HomeMy WebLinkAbout2011-02-09 Finance Committee PacketThe Town of Reading - FINCOM
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Wednesday, February 9, 2011 at 7:30 PM
Town HaU conference room
Printer-Friendly Version
• FY12 Budget - schedule overview for March;
• Update on Snow and Ice FYI I budget;
• Update on fuel prices;
• Update on meals tax receipts;
• Municipal Building Committee final report;
• Pulte Homes development proposal;
• SEC new rules about'municipal advisors';.
• Liaison reports;
• Analysis of free cash use scenarios on future budgets % impacts on services;
• FINCOM preliminary comments on FYI 2 budget process; any add'1 info needed for
March;
• FINCOM pre-Town Meeting communications (key points; methods & timing);
• Town Meeting FY 12. Budget presentation (FINCOM & staff);
• Fall 2010 Financial Forum updates;
Minutes from January 26th Financial Forum.
Town of Reading, Massachusetts 16 Lowell Street,-Reading, MAO 1867 Website Disclaimer
Virtual Town Hall Website
1
1 of 1 2/9/2011 1:02 Pl'
The March 2nd thru 25th meetings will be held at RMLD; March 30th at Town Hall.
All meetings begin at 7pm on Wednesday except as noted, and will be live on RCTV.
March 2
Overview
Detailed budget reviews:
Town Administration
Accounting
Finance
Public Safety
>Fire/EMS
>Police
>Dispatch
March 9
Detailed budget reviews:
Finance
> Board of Assessors
Community Services
>Council on Aging
>Board of Health
>Conservation Commission
Library
>Library Trustees
March 16
Detailed budget reviews:
Schools & Facilities
>School Committee
March 23
Detailed budget reviews:
Public Works
Enterprise Funds
Capital
Debt
Benefits
March 28 (Monday)
Vote on FY12 Budget
March 30
Review & vote on Warrant Articles
Prepare presentation to Town Meeting
2
02/07/2011 16:27 (TOWN OF READING
jkinsella GL ACCOUNT INQUIRY
Org A Object Proje Description
14233511 511000 SNOW / ICE WAGES PERM
14233511 515000 SNOW / ICE OVERTIME
14235530 530415 SNOW / ICE PLOWING & HAULING
14235530 530420 SNOW / ICE POLICE DETAILS
14235540 540000 SNOW / ICE SUPPLIES/EQUIPMENT
14235540 540425 SNOW / ICE SAND
14235540 540430 SNOW / ICE SALT
14235540 540435 SNOW / ICE CACL
14235548 548999 SNOW / ICE GASOLINE
Rev Budget [Total: 525,000.00 ]
Actual/Encumb [Total: 83 ]
Available [Total -309,197.54 ]
DEC Rev Bud [Total: ]
DEC Act/Enc Bud [Total: 0.00
DEC Available [Total: 43,750.00 ]
w
ca X~dcxveg
y, sad
~,c
3S oco
l1 . or)()
c.~na 1 ns
0-66
231
Ai;Cj aL~Xk&
ILI UY
Rev Budget
11,971.00
61,812.00
169,517.00
8,000.00
248,700.00
0.00
0.00
0.00
25,000.00
Actual/Encumb
9,833.29
144,981.84
370,438.25
5,934.44
179,738.80
0.00
103,704.89
0.00
19,566.03
Available
2,137.71
83,169.84
-200,921.25
2,065.56
68,961.20
0.00
-103,704.89
0.00
5,433.97
END OF REPORT - Generated by Jane Kinsella
t-)Olj 2- / 13 -7
IPG 1
glactinq
Pct DE(
82.14
234.55
218.53 "
74.18
72.27
78.26
Page 1, of 1
LeLacheur, Bob
From: Hechenbleikner, Peter
Sent: Tuesday, February 01, 2011 5:13 PM
To: Torman; Harold S; LeLacheur, Bob
Subject: RE: Snow & Ice Cost
The cost can certainly be covered by a reserve fund transfer. I do not believe it would be eligible to go onto a future years
tax rate.
Peter I. Hechenbleikner
Town Manager
Town of Reading
16 Lowell Street
Reading MA 01867
Please note new Town Hall Hours effective June 7, 2010:
Monday, Wednesday and Thursday: 7:30 a.m - 5:30 p.m.
Tuesday: 7:30 a.m. - 7:00 p.m.
Friday: CLOSED .
phone: 781-942-9043
fax 781-942-9071
web www.readingma.gov
email townmanager@ci.reading.ma.us
Please let us know how we are doing - fill out our brief customer service survey at http://readingma-
su rveV.virtuaItownhall.net/survey/sid/-887434dd9e213Ob7/
From: Torman, Harold S [mailto:Hal.Torman@lantheus.com]
Sent: Tuesday, February 01, 20113:02 PM
To: Hechenbleikner, Peter; LeLacheur, Bob
Subject: Snow & Ice Cost
Peter and Bob,
Is the ability to fund over budget snow and ice cost through next year's tax rate or reserve transfers limited solely to the
cost of roadway'snow and ice? I was wondering if expenses for rooftop snow and ice removal from town and school
buildings would be considered as well as sidewalk plowing.
Thanks... Hal
Hal Torman
Sr. Director Financial Planning & Analysis
Lantheus Medical Imaging 1978.671.8293
4
2/6/2011
Massachuseffs Department of Revenue Division of Local Services
Alan L. LeBoWdge, Commissioner Joseph J. Chessey, Jr., Deputy Commissioner
Barbara Martel
City Auditor
City of Marlborough
140 Main Street
Marlborough MA 01752
Dear Ms. Martel:
January 9, 2002
N
~ .
04
Re: Snow and Ice Deficit Spending
Our File No. 2001-780
You asked whether the City of Marlborough could legally incur deficits. for certain
Department of Public Works expenses under General Laws Chapter 44 §31D, which creates an
exception to the fundamental principle of municipal finance set forth in G.L. Ch. 44 §31 that
municipal departments cannot incur liabilities in excess of appropriation.
We believe G.L. Ch. 44 §31D authorizes, under certain conditions, deficit spending only
for those expenses directly related to the removal of snow and ice that are variable from year to
year depending on the severity of the winter. It recognizes that certain snow and ice removal
costs are unpredictable and difficult to budget for accurately given variable weather
conditions and its purpose is to ensure that communities, for reasons of public safety, will be
able to conduct essential snow and ice removal activities without delay when appropriations
for such expenses have been exhausted. Typically, the types of expenses that would vary
unpredictably with the weather would be overtime costs for DPW plowing crews, the cost of
extra sand and chemicals to be spread on the roads, and the cost of hiring plows and drivers
during storms. On the other hand,' expenses for regular, recurring DPW activities that are
predictable and should not vary with the weather in any given winter cannot be paid for by
deficit spending. Municipalities must budget for such planned and regular expenses.
Most of the costs mentioned in your letter appear to be for regular, recurring activities,
although in some limited circumstances they might qualify for deficit spending. For example,
we think regularly scheduled maintenance of snowplows and trucks is a predictable, non-
variable cost that should be budgeted. However,. if a plow blade were damaged or the
transmission of a truck ` failed during snow plowing season, an emergency repair or
replacement could qualify for deficit spending if appropriated funds have been spent.
Similarly, we think street and drain cleaning activities regularly and typically performed every
year must be paid for with budgeted -funds, but if unusual weather conditions result in
extraordinary cleaning activities, those costs could also possibly qualify for deficit spending.
Overtime incurred from the customary scheduling of a DPW employee to be on call during
winter weekends is also a regular and predictable expense to be included in and paid from the
Post Office Box 9490, Boston, MA 02205-9490, Tel. 617-626-2300; Fax: 617-626-2330
5
Barbara Martel
City Auditor
City of Marlborough
Page Two
regular budget. Ordinarily, the costs of maintaining and repairing water system infrastructure
would not be budgeted in the snow and ice account, but rather considered a water service
expense. However, expenses associated with digging out and thawing hydrants after storms
could be considered snow and ice removal costs and could qualify for deficit spending after
regular appropriations are exhausted.
