only to the enterprise fund capital budget, which is what we ended up doing last year, or in the spring or three you could create a separate yet another enterprise fund article that dealt solely with the capital which Finance Committee wasn't too interested in. My hope is that the current finance committee will re look at this again this year and have another discussion about whether it makes sense to pull the capital for the enterprise funds and just deal with all of that stuff the Enterprise Fund budget article, but at least Town Council is okay with pulling it apart under the omnibus article, but we had to do a separate motion, so we had Four different motions under this article at town meeting, which got a little bit unwieldy. That's more than you probably needed. Kelly Lappin: So we've spent a lot of time on one specific area. I do think it's important, because I think it's the found, sort of the foundation of like we're going to be talking about projects, there's got to be a place for the money to come from, and we need to understand what what that impact is. Unknown: I want to ask you a philosophical question that we should you just hit the button of the TV for us. Yeah, continue watching. Sorry, TV screen itself
and there's a remote
so obviously, we're talking about a lot of detailed financial items, which are again important generally to the process. As I think about, sort of just kind of a very high level Capital Planning Committee. In my mind, I could certainly say, well, our job is to and look out into the future longer than has historically been done to try to identify and begin to report on on a consistent basis. ADU projects, needs, wants and let the financing be dealt with, with the finance director, the town manager, the finance committee, having said that the town has followed, or certainly over the last number of years, a revenue based approach to capital funding, which is, what are our financial resources? There's lots of things people need to do, want to do, but we don't have unlimited. Resources to do that. And so I understand the concept that you need to have at least a feel for what do we have available in each and every year. One is staring us right in the face, fiscal 27 and then as you start to go out the next four years, maybe have a little clearer picture. And then obviously go out 10 or more years after that, lot less clear picture. Is it in the discussions that the working group had, is it your view that this committee will be working closely with the finance director at the outset, with the finance director kind of establishing, from his perspective, what those financial limitations, I Kelly Lappin: think the finance director and the finance committee, so what we anticipated is they're still going to need a guideline right of what is available or within the realm of possibility. So the way I view this, and I think it's consistent with what we talked about, Carol or Michael can correct me, right? We're looking at all the projects being proposed, right, evaluating them for priority and readiness, right? And then they need to be slotted according to resource availability, both financial and human. Unknown: Is that, is that in your discussions, is that
Kelly Lappin: I don't, I don't see collaborative this committee, yeah, I think it's got to be collaborative, because this, I don't think this committee should be taking on the task of financial, what the resort, right? What the ultimate affordability is right between the finance director, the finance committee, others need to be providing the guideline, right? And, yeah, is there going to be it to be collaborative? Because there's going to have to be some push pull, right? Because I think you would say you're basing purely on affordability. Then I don't know how you do MWRA, but clearly you have to have water, so there's got to be some back and forth. But I would expect that finance director, Finance Committee, are providing some guidelines, some guide posts around what's in the realm of possible, because ultimately they're the ones that kind of have to go to have to go to right in the town manager to town meeting and present it as a part Unknown: of so. And I agree with all that. So my concern is it's we have a number of chickens and number of eggs here. Finance Committee leads to three years I was on it. Waited and waited and waited. They were kept apprised of the prior year numbers they look at. They were kept apprised of process, but ultimately they were presented with a town manager recommended capital budget, and it included proposed sources, including the five year plan. And then the finance committee reviewed that and thought about it and agreed, disagreed, and eventually it came to either what was proposed or, you know, make whatever changes they felt they needed to make before they could then present a same information to the town for us to we can obviously start the process. Well, we can't. We can't start the process. We have to wait for the town manager to start the information or data gathering process or request process to find out what people are looking for in terms of the fifth year in the plan, plus any changes pose in the first four. Let's forget about year six through 15 at the moment, so that that hopefully is either started or will get started very quickly here. Otherwise we can't do anything. But it sounds to me, Kelsi, if what you just described is your anticipation, that would be a slightly different timing wise, slightly different responsibility of the FinCom, because it sounds like they would need early on in the process to be interacting with the finance director. So they jointly then present to us, okay, once you're done, however we do it? Either we're doing a collection or it's done by the finance director, he's always done and he presents us with his sort of pre vetted five year scenario, and then we start our work. That's another open question I have. I prefer that, but, but when we then ultimately have to come to the point of making recommendations to the town manager, you're saying, we kind of need to know what the revenue constraints are, because they likely will affect what we're thinking Kelly Lappin: my that's my opinion. Otherwise, I don't know how you slot and prioritize if you don't know the constraints. Unknown: I mean, we could know that from the finance director. He certainly has had his own opinion in that. And we will continue Kelly Lappin: if you assume, and if you know, if history of the last three years continues, that might be sufficient, right? Because the. Finance Committee didn't necessarily push back too much on on that recommendation, I would like to whether or not it was given a lot of thought, but Finance Committee prints right in the warrant in the report, a general guideline, I think right, and that's on page 16, on the type of funding sources, what they would expect me to use. I think you and I both know from experience that's a range, and it's general, and it and it changes right from year to year based on what's going on. So I'm happy to accept it from the finance director, right, as long as right, there's general comfort that it's not going to we're going to get that go to a bunch of work, spit something out the other side, and there's going to be a like, no, no, no. We can't afford that unless we get really good at this. And we know, well, if you, if you bring any of these things down, this is the project that moves out, right? So in a perfect world, we don't live in this one, right? We're ranking all the projects in every funding source. And you've, you've predetermined, if you cut me off short, this is the one that goes right. Unknown: So some of those funding sources, I think, and I haven't had time to review the final, final version of the DEP policy and the capital planning policy, both of which are included in the 150 pages Kelsi of town financial policies. But I believe that some of the at least constraints, whether they're parameters or not, I don't know, but there's some certainly constraints that are being proposed from a policy perspective on amounts of debt service relative to the budget, etc, but, but I think, I think what we're talking about now is in getting the FinCom Buy in much earlier, like since we're supposed to be reporting at the town manager by October 15, which isn't going to happen right this year anyway, but given which will probably run out of talk about in great detail tonight, but given what the next decade looks like on the operating levy situation, the town levy situation, there's going To have to be some level of discussion about, how does, how does the funding of Capital Square with what the town's gonna, on the other side, be trying to do to figure out how to eliminate a structural deficit that's going to be there for a decade, and, you know, it makes no sense for the town to be, you know, working on trying To solve, which can be very difficult, the structural deficit without the use of opine to override along the way and have us over here approving a bunch of projects with a bunch of levy debt that is simply adding, you know, adding costs to the operating budget that impact. Kelly Lappin: I don't disagree with you, Brian, I think I want to cut this off, though, because we're coming up on time here.
Yes, Carol, I recognize Carol Martin. Unknown: Thank you. Thank you, Madam Chair. Carol Martin, Lake Road, member of the Select Board. I don't know if you'd like to speak, Michael, but I think I would like to answer a couple of these questions. Maybe you'll hop in after me. Under the town manager act, it is the town manager who is now the CFO of the town, and His responsibilities include preparing the budget and the capital plan, which was previously under the Finance Committee, which we changed to coincide with the town manager Act last year when we updated chapter 19 two. So the flow, and you'll see this on page 69 of the thing under number 20 dash three, it tells you that you're going to prepare this capital plan with a term defined by the town manager, and the report will be submitted to the town manager. You're not working with the finance committee to get the buy in, Michael, you'll chime in here. You're working with Michael and obviously, most likely Brian, and whomever Michael designates as part of his finance team to come up with a plan, which will, then, once he's comfortable with that, send it to the finance committee for review. Brian, Kevin, just to be clear,
Mr. Kevin, I'm sorry the finance hop in here. Kelly Lappin: Yeah. No. Thank you for reminding us of that, but I would also say right, and I expect then that that Michael would do this right as town manager, still going to need right? He's presenting it, but the Finance Committee is still ultimately putting an opinion on it. So we still want to be connected, right? We don't want to be in a situation where there's a. A disagreement where the Finance Committee doesn't recommend Michael McCall: a non starter in your plan,
Kelly Lappin: collaboration across but agree. So we're going to take our we're going to take it from right our marching orders from a guideline from Michael with with Brian's assistance. But I would still like a head nod, right? That Finance Committee is not going to come Unknown: back. And a good example, and I'm not proposing this, but a good example would be, it could be the town manager proposes this with input from the finance director, or Ultimately, it comes from the finance committee, but they could come to the conclusion, based on what they're seeing in the operating Levy, that other than life safety, spending, has got to move out for at least a year. So we can understand which is what's currently trying to be done with fiscal year 27 is take some actions that will hold off a prop two and a half override until we get past collective bargaining, which is coming up. And so I could see, you know, a conclusion being we got to put everything off from the capital side, except for life safety, just to buy time. To Michael, your point, we'd hate to do a lot of work, and maybe it's not. It may. It's work has to be done anyway. And so it's just a question of, okay, everything we thought we might want to recommend doing a fiscal 27 here's the five items that we now. Here we we understand why we'll keep doing but everything else has to push out. But it'd be better to in the near term, if possible, have a, at least a sense of whether that's even a possibility. Is just an example.