If you have any further questions, please do not hesitate to contact me again.
Very truly yours,
Bruce H. Stanford
Chief, Property Tax Bureau
BHS/ KC
6
ULSD
Date
Diesel Price
Contract Price*
Our net cost
1/25/2010
2.0835
-0.0062
2:0773
2/19/2010
2.229
=0.0062
2.2228.
3/18/2010
2.331
-0.0062
2.3248
4/20/2010
2.3359
-0.0062
2.3297
5/20/2010
2.1364
-0.0062
2.1302
6/24/2010
2.2085
-0.0062
2.2023
7/23/2010
2.1895
-0.0072
2.1823
8/23/2010
2.113
70.0072
2.1058
9/23/2010
2.2245
-0.0072
2.2173
10/2512010
2.386
-0.0072
2.3788
11/23/2010
2.42
-0.0072
2.4128
12/2112010
2.6005
-0.0072
2.5933
1/24/2011
2.816
-0.0072
2.8088
e increase from
Diesel
ri
Jan 2010 to Jan 2011
35.21
p
c
* we have a new contract as of July 2010,it was -.0062,
now -.0072 from JOC pricing
7
VendorWeb-Office of the Comptroller
L
TOWN OF READING
Payment History
Date Range Searched: From 12/27/2010 To 12/29/2010
Department(s) Searched: ALL
Number of Payment Lines Found: 4
Understanding Payments History
Address ID: AD001---16 LOWELL ST READING, MA
Payment Number: 362F0005249
Payment Date: 12/27/2010
Department
Payment Ref. # Contract Number
Line Amount
Check Amount
DOR - DEPARTMENT OF REVENUE
FY11 QTR. 2 CH. 70 11LOCALAIDPAYMENT001
$2,210,017.00
$2,210,017.00
Check Description:
Chapter 70 Cherry Sheet Distribution
DOR - DEPARTMENT OF REVENUE
FY11 QTR2 CHARTREIMB 11LOCALAIDPAYMENT008
$3,453.00
$3,453.00
Check Description:
Charter School Tuition Assessment Reimbursement (Cities, Towns and Regional Schools)
DOR - DEPARTMENT OF REVENUE
FY11Q2UNRE5TRICTAID 11LOCALAIDPAYMENT019
$
•6-855,520.00
$685,520.00
Check Descri ti
tiaovee~
-
/ .
DOR - EOF REVENUE
_
MEALS TAX SEP - NOV 2010 NT2011LOCALOEA^
$25,930.66
$25,930.66
Check Description:
Meals Tax Collections for Sep to Nov. 2010
mount
$2,9 ,920.66
$2,924,920.66
Address ID: AD001---16 LOWELL ST Total::
$2,924 920.66
$2,924,920.66
6CA \1
Data last updated: 12/29/2010
https:Hmassflnance.state.ma.us/.VendorWeb/vendorPaymentDetaii.asp [12/29/2010 9:36:49 &1
, _ . _ _
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Town of Reading Massachusetts
Board of Selectmen
FINAL, REPORT
compiled on
December 14, 2010
presented on
January 25, 2011
OVERVIEW
The Policy establishing an ad hoc Municipal Building Committee was approved
by the Board of Selectmen 11 /24/09 following discussion with representatives of
the Library Board of Trustees, School Committee, and FINCOM. The policy is
included in Appendix.
Members were appointed to the ad hoc Committee and'their first meeting was
held on March 9, 2010. One member resigned shortly after being appointed
and the ad hoc Municipal Building Committee operated with 6 of the 7 positions
filled for its duration, with member and Finance Committee member George
Hines resigning in early November because he was moving out.of Reading.
The ad hoc Municipal Building Committee's first order of business was to
establish a work plan and schedule to meet the timeline of completing their
work by December 31, 2010.
Town of Reading: Ad Hoc Municipal Building Committee: FINAL REPORT page 1
9
WORK PLAN
The Committee met 13 times between March 9 and December 2, 2010, and
visited all Town buildings and 3 school buildings selected by the Superintendent
of Schools during that time. The purpose of the site visits, with staff; was to
- understand the conditions of the building and any major needs for major
maintenance,"and
- understand the operation of the buildings and any need for major'expansion
and/or renovation to meet the operating needs of the user.
The Committee heard a presentation.by Mary Delai and Joe Huggins from the
School Department regarding the management tools and capital planning used
by the Facilities Department to manage all Town and School buildings.
The Committee also heard a presentation by an advocate for developing the
Oakland Road property for an indoor sports facility and early childhood center.
Less than a quorum of the Committee conducted a site walk of the Oakland
Road Property.
The Committee received copies of the following reports:
RMLD and Town of Reading "Optimization Study of Fleet Maintenance
Activities" December 2000
- DPW Management study - April 2008 - Executive Summary and sections
relevant to facilities
- FY 2011 - 2020 Capital Improvements Program
- Cemetery facility report by the Reading DPW dated December 2010
Reading Public library - Library Building Assessment by Adams and Smith
dated 9-15-08
The Committee ranked priorities for potential public buildings projects
individually, then discussed the rankings as a group. There were no significant
variances among the Committee members ranking the projects, and a
consensus was easily reached.
~w
• 4~. Town of Reading: Ad Hoc Municipal Building committee: FINAL REPORT page 2
10
FINDINGS
The building maintenance functions conducted by the Facilities Department are
excellent, and meet or exceed the expectations of the building users in the
public areas. There are still some unmet needs, including storage in individual
buildings for the maintenance functions.
The existing 10 year FY 2011- FY 2020 CapitalImprovements Program (CIP)
reasonably identifies the foreseeable maintenance needs of all Town and
School buildings during the life of the.CIP. It is not the intent or purpose of the
CIP to address needed major renovation and/or expansions of the buildings -
that is the purpose of the work by the ad hoc Municipal Building Committee.
Maintenance demands have evolved and need to continue to evolve with
additions and changes in technology in classrooms, libraries; and offices.
The following needs (over and above more routine maintenance identified in the
CIP) were' identified during the scope of the ad hoc Municipal Building
Committee work.an.d should be addressed during, the next 10 years:
A_ll'Buildings
Security system upgrades
DPW
Cemetery Garage - complete replacement of the existing garage
DPW Garage- Vehicle Maintenance . more space - drive through-bays
DPW site - security
Improvement to outdoor storage
Community Center
Need for a Community Center
Libra
Expansion of net usable floor space for a variety of programmatic spaces
Replacement of windows
New roofing, gutters, and downspouts
Masonry repair and brick pointing
HC access ramp not to code
Will need a new roof; and replacement of conical turret roofs
Lighting, wiring, and IT improvements
Drainage improvements to address water intrusion into lower level areas to
prevent ongoing damage
Security improvements
Town of Reading: Ad Hoc Municipal Building Committee: FINAL REPORT
4110.
page 3
11
Police Station
No building improvements needed.
Additional parking would be desirable
Fire Stations
Re-roofing West Side Station (included in CIP)
No other improvements needed
Joshua Eaton School
Replacement of flooring
Window and door replacement
Cafeteria food service line is too small
New roof (included in'CIP)
Install rain gutters
Birch Meadow School
New doors and windows
New Roof (included in CIP)
Classroom millwork replacement
Carpet replacement in media center
Killam School
New doors and windows
New roof (included-in CIP)
Additional administrative space
Media center is not ADA compliant
Senior Center
Drainage improvements to address water intrusion into lower level areas to
prevent ongoing damage
Kitchen renovation (not as a catering kitchen)
Parking is needed
Town Hall
Will need a new slate roof - fairly expensive '
Expanded bathroom facilities, lower level
Minor administrative space modifications
-Drainage improvements to address water intrusion into lower level areas to
prevent ongoing damage
Projects with an * are already committed for implementation,
with partial funding from the Green Repair program of the MSBA
Mmm
J Town of Reading: Ad Hoc Municipal Building Committee: FINAL REPORT page 4
12
Oakland Road Property
Development of this site would be very challenging due to topography.' If sold it
would lend itself best to a cluster type of residential development or. a single
building for other appropriate use.