So I didn't, I'd like to just finish my thought, and that is that certainly the Finance Committee wants to be consulted, but you'll all work out the process of who gets consulted first, to me the way it reads, you work through the town manager, who then is going with through Brian Kevin to the Finance Committee. I may not necessarily be your, your your number one contact. Kelly Lappin: So agreed. Yeah, already. Thank you for
Unknown: talking about process, do think, and this is important stuff, because we're at the outset here, and I want to just speed down a path. So Mr. Town manager, from a process standpoint, I've always found Brian, Kevin, a to be very detailed and thoughtful and pulling together what he presented to the to you, and then what you ultimately presented to the Finance Committee in terms of a capital budget for the next fiscal year, plus the remaining four years of the five year capital plan. And I assume that he once you sent out your memo asking for everybody to submit their CIP forms. He accumulated all that information in an Excel workbook, which he's provided as a blank and he's done his own prioritization. He's He's overlaid on that what he believes financially needs to be kind of the sourcing and what years. And then ultimately, I presume, Michael, that got presented to you before it eventually found its way to the FinCom. I'm just curious, do you envision anything changing on that process and, and, and he'll still do all that work and then present that work product to us before it then gets presented to you. Or are we? Are you expecting that? And he's expecting that we're somehow be collecting all that information, putting that Excel workbook together, making the initial prioritizations? I sort of hope that's not the case, but I'm just curious what clarity Michael McCall: you know, he and I talked today, and I, a little while ago, sent that memo out to all the department heads, asking them to fill in their CIPC forms. Because we, as you, point out, we've, we've had a lot going on. I would have liked to have done it about a week or two ago, and we've asked them to get them back within about 30 days, third week of November. So we're pushing them to get the information back to us. I envision that we would be sharing that with you at some point, whether he compiles it and we make I envisioned us getting that information and sharing it with you so that you could look at it and help us make a determined you make a recommendation that we, in turn, go to the FinCom with in we did this where I was the assistant town manager. We had this type of process. We had it. We were starting it in south bridge when I. Left, we got a capital planning committee established, and we were going to do the same thing with the committee. You'd have additional sets of eyes with different levels of expertise coming in to evaluate these and so then you make your recommendations, and then we also would do a second check of those looking at our finances, but hoping to get a community based perspective of what we what we should be focusing on rather than what oftentimes would happen. At least, in my opinion, is it comes down to the manager and the finance director trying to shoehorn the right number of projects in based on the amount of money you have. Unknown: So I'm still. I'm not still. I think that that process question needs work. I guess the question I'd have though was so that that was the process up until a month ago. So is it. And I don't mean I get this a feeling to try not Hey, start your own review, see if you make different opinions, but do not waste all that five years of effort. Do we get a debrief of this is why I chose these five years of projects. This is what went into it, so that we're not just dismissing it and starting with what we read. Yes. So I Kelly Lappin: would say what I'm gonna I'm gonna say, from my opinion, what was missing in the prior process. So because we have a new committee, why do we have a new committee? What was, what I think was missing in the prior process? And I hope, I hope, right, Brian's still going to do that step of compiling it and and providing it to us, right? The walkthrough of, okay, this is what was requested, and this is what I'm I'm thinking we should slot in. And here's why. That was something I didn't feel in the time I was on FinCom that there was ever enough time or focus on of and what we what? Because there wasn't. What often happened was there would be last minute ads, right? There would be things like, Oh, well, the middle school needs a new boiler. And it's like, well, that was in the plan and got pushed back. Why does it, why did it get pushed back? Right? So having those discussions on this is what we're doing, and this is why, and this committee having some input right, from a community perspective, of like, yeah, have we thought right? Maybe we have different opinions based on our different backgrounds and that we have an open meeting discussion process around those projects to get to, ultimately, what's the recommendation? Maybe it'll be exactly what Brian Right gives us to begin with. But I think there's, there's some work that we can add from our various backgrounds on why, right? And that's something in years of doing the warrant and the write ups that follow the section we were just in in the warrant of each project. I mean, when was I learning that stuff, when I was writing it to put it in the warrant, versus at the earlier stage in the process of being presented the capital projects and debating whether or not they fit, both from a resource standpoint, human resources, financial resources, but also is what we were missing was, why is this the highest priority? Is it just because the amount fits can be paid from this funding source, and we have that much in this funding source, or is it because of the whole list of projects we're putting on the docket? This one's the most