The northerly-most portion contains a 30' high "knob" of rock. The Committee
was made aware of the possibility that this portion of the site may be ideal for
'the location of a cell tower which could yield an ongoing source of revenue to
the Town.
The Committee heard. a presentation on a concept whereby the Town would
sell or give the property to a "for profit" organization which would then develop it
for an athletic facility (gym(s) and related facilities) and an early childhood
center. The Superintendent of Schools noted that an early childhood center
would be nice to have but would not be a high priority.
This property represents the last significantly sized (4.5 acres) parcel of land
owned by the Town which could reasonably house a new yet-unforeseen public
facility. All other Town owned property is restricted as to use (school,. park,
public building,'cemetery, etc.) or is severely restricted as to use by land use
restrictions' generally flood plain or wetland. While the ad hoc Municipal
Building Committee does not seethe need for any new yet-unforeseen public
facility within the next 10 years, it is difficult to anticipate what needs may arise
in the future - such as an all day kindergarten or early childhood center.
OAKLAND ROAD PROPERTIES
'•"5.;:T. ?'1C', .i=:dt `:r li.u ~F ; ,,df.?':,. f,'.^_ t t
't : ~t •nt t, IMF .1 top of knob h~fv a
Y,,-} , ..:tom- .,-.'.a ~S•;,. 7y?.Y.-.
;,k N._r j{g.• •r` Y, 9 1:~', 126'elavaflonat Oakland ,
Rood od'~ntlo knob..
[ \ c F~ ly I i 11 3 19, iY ~
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ftERRINGJ} j.la !l y.27 ~•''l'',1••r,., }•i~:, i~:W'"
IN f'•:r61EktORIFL !'ti. ':.j. 1:• ~i, ~'+,t'Ml 1,`.~;;, c),
.l ;HIGN•9CHOGy'f>.
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land
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Town of Reading: Ad Hoc Municipal Building Committee: FINAL REPORT page 5
13
Following the data collection phases of this process; the Committee reached
out to the Department heads and the-Superintendent of Schools about whether
there was any additional information 'that they would like to provide, and no
additional. information was forthcoming.
CONCLUSIONS
The facilities management program is appropriate to maintain all buildings in
excellent working order
The current Capital Improvements Program (CIP) planning process is
appropriate to maintain all buildings in excellent condition, but is not intended to
address programmatic needs, like expansion of the library or replacement of the
cemetery garage.
The condition of the Town and School buildings is generally good to excellent
There is no funding available in the Capital Improvements Program in the short
to mid term (current for at least -8 years) to address new building capital needs
such as those identified in this study. Those projects would need to rely for
funding on major outside funding and/or Proposition 2 '/2 capital exclusions or
debt exclusions.
There are some opportunities currently available to offset portions of projects
through grant programs - particularly in the area of Library additions and
renovations, and an MSBA school building "Green Repair Program" for school
roofs, windows, and/or boilers. In fact Town Meeting has recently approved the
filing of a grant application under the Green Repair program for Birch Meadow
and Killam School.windows and Killam School roof, and .Reading has been
approved for participation in this program with a 47.21%'reimbursement.
There is a potential to generate some level of income from the _ use of the
northerly portion of the Oakland Road' property for use as a cell site, which
would not impact the use of the remainder of the site for other uses.
The ad hoc Municipal Building Committee recommends that the Board of
Selectmen continue to hold. onto the Oakland Road property and land bank it
for some a's yet; unforeseen public use. This recommendation can be
reevaluated at any time, and should be reevaluated at least every,10 years.
Town of Reading: Ad Hoc Municipal Building Committee: FINAL REPORT page 6
14
The committee recognizes the strong desire by the community.; as evidenced
by discussion at-the World Cafe, and mention in the Master Plan, to have a
community center. The Committee recognizes that the Board of Selectmen has
had some discussion about whether or not to pursue the acquisition of the
former Christian Science Church next to the Town Hall -for that purpose, and the
Board of Selectmen has decided not to pursue it at this time.
The community needs to recognize: that the. Town's public buildings need
ongoing review, occasional updating, and periodic major renovation.
Packaging several of. the more expensive building projects into a single
Proposition 2 1/2 debt exclusion may be appropriate to enable the Town to move
forward with several important projects in a comprehensive manner, and to take
advantage of funding programs that are available to help to offset the costs of
these projects. Additionally, the economic climate makes this an opportune
time to bid construction projects and to get a favorable cost of construction and
favorable interest rates for borrowing.
This review of the condition of and programmatic use of all public buildings in
the community has been a very worthwhile endeavor, and an ad hoc Municipal
Building Committee should be established every 10 years to do a similar
review.
Respectfully submitted by
Kathleen Dugan
Andrew Grimes
George Hines (Finance Committee) - resigned early November 2010
David Michaud (School Comrimittee), Chairman
Richard Schubert (Board of Selectmen)
Vickie Yablonsky (Board. of Library Trustees)
Town of Reading:•Ad Hoc Municipal Building Committee: FINAL REPORT. page 7
15
ad hoc [Municipal Building Committee-project rating sheet
c
PROJECT R el{
_ o
T G`Q" ~ap~ ~oa\~ PpP
N~ o e ~P GO5 a>Lo
[ n\3 zZA e~~ . meo~ -5 oar
,G `C.
3~ G a 0
toy ~~o o`?. oim ~a . o~ o z ~Q
See full report
detailed descripti
Library
Cemetery garage
~l V 1- Y Y - I-- I I 1 1 lv.
C" Joshua Eaton cafeteria
flooring
Killam School Admin. space
Town Hall bathrooms
Town Hall admin. space
Community Center
Senior Center kitchen
Killam School -media center
ADA
DPW site security & outdoor
storage
on a scale of 1 to 3, with 3
being the highest priority. _
N
2
2
3.
3
3
3
3
3
Z
Z4
2013
$50,000
2014 $1 M
debt
1
3
2
.3
3
1
1
2
3
19
N'
2
2
2
3
2
1
1
2
2
17
2013-
$25,000
2014
$20,000
2
2
2
2
3
2
.1
2
1
17
N
2
2
2
2 •
3
2,
1
2
1
17
N
1
1.
3
2
3
1
1
2
1
15
1
1
2
2
2
2
1
2
1.
14
N
1
1
1
3
2
2
1
2
1
14
N
1
1
2
2
2
1
.1
2
2
14
N
1
1
1
3
2
1
1
2•
2
14
N
1
1•
1
1
1
3
1
3
1
13
2013-
$30,000
1
1
1
2
2
1
2
1
13
N
1
1
1
1
1
2
1
1
3
12
N
1
1
1
2
1
1
1
1
1
10
11261201'1 1
ASSISTANT TOWN MANAGERFINANCE DIRECTOR
(781) 942-6636
FAX: (781) 942-9037 Email: finance@c i.reading.ma.us
To.: Community Planning & Development Committee (CPDC)
From: Bob LeLacheur
Re: Response to Connery Associates Reading Woods Fiscal Impact, December 6, 2010,
To analyze the above referenced Connery 2010 study .I have consulted a prior 2007 Connery
study on the same property for a previous redevelopment proposal. In addition, I have reviewed
the 2010 study with many town and school department heads. From this point on my comments
will reflect the sum of all of our views.