important from health and safety perspective, whatever that may be, that was the step that I thought was most critically missing, and why I was on the capital working group, and why I'm here today, right is because I think that's that's where the added value needs to be inserted. And maybe there's other things along the way we're going to identify, but that's the piece that I think is most critical based on past experience, Unknown: and we can certainly, although, again, unfortunately, it's probably premature based on experience. If we thought that the four years of last year's five year plan are static, we could certainly invite in, depending on hours and getting permission from the town manager the various department heads that put in those requests that are now in the five year plan to go through each one and what the rationale in their minds for why they needed it. You what you will likely find, if you look back in what we saw on the Finance Committee would be what was requested in which years you will likely see them requesting things in different years as to where it finally got slotted in. And so you may and it's fine you may get and it's probably appropriate that this committee get a let the department heads have a an ability to say, Okay, here's here's what we wanted, here's where it got put. But it may be premature, because what Michael has asked them to do is add the fifth year plus, right? Let us know of any proposed. Changes to what's already in the plan. And so the question is, do we then have to wait until they've submitted? And then, you know, Brian can certainly, from a staff level, accumulate the information, but as quickly as we can get the requesters in front of us to walk through to your point, so we could then begin to evaluate. Kelly Lappin: Would ask, I know, Michael, you said you just sent it out, and they have, would you say, 30 days Michael McCall: to less than we're trying to get that by the third week of October. Yeah. Kelly Lappin: So to the extent I would ask that, to the extent you have a couple of A plus students who are on the front end of that, you know, not naming names Tom, we will, we will get, we get to talk earlier. Yeah, we that. We don't wait until we have a consolidated plan. We get to talk to whoever got to submit first, right? We're talking to them earlier. Bradford Carver: And I guess a related question, I think I already know the answer based on how this conversation is going. I mean, if, if the school submits a request for the middle school and says a roof is going to cost $1.5 million is it our task also to say, Well, that seems remarkably low or remarkably high? How did you come up with that number? Is, are we supposed to be vetting the numbers that are presented. Kelly Lappin: I think it would be good if there was some level of vetting. And I don't, not in a non trusted way. But just like, hey, talk to us about where this estimate came from. Because I think different department heads do that in a different way, right, some depending on, you know, if it's equipment, you know, I talk to the dealer, this is what the current quote is. Here's right, versus the Council on Aging right, where the pmbc is involved and they are, they are checking right and kicking the tires on the itemized cost and the inflation and and Unknown: permanent, permanent, municipal. It Kelly Lappin: depends on the project. Okay, how much of that we need to do, but I don't think it hurts to have like, tell me where these came from. Unknown: Well, again, a good example of that in the fiscal 26 budget was there's this crazy fire sensor switch at the middle school had to be replaced. It's causing all sorts of problems. Kind of got 200 last minute requests, $350,000 I still don't know why it changed, but back in July, and I'm on a budget working group, Brian, Kevin, he said, Oh, by the way, we don't need $350,000 it's going to be $50,000 well, that's $300,000 of possibly another project that got delayed, that could have been plotted into the plan. I don't know the particulars, and anytime you save money, that's great. I prefer going that direction. Another example would be up until last year. We're on a path to have to refurbish, rebuild the wastewater management facility at the high school, which wasn't doing what it was supposed to do, at an estimated cost. And Tom holder, I know Tom is, I think it's now in the building facilities management side, but it's a five and a half million dollar cost, and it was carried in the five year plan, and then last year, it got pulled from the plan because the town's engineer is working on a strategy to use a more traditional septic system bleaching field solution that, guess what, hopefully will cost a lot less than five and a half million. Well, that's good, right? But it's unclear whether that is going to pass muster the DEP, but having the ability to have that discussion, I think, is important to understand what's what's the risk of those kind of things moving sideways, anything that you can save money do more efficiently. I'm all for it's the surprises on the other side or the last minute. You know, we just absolutely have to do this. Kelly Lappin: So Brian, I'm going to cut you off. We've, we've got a lot we're not going to get to and I want to, I do want to move on to some of the other agenda items. So what I'm going to do now is we covered a small piece of what I had in the review capital information items. You guys had some great questions, like I said before, your questions don't need to end, right? You can, you can send, and you can send questions directly to me, right? And I'll make sure that we're addressing them at the next meeting. But I'm gonna hold up right. We're not gonna get into the projects that are in the existing capital plan. I think the I will work with Michael to slot out right, based on when you think things are coming in, to slot out, when we can talk to folks