In general, the 2010 is comprehensive and well thought out. However, more detailed information
is needed in order to understand some of the financial conclusions. Below I will comment on
many .aspects of the study, and ask for clarification where it is needed.
Time Frame
This analysis presents some `best guess' assumptions covering the next ten years. In some cases
my opinions differ, and below I will cite those instances. The only things we can say for sure are
(1) that all best guesses will turn out to be inaccurate and (2) that these assumptions are a very
important component in the overall financial analysis for this project.
I understand some of the financial reasons for the proposed 8-10 year time frame of this project.
However, this time frame adds increased risks. First, it greatly decreases the reliability of any
forward-looking financial analysis because of the importance of many assumptions. Second,
obviously the timing of revenues is that much slower, thus decreasing the ultimate discounted
present-value of the project to the Town. Third, those that make the rules can do) change the
rules. The risk of possibly jeopardizing the state's 40R related one-time payments increases as
time passes.
Revenue Estimates
Connery cites the 2010 assessed value of the property as $17 million, and then calculates a
residual site (land) value as construction progresses. In fact, the 2011 assessed value of the
property has declined to $12.6 million for a variety of reasons. In Table 2 (page 5), therefore the
estimated site value calculation and subsequent residual site values may not be accurate.
The assessed value of the average single-family home in Reading increased by 2.3% from FY10
to FY11 and now stands close to $443,000. Over this same period, there was no noticeable
change in the assessed value of the average condominium, now at $286,000. Today, there are
approximately 800 condominium units in Reading. The absorption of an additional 50% of
condominium units in town will likely have a further depressing impact on this segment during
the entire construction period. If a market study has been conducted of likely buyers for these
proposed new condominium units, we would like a chance to review it. An accompanying
17
marketing plan would be very useful to help answer the question "Who will live there and how
will they be marketed to (and ultimately sold) on these units? Without further details regarding
marketing we would certainly question if new units at above average (i.e. Reading average)
market prices ($300,000 to $350,000) will appreciate at 3%o per year during the long construction
period.,
In Table 2, some of the numbers do not seem to belong together. The year 2010 makes sense: the
tax rate of $13.75 on the $17 million assessed value does produce $233,750 in property taxes.
However, in order to produce revenues of $276,513 in 2011, either a tax rate of $13.09 on the
assessed values cited ($21.12 million) is needed, or an assessed value of $20,110,000 is needed.
If one ignores the $1,015,000 of construction in progress, those assessed figures tie out, but
we're not sure what the author intends. Likewise, in 2012 the stated assessed values and taxes do
not tie out, and in this case there is no obvious reason. Future years do all tie out to a tax rate of
$13.75 as presented.
On page 2, there is a description under Revenue estimates about how the assessors are likely to
view this project over time. They agree that sales prices will initially set values. They also agree
that they would view construction in progress conservatively. However they, do not understand
the phrase about project stabilization (2019) and that only then would full and fair value be used.
At first glance this appears to be in contradiction with the fourth paragraph on page 4 which
states that in other years -it (the assessed value) will be a mixture of the full and fair market
value and improvement methods Further clarification of the author's intent is requested.
It is interesting that the 2010 study has added the expected impact of excise taxes to this
property. The projected excise tax figure at $90/car is conservative as in Reading we are just
over $110/car. Over the last few years this figure has declined as new car sales have slowed. I
cannot exactly calculate the underlying assumption of how many cars this property is expected to
produce - as background, we process about 23,000 excise tax bills each year for our 9,000
households. Regardless, the figures for excise tax are relatively small and these figures presented
are certainly acceptable..
I have already commented on the proposed $350,000 and per-unit payments from the state under
the Smart Growth zoning legislation.
Municipal Service Costs
The methods for estimating service cost for a municipality bring even more assumptions and.
variability into any analysis. Today, about 90% of assessed value in Reading is residential
property. Therefore if this proposal adds an additional 5% population, at first glance it seems
reasonable to assign a pro-rate share of the entire Town budget to this proposal.
Connery 2010 states "existing municipal debt service will not be impacted by the Project
given that it is an unrelated and pre-existing condition". It's unfortunate that the MWRA did
not share this view when the Town bought into that system a few years ago. Reading uses only
1% of the total volume of water processed by the MWRA, barely enough to notice. In addition to
buying water every year, through the year 2028 Reading will be paying the MWRA for asst
capital & debt- costs - currently this amounts to over $900,000/year.
18
To further the pro-rata approach, we pay about $7 million in annual debt service - the 90%
residential share is $6.3 million. Property taxes account for about 2/3 of revenues, which drops
the residential debt cost to be paid by property taxes to about $4.2 million. Therefore in order to
enjoy the benefits of all past infrastructure improvements (police station, fire trucks, schools,
tennis courts, etc...) this. method suggests this Project should pay $210,000 in annual debt
service alone. Taken across the entire budget, this means the Project has a $2.3 million
breakeven in today's dollars - a figure that would challenge any revenue projections presented.
We mention this approach only to highlight the simplifications in Connery 2010. We would
agree that a marginal cost approach of some sort is appropriate because the proposed Project's
population is different than a random sample of another 5% of the community. However we
disagree with Connery's implicit assumptions that there are no other costs aside from Police, Fire
and a minimal amount of Education as far as this Project is concerned.
Schools: `In this instance, education costs will be minimized since 49% of all homes are
restricted to people 55 years and older'. Back to the market study if one has been done: where
will these buyers come from? How many will sell a single family home in Reading to a family
from outside Reading that does (or will) have school age children? Connery 2010 makes no
allowance for this probability. We accept the figure Connery uses as the direct student impact
(there are many methods depending on-one's objective). It is worth noting that Reading
Commons (formerly Archstone) as rental units have produced more school-aged children than
expected, presumably because when you have an above average school system the demand for it
will produce above average results. I will also point out that the author cites a figure of $7,488
(net) per school child as of FY 10, and then says to increase that by 4.1%/year to begin the 2011-
12 year at $8,000. A 4.1% increase over the two years from FY 10 to what is now FY12 (2011-
2012) yields a figure of $8,115 per school child for what that is worth. This figure of $7,488 has
a lot of assumptions built in that are impossible to really ascertain for the next ten years, but one
worth. noting is the implicit assumption that the state will grow state aid at 4.1% per year for the
next ten years. That assumption seems to be very optimistic in light of the current state budget
reality.
Public Safety: We are studying the supposition that 67% of the police & fire budgets are
applicable to residential services for the community and will comment as soon-as possible. If that
assumption is valid, then we would disagree with the conclusion that this Project will generate
the same average Police cost of $301 and Fire cost of $295 per residential unit. It is a well
accepted fact that residential density is a strong element in public safety costs. Reading
Commons - which granted are rental units and therefore not the same as this Project - have
generated well over the average number of service calls/residence. The Fire department in light
of the proposed age-restricted units expects more emergency medical calls than the average
single family residence would generate. This is part of the flip side to less school-aged children.
They also expect more carbon monoxide incidents because of the underground garages and
depending on the residents perhaps more fire alarm system activations due to food-burning and
other actions. Finally there is an impact to the emergency management plan for notification,
evacuation and shelter of a large population in close proximity to major transportation routes
carrying hazardous materials. We would query the author as to why ambulance services were
19
included in the 2007 study, but omitted in 2010. Once the Connery 2010 study clarifies several
points, we will attempt to quantify our expected impact on Public Safety and any other areas here
where we have more work to do.
Public Works: `There are no direct DPW service costs'. It is true that there is planned to be
private trash collection and recycling on the property, but surely there will be costs associated
with access to the site from public property. While an indirect cost, those things that generate the
excise taxes will be driving on the local roads, causing even more wear and tear. If any of these
residents use the Town Forest, or local fields - there will be a marginal cost associated with this
activity.