right where it makes sense. Don't think it's going to need to be every person submitting right? It's it's going to be based on what the highest priority and biggest dollar amounts are first, or what's ready first, but we can work out a schedule of how we're going to achieve that right, and then I think it makes the most sense to do it at that point, because then we can take projects that were previously submitted for a given department, what they're currently submitting, right, and go through the Okay, what changed and why? Why do these numbers make sense? Why are these the priority projects over other projects? And I think the hardest part of getting a handle on how that priority measures against priorities of other departments, right? That's, that's the piece. I think we're really here to help connect. So I want to move on, and we can always, like I said, I'm going to keep this as a standing more general item, that we can always have meetings that we talk about, any questions you guys have on the existing materials that I've provided that are from the warrant, you know, various template spreadsheets. But I want to move on to the item that is the next item, which is the capital relevant information from the financial presentation made to the Select Board. So, Brian, you alluded to this a couple of times, and I know you're very close to it because you're on the budget Working Group. Would you mind? I mean, I can do it, but would you mind giving an overview of the because they're both items relevant, relevant to capital? Unknown: Sure. So the finance director set up a working group, both last year and this year. May have done it in prior years and gonna probably do it anyway, but at the urging, the finance committee started to forecast out at least one year on the budget without actually starting to create the budget, and we encouraged him to go out at least three years, if not more. And so we started meeting in July, he presented to the working group of five year operating budget forecast, and based on that operating budget forecast, it was unclear whether fiscal 27 was going to have sufficient levy limit to avoid potentially significant budget cuts and or going to the talent prop two and a half override, which we haven't had to do since late 2000s it's the last one. And as we got into it, it became, I think, clearer to the group, particularly the school side, who, prior year, had towed the line and held down their budget growth, including not refilling certain positions. To achieve that, to stay, hopefully stay within the levy limit, and after certain items cut the town's way because we don't know, certain big items like health care, insurance premiums state aid don't come until January, February of next year. The Finance Director has to slot in a conservative estimate, and last year, they both provided positive surprises, so we were able to hold the line on the budgets that were pre agreed to budget Max limits, and we went from anticipating zero unused levy to we ended up with close to 2 million unused Levy. And had people known there was going to be 2 million of additional unused Levy, I suspect there might not have been as much willingness to constrain the spending. Okay, but we also knew that was just fiscal 26 if you look fiscal 27 eight and nine, it was clear we have a structural issue, because our budget growth over the last decade has been 4% last five years, it's been four and a half percent year over year. And you know, you have compensation growing during certainly the post covid years popped up. We're about to enter into a new three year collective bargaining session. And so it became pretty clear that we're going to we were going to come up short with fiscal 27 even when we added back in partially some of the what we expected were conservative estimates. And then we asked the financial record to go ahead and run it out for until 2037 and that wasn't a random year. We picked a year after the town's retirement funding of its past unfunded liability with is projected to be fully paid off. Ma, it's required by state to be paid off by then, unless they change their unless they change rules, which they've done once along the way in every communities you know, maybe 50% funded. So that line item in the entire budget is a pretty big dollar line item, and it's scheduled to grow. That's one of the structural issues. But it goes. Way at the moment in 2036 and so we asked him to project out to the year after that. And what we saw and what the Select Board saw last week is a graph that you can find in the Select Board Meeting packet for last Thursday's meeting, a graph that shows three years of surplus, unused levy through fiscal 26 a decade worth of red getting from going from 2 million to 6 million. And it's a little misleading in the out three or four years, you're six through 10, just because of the way the finance director dealt with excluded debt in the past, but there, at the moment, there are no real easy fixes, other than, you know, continuing to look for efficiencies in the town operation, which town has been doing, and trying to find everything it can possibly having to make budget cuts, and then figuring out a strategy for when to approach the residents with prop two and a half overrides, and whether you do one every year or bundle them do kind of three years at a time, yet to be determined. And so the thought was there was a recommendation from the town manager and the school superintendent that it probably be great if we could get past fiscal 27 without having to do an override, because it's going to get messy in the collective bargaining process. You'd rather kind of know what the agreements were so we can settle them in 12 months as well as next spring, we have some potentially big financial issues to deal with. The $38 million long term water supply project is going to go to town meeting for approval, subject to what we review and recommend in the town manager and what town manager recommends to the Finance Committee and what they ultimately agree to present town, there's currently about a five and a half million dollar debt exclusion that would be required next spring ballot to make repairs to this building and and then there were certain strategies that this group came up with try to Avoid and put it off for one year the potential override and those required input and ultimate buy in by the Select Board, which ultimately they did last evening, one of those is to go to the voters in November or December and asked to re characterize the remaining $5.2 million of levy debt on the DEP W facility near the town dump, backside of it, which was originally borrowed as levy debt, and if the town so agrees that the ballot change it to exclude a debt for the balance of that loan, because that's chewing up, at the moment, about $700,000 of levy limit. And so in every year it goes down, but the next three years, it's six, $700,000 a year. So it's not only a fix for fiscal 27 but for how much, how big the overrides are for the rest of the years. The second thing was, as Kelly mentioned, and kind of passed by pretty quickly when you borrow bonds for any of these capital projects. Right now, Brian was planning. Spirit is planning in November to issue $16 million of bonds, you have to start paying principal back, typically a year later, and then interest as well. And typically, what happens is you end up borrowing in one fiscal year, and the accounting for the principal payment occurs in the following fiscal year, along with 12 months of interest plus anywhere from four to six months of additional interest based on the time you borrowed the funds originally. So you borrow in November, you've got six or seven months plus a full year. And so what you see, typically in the DEP maturity schedules, is a there's a bump in the first year of debt service because of the extra interest, and then it goes down the following year and then is amortizing, typically over whatever the term of the debt is. And so we discussed and Brian agreed and presented sucker, and they've agreed to borrow half of what was going to be borrowed solely for water and wastewater management projects, because they're in process, ready to go. Have no impact on the levy, but use bond anticipatory notes in part, and general funds, free cash in part for a period of time, followed by bond antic notes for a period of time, and then bond that other 8 million a year from November, which pushes out that. First principal payment into fiscal 28 so that between the conversion of levy debt to excluded debt saves 700,000 a levy the putting off of half of the bond borrowing saves about 850,000 of levy delays, delays. It's got to be paid, and that's about 1,000,007 and we were running about 1,000,008 to million nine shortfall. And the town manager and the school superintendent are work to try to find another three to $500,000 of budget savings. So depending on what happens at the ballot in November, December, if there's a favorable vote, they can then build a budget on that basis, which won't need a prop two and a half operating override in the spring, and then there's clearly going to need to be overrides in the following nine years and and so that's kind of where that is at this point in time and again, some of these big budget, items that will be known in January, February, may or may not cut the town's way. Health insurance is another big one. Last year, the town was budgeting a 10% year over year increase, and it had a 2.6 2.8% increase because the consortium the town belongs to used part of its million dollar Trust Fund to buy down. Kelly Lappin: I want to, I cut you off, Brian, because I think, I think you've gotten to the relevant point. So the reason I wanted to discuss it with the committee is only so that they're aware, right, that challenges, there are challenges, and those structural challenges are being planned, at least for FY 27 to be met by doing things right, different than than previously planned, related to capital, right? So they're both capital, one of them the the reclassifying the debt of the DEP W building, you could argue, probably should have always been excluded debt. There were reasons at the time my understanding why it wasn't excluded debt at the time my you know, their rumors effectively, right? But had to do with getting that that vote through, so that that building could be built, because the prior building was in not great shape. Whatever those reasons are, what we're asking now is the town, and this is what matters, right? We're asking the town to reconsider that decision and move that for the balance of the debt of the levy. Unknown: At the time, the FinCom unanimously recommended it be done as excluded debt required, as I said earlier, four votes, and select board put it on the ballot. Only three voted in favor, two voted opposed. And therefore the project continued forward to town meeting, but it got funded with levy DEP, which is not typical for projects of $11 million and at the time, when you read the Tom warrant, the FinCom comments said, you know, we could come the town could come back to the voters in a later year, if it can get two thirds of the then select board and majority vote at the ballot to convert it. And here we are. Kelly Lappin: So Brian, you're saying last night at the meeting that was Unknown: the, yeah, there were four votes to put the question on a ballot. They are going to hold a special action sometime mid to mid November to up to December 20. They haven't set a precise date yet. Okay, so it's going to go to the voters to make that decision. They still haven't heard yet from the FinCom, which, under their policy, they're supposed to hear from them before they took vote. But assuming the FinCom, and the chair of the FinCom sits on the budget working group, and he has