Other Municipal Services: No other mention is made about these costs. Surely there will be an
impact during the construction phase on the Community Services/Building department. The age-
restricted units are likely to generate further demand for elder/human and public health services -
again the flip side of fewer school-age children. The demand for Veteran's services may also
increase.
Taking a step further back, the Connery 2010 study asserts that there will be.no other municipal
hiring (page 9) due to this Project. Even in marginal analysis there is the so-called tipping point
where just one more demand will require a choice between a collapse in customer service or the
need to hire. There is no way quantitatively to judge where that tipping point is, but a 5%
increase in general demands on the rest of the municipal government will not go unnoticed. On
the expense side, there clearly are expenses that are related to the number of households -
mailings of tax bills, the annual census, and so forth that are not zero. Appendix 1 (page 13)
clearly demonstrates this fact on a broader basis.
In conclusion, as was stated at the beginning, the Connery 2010 report is comprehensive and
well thought out. However, more detailed information as requested above is needed in order to
understand some of the financial conclusions. We look forward to hearing back on some of our
questions, and will follow through with our own financial conclusions when we have that
information.
20
Table of Contents
Section Paize
1.0'Preface
2.0 Summary of Methodology
3.0 Summary of Findings
4.0 Revenue Projections
5.0 Municipal Service Costs
6.0 Net Fiscal Impacts by Year
7.0 Building Permit Fees
8.0 Concluding Comments
Appendix 1
About the Author
1
2
3
4
6
11
12
12
13
14
i
22
A Fiscal Impact Analysis
Reading Woods
Reading. Massachusetts
December 6, 2010
•n%r''swei'~a~v:; ~E+i;.i§:r:Ai~^==iY tr:li:._,a;rs..~ .a.: a...._.....~....:.:u.usvu....-..
This report is designed to provide the Town of Reading with a n objective understanding of the
annual fiscal impact related to Reading Woods (the "Project"), a proposed residential community
by Pulte Homes of New England LLC located in Westborough Massachusetts. The Project is
located on the former Addison Wesley property (a former and now vacant office and publishing
complex) off of Jacob Way which provides access to Rt. 28.
This report examines the anticipated municipal service costs and revenues that will be generated
by the Project in order to determine an annual cost to revenue ratio; and the estimated annual
dollars lost or gained by the Town of Reading.. The report will also indicate the annual net fiscal
position of the Project as it moves from initial construction to final stabilization. In addition, the
report identifies the significant one time fees associated with building permit and any other
construction applicable fees. For purposes of this fiscal analysis the Project startup year is 2010
since it is the initial design year; stabilization is estimated to occur in 2019.
The proposed for sale residential community is summarized in Table 1 below. It is anticipated
that construction will commence in the spring of 2011 beginning with 200 senior housing units
located' in Sub district C and will require 36 to 42 months to complete. During this period
construction will also commence on the 16 town house units in Sub district A, located along
Jacobs Way. The "start up and follow on" method of site development will continue though out
the construction period until all four development sub districts.
']Cable 1. Reading Woods Development Program
200 smart growth units
Four story buildings.
20% affordable, 92 one bedroom
Sub district C
Four 50 unit.buildin s
108 two bedroom units
16 town houses and club house
Three stories
Three bedroom townhouses
Sub district A
4 buildings and club house
Market Rate
122 senior independent living
Four story buildings
Age restricted over 55
units; Sub district D
Two-36 unit buildings
independent living
One 50 unit building
86 senior independent living
Four Story buildings
Age restricted over 55
units; Sub district B
One 36 unit building and
Independent living.
One 50 unit building,
GSDOCS\2008240.4
23
'".=:l+xN^'^ i.1,:~w•rn~_... i. a:,:C~; j.'=:S'i.:5~.• :,'i. ye.a~.[jiF?'y
~ nr cet::.yrs. J L~"t`~r-si '71 v t,,~;-~ y t~,~~~ i. c3i ~y L~ ~r~'~nY t P
7 b..s z~"' ,Wad' ..may 1 r1.
2A. g 7
.....•,.-~.;F.L .'L~ Ic.
2.1 REVENUE ESTIMATES
Reading Woods is a for-sale development and all homes will be taxed using the full and fair
market value method of assessment. Essentially the initial sale price of the homes will set the
original assessed value and from this initial value, adjustments will be made annually by the
local assessor with state mandated comprehensive re-valuations every three years. In this
instance, it is only at project stabilization that all the homes will be taxed using the full and fair
market value assessment methodology. Until stabilization occurs those components under
construction will be taxed at the replacement cost or improvement cost method. Therefore, in
Table 2 below in any given year both the full and fair market value and the improvement value
method may be used to estimate the total property taxes for any given year. Real estate property
taxes comprise the large majority of the estimated annual municipal revenue stream; however, in
this instance'local annual automotive excise taxes and special 40R revenues will supplement the
annual municipal revenue stream. Finally, one time revenues such as building permit fees will
also be estimated. While significant they are not included in the annual fiscal analysis since they
are onetime payments.
2.2 SERVICE COST
Residential development generates two general types of municipal service costs; education cost
and general service cost i.e. the estimated annual cost of all other germane municipal services
excluding education costs. In this instance, education costs will be minimized since 49% of all
homes are restricted to people 55 years and older. Further, in the 200 unit smart growth
component, 46% of the homes will be designed as one bedroom units and as illustrated by
regional and local data one bedroom units do not generate school aged children. The remaining
54% of the smart growth units will be two bedroom units and will generate school aged children
at a rate of approximately 0.14 children per condominium. There will be no three bedroom units
in the smart growth component.
The three bedroom town houses comprise the smallest component of housing types, only 16
units. However, these units will generate school aged children at the regional average of
approximately 0.65 students per unit. Accordingly 300 or 71% of the 424 homes will riot:
generate school aged children and this purposeful design factor will significantly reduce the
overall education costs associated with Reading Woods.
Annual fiscal impacts are fiirther mitigated by the established utility (water and sewer) enterprise
funds, essentially a pay as you use accounts that do not impact the annual fiscal balance sheet in
terms of revenues or costs. Further, municipal costs associated with traditional public works
responsibilities were determined to be minimal, all internal roadway and drainage maintenance,
trash removal, lighting, snow plowing, and other associated site maintenance costs will be the
responsibility of the Condominium property owner; and since Route 28 (the main connector road
and point of access) is under the jurisdiction of the Commonwealth all maintenance costs for Rt.
28 are absorbed by the Commonwealth. Costs for recreation, library, and general government
are de minimus given the nature of the Project and the ages of the majority of the residents.
Primarily no additional municipal employment is projected as a consequence of the Project
except for school personnel which will be included into cost estimates: Finally, existing
GSDOCS\2008240.4
2
24
municipal debt service will not be impacted by the Project given that it is an unrelated and pre-
existing condition. Similarly budget line items such as statutory, unclassified, and general
government departmental costs (e.g. assessor, city clerk, etc.), will not be impacted in any
measureable manner.
Accordingly, in addition to educational costs the municipal costs associated with Reading Woods
will focus on public safety costs, (police and fire services) but not including ambulance service
costs which are reimbursed to the Town since the Town provides for Advanced Life Care
services. Please note, any traffic mitigation costs associated with the Project are considered as
Project development costs and while beneficial to Reading Woods and the community, they are
not on-going annual operational (fiscal) costs.
aY.^.> F ='ww~t t n- ~~s ~Fr•'G.-`f~.~ ~kti. i;.ut. .:nr'e' _ '_A csi 4 . ~{~~i.' ! ~~r~y~ r ~ ..,4~. ~
l a c tl ^Y. fl .,.uc i e4 t n
y~f3 c d z S 2
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r..,ce. s~ 3]'Q~~.`l't7a', 1s.T~.