seemingly himself, been supportive of the notion, okay, but if the FinCom were to come back as a committee saying we don't agree with this. It's possible cycle. It could not move forward Kelly Lappin: to the FinCom originally. So, you know, I'm Unknown: just saying it for the moment. It's on track to move forward, okay? And on the financing piece the finance director is holding is called Moody's next week. He's now, I believe, going to move forward and only tell him he wants to borrow 8,000,016 permanent basis. He's He's progressing on that plan, and that'll all get done in November. Okay, all right, which is different from, Kelly Lappin: yeah, I think that's typical. Time enough on that topic unless, I mean, you guys could ask that one. We can say that for next time when. Unknown: But I do think that at some early point in the process, we need to get input, at least in the town manager as whether he views those fiscal challenges on the operating side. Plan to have any bearing on what should or could be recommended on the capital side, given that any debt, Kelly Lappin: I would expect it would right, because any debt service is going to affect the budget, and it's going to eat feed right into that Okay. On the next item was to review the capital and DEP policies. However, those were approved. Once I sent you are not the ones that were approved. There were some changes. I'm going to push that off to our next meeting, so that you guys have time to read them and any changes and we can talk about it. I don't. We don't have, not anything that we have input into if they've already been approved. Yeah. Unknown: I mean, there's only one item I called out, and it's still in the final version, which basically has the process for gathering the capital data, says that in October, the town manager will send out, well, that isn't going to work. Yeah, that doesn't line up with that. We make our October so I suspect at some point in the future when they get around to editing the policies. And in the meantime, we're just going to have to rely on the town manager to acknowledge that he's got to get going in July or August next year. So I Kelly Lappin: would ask that I will send those more recent versions out that you come to our next meeting with any questions or concerns, because if there's already, we likely have to suggest an edit for the next time it's updated or in the meantime, hopefully honored. Unknown: But do you know again, you, I think your working group vetted at least the dead policy. Did you vet both of them? Kelly Lappin: I believe we did earlier on. There Unknown: were, they're not in the final versions, but they were in both policies. There was a table that was computing certain parameters, percentages of operating budget, and I was having problems figuring out where all the numbers came from. So I reached out to the finance director and said, I can figure out where some of these come from, but I can't others. And then I noticed they got those two tables were pulled and so I was just curious, if you recall any, because he didn't put together. I don't, I have to look at it and then. But they're not in, they're not in their final Kelly Lappin: version, okay, all right. Any I don't have any other topics that I didn't anticipate. Does anybody else have anything that came up recently that tonight, Unknown: this topic, when you're going to set the next meeting? Could we just talk about one potential, probably a little longer term agenda item. And again, it's just, if you have nothing else to do, you can read town reports. There was a committee set up a number of years ago, all the Wayland real estate plan, the rap report, the rap report, which inventory to all town real estate, land and projects. And it's a tremendous report, tremendous, lot of work was done. And I was wondering if we could, at some point, slot in Anette Lewis, who worked on that is just an example to come in and at a very high level, give us a sense of what she believes that the value of that report could be to a committee like this, because it's the last big planning document, because you'd like to think we can both zoom in on request, but zoom out to say, how does that fit with some or number of different plans. There's a recreation field plan, there's there's a town master plan was done in 2004 even in 2011 that has been reviewed since you'd like to think you're making decisions in accordance with plans that have a lot of work done in. And the rap report was one of them. And I would a hate to see us as this would be more likely important when we get into start talking about year six through 15 or Yeah. So shall you add the Tom master plan to that review? It's kind of, I mean, it's so old I just and it's, it's only available electronically. You can get, you can get it through links on the planning department website. Apparently, it's a very thick volume, one of which is at the library and one of which is in the planning office. But planning department website has a link for each chapter in the town's master plan. And then there's, he has a link to the 2011 there's a separate committee set up to review the progress on the master plan, and that report, you can pull down the wrap reports on the Planning Board website as well the Planning Department website, so they're heavy duty long documents, but I just think further down the road as we get into long range planning, yeah. Kelly Lappin: I take it under consideration, Brian, but not, not in the near Unknown: Yeah, I agree. We have a lot to do just Kelly Lappin: to get through this year. Yeah, but I will. I'll see if I can find, I can find the links and send you what there is. I is the master Kelsi is the master plan being updated. I thought I read something about the master plan being updated. I don't. I'd have to check out Michael McCall: maybe the route 20 master plan. But I don't Unknown: think, okay, not the town's housing