.,r.._..
r.i L..~-.v
Ana-isvvwfvhs'-'. _ 1..v.,_..-.e.,.. v _
® At completion, Reading Woods has a strongpositive cost to revenue ratio of 0.26 and
will generate a net fiscal benefit of approximately $1,778,250 per year and the net
benefit will be sustainable for the long term.
® At all times during the build-out period Reading Woods generates a positive net fiscal
benefit for the Community
o At stabilization in 2019 Reading Woods will have generated approximately $13,940,000
in total revenues of which $10,246,900 will be net revenue for the Town.
® As part of the revenue stream the Town will receive a total $950,000 in Charter 40R
smart growth funds by 2015.
The estimated total assessed value at project stabilization will be $170,000,000.
® One time building and associated permit fees will total approximately $600,000 and are
in addition to the estimated net annual fiscal benefits.
® A total of 28 students will be generated, approximately 5 to 6 per year during the build
out process ending in 2019.
GSDOCS\2008240.4
3
25
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7 m :x. 'R 'a.~r- t:r,-•r~i:+ va¢c us`__'x-.<.i ~s-4 sra •a x r~ y . h ~ `!"..Y~,w'X`~~.-~, { x. V u +a;~r_.
c..~'a t E #i ~ "s-• j ~ " ~ qi`'~ .Kry's~-~T - ~a rot. -t 1 ~ t r~a~r'fi~s
n. :....c.._.,.~_..~.r x:..,x.....~..~~n. ,_,*...9d...: r_.. y i":Y'4',c... a~ ....a: ~""c'.3~~ .a.:~_u-rxrca==
4.1 Revenue
In Massachusetts the annual municipal revenue stream is comprised of various sources. This
characteristic is reflected in Reading with property taxes, being the largest single source of
revenue at 59%, followed by local receipts (excise taxes, departmental fees, etc. at 22%), and
state aid (education and general government at 15%); with 4%'of local revenues are from special
funds and trusts.
In this report it is important to note that I have accounted for the water and sewer revenues by
assuming they are off-set by annual service costs. In effect the annual enterprise account service
fee charged to the user covers the annual service cost that individuals or businesses pay for water
and sewer services on a usage basis. Further, state aid to education and unrestricted government
aid revenues are addressed further in the report as off-sets to service costs, as appropriate.
Accordingly, the revenues that will be generated by Reading Woods are property taxes, and local
receipts (excise taxes). Additionally, Reading Woods contains a 40R smart growth development
zone which will result in an additional one-time payment of $350,000 and payments of $3,000
per unit up to $600,000 as the units receive building permits. The latter sum sum will be paid
over a period of years as the 40R component is completed and is therefore reflected in the
revenue analysis.
For the property tax estimates I employed two methods of assessment i.e. the stabilized income
method and a property improvement or cost method. Due to the nature of the Project it will be
built in phases over at least an. eight year period. Accordingly, the property taxes may be based
only on the physical improvements to the property while in other years it will be a mixture of the
full and fair market and improvement methods. Once the project is fully constructed and
occupied the assessor will likely switch to the full and fair market method based on the estimated
market value of the property. The assumptions used and integrated into Table 2 below are as
follows:
To estimate the value of the new homes over time, the =able value of completed units
have been increased at a rate of 3% per year (reflecting both the estimated changes to the
current annual tax rate and underlying assessed value).
The assumptions used to construct the estimated assessed values reflect the reduced value
for the affordable housing units i.e. $149,000 for a one bedroom unit and $167,500 for a
two bedroom unit. Market rate town houses have an assigned value of $400,000, the two
bedroom multi-family units have an average value of $350,000; and one bedroom homes
an average value of $300,000. In the table below the words "sold or sale" refers to the
estimated units sold and or under agreement.
® The property improvement method is based on the construction cost projections of Pulte
Homes of New England LLC as of November 2010. To reflect anticipated cost increases
GSDOCS\2008240.4
4
26
over time, the value of the construction estimates have been increased at a rate of 1 % per
year.
Local Receipts (excise taxes) are based on FY1 0 levels ($90 per vehicle) and have. been
increased in value by 1% per year over the construction period.
® The $950,000 in 40R payments will be paid from 2011 to 2015 representing the
completion and occupation of the 40R component of the Project.
Table 2 Revenue Estimates
2010
Est. Site Value
17,000,000
233,750
0
233,750
233,750
Residual Site value.
15,000,000
2011
Construction 8 town
homes.
Construction of 50
1,015,000
276,513
0
276,513
510,263
condos (40R)
00
5,110,0
21,120,000
Residual site value.
12,000,000
350,000
2012
Construction of 8 town.
40R zoning
homes.
Sale of 8 town homes.
2,030,000
3,200,000
470,662
OR sales
992,419
1,502,712
Construction of 50
150,000
condos (40R).
5,015,000
Sale of 50 condos. 40R
13,000,000
Excise tax
35,245,000
7,800
Residual site value.
9,000,000
2013
Construction of 66
40R sales
condos
6,620,000
765,696
150,000
-
16 town homes sold
6,592,000
931,696
2,434,408
100 condos sold
33,475,000
Excise tax
55,687,000
16,000
Residual site value
6,000,000
OR sales
2014
16'town homes sold.
6,790,000
198,000
Club house.
166 condos sold.
400,000
57,236,000
1,067,738
Excise tax
1,292,738
3,727,146
Construction of 70
7,227,716
.27,000
condos.
77,653,716
Residual site value
3,000,000
40R sales
2015
16 town homes sold
6,994,000
102,000
236 condos sold.
83,813,000
1,386,096
Construction of 65
7,000,000
Excise tax
1,527,096
5,254,242.
condos.
100,807,000
39,000
5
GSDOCS\2008240.4
27
Residual site value.
1,000,000
2016 •
16 town homes sold
7,203,820
Excise Tax
301 condos sold.
110,104,001
1,732,918
50,000
1,782,918
7,037,160
Construction of 71
7,722,61
condos.
126,034,436
16 town homes sold
7,419,934
Excise Tax
2017
371 condos sold.
139,490;758
62,000
Construction of 37
4:064305
2,075,911
2,137,911
9,175,071
condos
150,975,397
16 town homes sold
7,642,532
Excise Tax
2018
408 condos sold or
158,004,302
2,277,644
70,000
2,3471644
11,522,716
under agreement.
165,646,834
Stabilized, all units
Excise Tax
2019
taxed at full and fair
170,616,000
2,345, 970
71,000
2,416,970
13,939,686
market value; 424
units
As indicated above, the revenue stream is a combination of the estimated property taxes and
excise taxes and 40R revenues received during the period 2010 -2015. The annual gross revenue
stream is estimated to be $2,416,970 in 2019.
a
As noted, this analysis divides municipal service costs into two broad categories: education costs
and general service costs which are all other non-school operating costs. In addition, there are
several departmental or general budget line items that will not be impacted by the Project in any
measurable way.. Some examples of municipal costs not measurably impacted are existing
municipal debt, overlay accounts, free cash and special appropriations.
5.1 Education Costs and New Enrollment
Our review of the most recent Massachusetts Department of Education data (updated to October
of 2010) indicates that over the past decade enrollment in Reading increased at an annualized
rate of approximately 0.042% or by approximately 180 students over a 10 year period. For FY10
there we approximately 4,300 students enrolled in the school system grades K-12.
This report employs the Actual Net School Spending (ANSS) per pupil cost, as opposed to a
more defined incremental. cost analysis, as the method best suited to,reflect costs associated with
additional pupils. In FY2010, the last year of complete data the ANSS for Reading was $9,610.
It is important to note that not all of the ANSS cost impacts the Reading general fund. The Town
received approximately $2;122 per pupil in state aid in FY10. This is a revenue source that
needs to be assigned against the ANSS. By deducting the state aid from the ANSS value I have
accounted for the state aid to education,revenue source. Accordingly, deducting $2,122 per pupil
from the ANSS of $9,610 leaves a local school cost responsibility of $7,488 per pupil for the
Reading school system.
GSDOCS12008240.4
28
Please see Table 3 below for a student enrollment projection by year thorough to project
stabilization in 2019. A five percent private school factor is likely to occur but given the relative
small amount of new students the private school deduction would amount to slightly more than 1
student per year. To be conservative with enrolment estimating _and to be prudent in the Town's
favor the private school factor was not included in the school cost projections.
Table 3. Additional Students by Year and Total
e xa £ bra
j7MWW- gp un1_
~-1<Ox?d fjtl e1
2010-11
No occupied units
0
0
2010-12
No occupied units
0
0
2012-13
8 town three bedroom houses
0.650
5.20
21 one bedroom 40R condominiums
0.000
0.00
19 two bedroom 40R condominiums
0.140
2.66
5 one bedroom aff 40R condo
0.000
0.00
5 two bedroom aff. Condo
0.350
1.75
Cumulative Total
9.61 10
2013-14
16 town three bedroom houses
0.650
10.400
42 one bedroom 40R condominiums
0.000
0.00
38 two bedroom 40R condominiums
0.140
5.32
10 one bedroom aff.40R condo
0.000
0.00
10 two bedroom aff. 40R condo
0.350
330
Cumulative Total
19.22 (19)
2014-15
16 town three bedroom houses
0.650
10.400
63 one bedroom 40R condominiums
0.000
0.000
57 two bedroom 40R condominiums
0.140
7.980
14 one bedroom aff.40R condo
0.000
0.000
13 two bedroom aff. 40R condo
0.350
4.550
Cumulative Total
22.93 23
2015-16
16 town three bedroom houses'
0.650.
10.400
83 one bedroom 40R condominiums
0.000
0.000
77 two bedroom 40R condominiums
0.140
10.780
20 one bedroom aff.40R condo
0.000
0.000
20 two bedroom aff. 40R condo
0.350
7.000
36 senior condos
0.000
0.000
Cumulative Total
28.18 28
2016 17
16 town three bedroom houses
0.650
10.400
83 one bedroom 40R condominiums
0.000
0.000
77 two bedroom 40R condominiums
0.140
10.780
20 one bedroom aff.40R condo
0.000
0.000
20 two bedroom aff. 40R condo
0.350
7.000
101 senior condos
0.000
0.000
Cumulative Total
28.18 (28)
201748
16 town three bedroom houses
0.650
10.400
83 one bedroom 40R condominiums
0.000
0.000
77 two bedroom 40R condominiums
0.140
10.780
20 one bedroom aff.40R condo
0.000
0.000
20 two bedroom off. 40R condo
0.350
7.000
208 senior condos.
0.000
0.000
Cumulative Total
•
28.18 28
GSDOCS\2008240.4
29
2018-19
16 town three bedroom houses
0.650
83 one bedroom 40R condominiums
0.000
77 two bedroom 40R condominiums
0.140
20 one bedroom aff.40R condo
0.000
20 two bedroom aff. 40R condo
0.350
208 senior condos.
0.000
Cumulative Total.
28.18 (28)
Total
424
28 or.0.066/ unit
Table 3 above indicates that by the 2018-19 school-year Reading Woods will generate 28 school
aged children. In reality this figure will be attained by the 201.5-16 school year since after said
date all new units to be added will be age restricted senior units. Accordingly during the 2011-
16 time frame Reading Woods will add approximately 5 to 6 new students per year. The
students will attend all 13 grade levels from Kindergarten through grade 12. It is estimated that
60 % will attend grades K-6 (17 students); and 40% (11) students will enroll in grades 7 through
12.
As noted in Section 5.1 the actual net school service (ANSS) cost per pupil in 2010 was $7,488
after removing state aid. Since this study assumes stabilization in 2019, I have examined the
school budgets of the past ten years and determined that the average 10 year annualized increase
in education costs has been approximately 4.1 % per year. Accordingly, for the school year
2011-12, (the earliest year to anticipate school costs) I increased the Town's portion of the actual
net school costs per pupil or ANSS school cost of $7,488 by 4.1% to cost to $8,000. In this
manner I am accounting for the anticipated rise in annual school costs but also taking into
account the revenue contribution of the Commonwealth.
Table 4 below illustrates the estimated school costs per year over the period of the estimated
construction period.
Table 4. Projected School Enrollment Increases and Associated Cost.
Tl
15 °~S~
&tt1
"
MCI
j 1
2010-11
0
0
0
0
2011-12
10
10
$8,000
$ 80,000,
2012-13
9
19
. $ 8,328
$ 158,232
2013-14
4
23
$8,669
$199,387
2014-15
5
28
$9,205
$ 257,740
2015-16
0
28
$9,395
$ 263,060
2016-17
0
28
$9,781
$ 273,868
2017-18
0
28
$10,182
$ 282,096
2018-19
0
28
$10,600
$ 296,800
2019-20
0
28
$10,918
$ 305,704
GSDOCS\2008240.4
30
As noted in Table 4 above, at stabilization in 2019, the estimated actual' net school service
(ANSS) cost minus state aid to be raised locally will be approximately $305,704 or $10,918 per
pupil.
5.2 General Service Costs. General Service costs are best described as the non school annual
operating cost increases that can be logically assigned to a specific development proposal. For
the most part additional service cost accrue when there is a. direct relationship between the
proposed project and new municipal hiring or, an expansion of a community service into a new
area. In this instance we can anticipate new school hiring and said costs are reflected in the
estimated $305,700 of new costs shown in the table above. However, I do not anticipate new
municipal hiring in the other departments as a result of the Project that reaches stabilization in
2019.
The fire department has historically provided fire and fire inspection service to the former
publishing and office complex but since the use is now changing to residential, I have included
fire safety services as an anticipated new cost since it is a change in service type. Further, I have
included additional police services since there will be additional population. All other
measurable public service cost attributable to the project will be trash collection, otherwise all
other traditional public works services, including trash collection, will be privately borne by the
condominium association. Accordingly, police and fire services will be added to the overall
anticipated increases inmunicipal service costs.
Police Department
While the project area has been traditionally service in the past by the Reading Police as a
commercial complex, like all residential uses, Reading Woods will generate a need for a variety
of police services. Apportioning the public safety expenses to both police and fire departments I
estimate the current annual budgets to be $3,975,000 and $3,900,000 respectively. It is
important to note that all public safety costs are not generated by the residential population.
.Applying the analyses provided in of The Fiscal Impact Handbook Burchell and Listokin,
Chapter 6 Proportional Valuation Fiscal Impact Method (See Appendix 1) it is observed that
depending on the community type 40% to 90% of public safety costs are related to commercial
activity or general traffic not necessarily originating in the community. In this instance while
Reading has increased its commercial base in recent years and has expanded commercial activity
in it's downtown and along Main St./Route 28, and is serviced with regional interstate
interchanges; to be prudent and conservative I am applying only 33% of the police budget to
non-residential services. Accordingly the base police service cost budget for analysis purposes is
$2,663,000. Currently Reading has approximately 8,850 total residential units or a police service
cost of $301 per residential unit. Given that Reading Woods will have 424 new residences (208
of which are senior housing) the estimated additional police costs are estimated as a function of
the number of new units and the cost of policing over time. To estimate police costs over time I
have expanded the current $301 costper housing unit by 3% per year in the table below.
GSDOCS\2008240.4
31
Table S. Police Service Cost.