production plans got to be updated. Okay? Yeah, plans and we're a planning committee. Okay, thank you. Kelly Lappin: All right, can we talk about date and time? Next couple one we're done. I don't think I ever came out of a finance committee meeting. Okay? And dates and times for our next meeting. All right, awesome. Well, I'd like to get some some consensus, but I also don't have those here, so Unknown: I can circulate an email with a couple, yeah, I'm Kelly Lappin: actually, yeah, I'm gonna circulate an email. Part of Unknown: it just depends what you think the next meetings or topics will be. It may be more of this type of stuff, yeah? Kelly Lappin: So my thinking is that probably some more of background stuff needs to be done still before we and while we're waiting for information from the department heads on their requests. But Michael, I'll, I'll send you a note just if you want to help me figure out when we think we might have the various departments ready to talk about, but I think we've got work to we have work to do in the meantime. So I'm thinking in I gotta just look at my calendar, because I don't know if I can do next week or the fall. I would like to go every other week. I do not want to be in every week. Are we still six to eight Unknown: or are you getting requests from the ex officio staff members to try to do something like Kelly Lappin: to stick to six to eight until we're asking folks to come in here, right? So while we're doing still doing background stuff, getting to speed on what is out there, I think we can stick with six to eight, but then when we're asking the ex officio members to come in, we got to try and accommodate right at least, at least every other Unknown: two of you that work. Would I think? Liz, I can't. Liz, I think, and hopefully you'll reach out to Liz and just say, watch the table. Yeah, would be doing like, 830 in the morning meetings be easier than doing five o'clock at night meetings or neither one is particularly
Kelly Lappin: your job, sure, so if I'm taking time off during the day, I have to account for that as time off. So it's indifferent to me, right? Yeah. Unknown: I mean, I I have to yield to those that are working. I can, but I'm also sensitive to how we address, Kelly Lappin: yeah, I would like, I'm guessing this next meeting, we're not going to have necessarily things back from the departments. So if we were to do not this next week, but the week after, so I'd stick to six to eight for that one, and then when we're ready to have folks come in, we can do something earlier. Unknown: Right now, you're you're gonna look but you're thinking, Tuesday, I'm thinking it's a little tough Kelly Lappin: to do it every week, and that's a lot given how much have done this, the information is Unknown: something I'm trying to think Tuesday night is the best night given the last two weeks, I'm going to Tuesday or Wednesday for that time slot. Bradford Carver: So, yeah, I should, I had to move a couple things around, but that's I can do Kelly Lappin: those. Okay, let me look at my calendar and email. Okay, I Unknown: have other opportunities. But just since we're here. Those are easy, I think, to say, Yeah, I mean, I agree, every week, a lot, but if we want to just do a couple, like, two, three weeks and just kind of grind through it, so be Kelly Lappin: it. I would rather save it. We're gonna, we're gonna be doing more meetings. I would rather save it from when we're talking to department heads and and moving that accordingly, right? I don't want to spend every week taking you down or down the background rat hole. Unknown: So that's for us. It's new. So, Kelly Lappin: you know, yeah, I am just sensitive to how, how much. Any one person can absorb right? That much information. Bradford Carver: Very helpful for me. Because actually, I, Brian, had some of the questions you had about process, and you know what exactly our tasks and roles are, is very helpful. Okay, I just Unknown: worry we're gonna get into the actual review of the data, that we're still be asking fundamental questions, and it's gonna, Kelly Lappin: yeah, you might be, but that's okay too, right? Unknown: I'm not better to ask question. You all are gonna be on the committee for a while, hopefully, and so you got to get the foundation, and again, it, it takes at least a year, yeah, when you step into one of these committees, to get used to the processes and get Kelly Lappin: it all down before we start looking at Capital. Six years into being on FinCom, I think I had, you know, like, 50% of it, and Unknown: I know you want to adjourn, but the reason I was pressing on the finance director's continued role is I've been on a number of committees where folks like Kelly have ended up having to hands on, do a lot of stuff while they're working a job. I have had similar experiences, and it's not a lot of fun, and probably Kelly had to think about coming back to do this. So you have things, they have things, not that staff has an overload of work too, but if you have things traditionally have been by the staff, I would much prefer to see them up to a point, to the accumulation and the creation review materials that we could then spend our time vetting stuff and talking about it. That's why I was pressing on that a little bit. Especially they're just going to redo it. Just going to redo it their own way. Kelly Lappin: Okay, everybody, any other ex officio members? Anything you want to add or comment Unknown: on? Thanks for attending. Want to go home? Please. Please excuse me. Please include me on that date. Email. Thank you. Yeah. Are you our liaison? Carol now, yeah, she's our liaison. I am okay. Thanks for attending, Kelsi. Hope you're feeling all right. Kelly Lappin: I got a little cloth that's all right. I get a motion to adjourn. So moved second, second. All right. All in favor, aye, we are adjourned at 808. Recording stopped. Thank you very much.