1h
IIni °
-W
G`a5~ar
2010
0
$301
0
2011
0
$310
0
2012
.58
$319
$ 18,502
2013
116
$329
$ 38,164
2014
184
$339
$ 62,376
2015
252
$349
$ 87,948
2016
317
$360
$114,120
2017
387
$371
$143,577
2018
424
$382
$161,968
2019
Stabilized
424
$393
$166,632
Fire Department
As noted, the Fire Department budget with expenses is estimated at $3,900,000. Applying the
same public safety factor for non.-residential uses as. was applied to police services, the base
budget for this analysis is $2,613,000 or $295 per residential unit.
Table 6. Fire Service Cost
,r
e
V
3 YVa~.
t~O
MEMO%
2010
0
$295
0
2011
0
$304
0
2012.
58
$313
$.18,154
2013
116
$323
$ 37,468,
2014
184
$333
$ 61,272
2015
252
$343
$ 86,436
2016
317
$354
$112,218
2017
387
$365
$141,255
2018
424
$376
$159,424
2019.
stabilized
424
$387
$164,088
Based on the above, at Project stabilization in 2019, the estimated annual fire service costs will
be approximately $164,000 per year.
5.3 Public Works
For most new development, traditional public services such as roadway maintenance, snow
plowing, drainage management, and lighting, is a function of local government. However, in the
instance of Reading Woods, all traditional DPW services such as road maintenance, drainage,
snow plowing, trash collection and lighting, will be the responsibility of the private owner. There
are no direct DPW service costs.
10 . ,
GSDOCS\2008240.4
i
32
5.4 Summary of Municipal Costs
The applicable total annual service costs for Reading Woods are illustrated in Table 8 below. The dollar amounts
reflect the cost for any specific year with the maximum and on-going amount being represented by 2019.
Table 8: Summary of Municipal Service Costs
ry n
+ d'ileb jaik
w
' iCe
lsw
ffill" ~
-
2010
0
0
0
0
2011
$ 80,000
0.
0
$ 80,000
2012
$ 158,232
$ 18,502
$ 18,154
$194,888
2013
$ 199,387
$ 38,164
$ 37,468
$275,019
2014
$ 257,740
$ 62,376
$ 61,272
$381,388
2015
$ 263,060
$ 87,948
$ 86,436
$437,444
2016
$ 273,868
$114,120
$ 112,218
$500,206
2017
$ 282,096
$1431577
$ 141,255
$566,928
2018
$ 296,800
$161,968
$ 159,424
$618,198
2109 Stabilized
$308,000
$166,632
$164,088
$618-720
As indicated above, in 2019 dollars, the estimated total annual service cost will be approximately
$638,720.
lT :e€fica t eax
Table 9 below illustrates the net fiscal impact by year through to stabilization and provides the
reader with an overview of fiscal performance of Reading Woods based on the estimated costs
and revenues for any given year in the build out cycle.
It should be noted that in all years Reading Woods generates a strong net fiscal benefit to the
community. The slight fluctuations are essentially the result of the introduction of OR revenues
into.the revenue stream.
Table 9. Cost to Revenue Ratio and Net Fiscal Gain or Loss
`
11-
G-menial"Co
ME V
;.zla~brx
°f ~vfell "5
~t'~~30~
3
12
.°tr4,!i
3_21
-
2010
0
$ 233,750
$ 233,750
N/A
2011
$ 80,000
$ 290,500
$ 210,500
0.28
2012
$194,888
$ 978,462
$ 783,574
0.20
2013
$275,019
$ 931,696
1 656,677
0.30
2014
$381,388
$ 1,292,738
$ 911,350
0.30
2015
$437,444
$ 1,527,096
$1,089,652
0.29
2016
$500,206
$ 1,782,918
$1,282,712
0.28
2017
$566,928
$ 2,137,911
$1,570,983
0.27
2018
$618,192
$ 2,347,644
$1,729,452
0.26
2019
$638,720
$2,416,970
$1,778,250
0.26
As noted above, the Project remains strongly fiscally positive though-out the complete build out
cycle and further due to the nature of the Project the strong .fiscal benefits are sustainable for the
long term. The Project's positive cost to revenue ratio varies from a 0.26 to 0.30 primarily due
GSDOCS12008240.4
11
33
to the influence and timing of the 40R funds. In the latter stages as only senior housing is being
constructed, the Project's cost to revenue becomes slightly more beneficial and stabilizes at a
very strongly positive 0.26. Accordingly, for every dollar of revenue received the Town will net
74 cents after all municipal service costs are paid and this characteristic will be sustainable for
the longterm. Further, totaling the annual net benefit over the construction period
indicates that for said period the Project will generate approximately $10,246,900 in net
revenues to the Town of Reading.
Based on the current Town of Reading building, electric and plumbing fee structure and with an
estimated total construction cost estimate of $43,700,000, the one-time permit related payments
to the Town of Reading are estimated to be approximately $600,000 over the full construction
period. The fees will be paid during the construction period are in addition to the strong positive
annual fiscal benefit associated with the project. However, since they are one-time fee that cease
with project completion they are not included in the revenue analysis portion of the fiscal
analysis. While the permit fees are designed to cover the Town's construction monitoring cost, in
this instance, the scale of the total building permit and associated construction fee will most
likely generate an additional, but short term, fiscal benefit for the community.
~cwctu„m'aE+L-~.,6~`.ii ax ~i5>il:+aiil~.a___ _ _:;-~'a;; - •~+ti3u°^;'R="U' .'}c~:,l.sm '~-rtia`«:i- •:ti ^~+:ii-ru sw
;1 lY"Pi3•' ~ti4~:
'*r, :'•x ~u-=,ix.1.5',u.. s7•
Reading Woods has very positive fiscal profiles at 0.26. The magnitude of the overall positive
profile, indicates that regardless of economic background conditions the Project will generate
sustainable net fiscal benefit for the. Town of Reading.
The estimated total assessed. valuation of approximately $170,000,000 in 2019 will provide long-
term benefits. to the Town of Reading in terms of its ability to work within state regulations
limiting the increase in the total annual tax levy by 2.5%. However, in the short term, the new
growth taxes (all new growth is exempt from the 2.5% levy limitation for the initial year) will
constitute an additional fiscal benefit. Similarly, the $600,000 of building permit fees is likely to
generate some additional level of short term fiscal benefit over the course of the construction
period.
In sum., I find that the Project represents a classic revitalization effort within an established and
successful mixed use corridor which will provide a large ($1,778,250) net annual fiscal benefit
that is sustainable for the long term. The Project will provide the Town of Reading with an
excellent opportunity to augment its tax base for the benefit of the entire community.
GSDOCS0008240.4
12
34
Appendix 1
The following data was derived from Exhibit 6-4 Typical Impact of Commercial Uses on
Various Public Service Categories: Fiscal Impact Handbook Burchell and Listokin, Chapter 6
Proportional Valuation Fiscal Impact Method.
Service Cate ory Percent Range Mid-Point, %
In
General Government
4 to 6
6
Public Safe
40 to 90
75
Public Works
10 to 20
15
Health and Welfare
1 to 3
2
Recreation and Culture
1 to 3
2
In the report, the Public Safety category was composed of two categories: police services and fire
services. It is important to note that in the above referenced handbook, commercial development
is divided into two major categories with retail uses generating as much as three times the cost
per square foot as office / research use. The upper end of the range is essentially designed to
model the impact of large regional shopping centers in excess of 1 million square feet and the
low end the non retail activities such as general office. Given the fact that Reading Woods is
essentially a redevelopment of an existing commercial area, I applied the low end of the
estimated service range. Even at this level, it is likely that the above model overestimates the
annual service cost since it cannot take into account private security personnel, modern fire
suppression and monitoring systems. As noted in the Fiscal Impact Handbook, "the analyst must
temper his distribution of aggregate municipal costs with the kinds of services provided locally.
He must also take into account the potential assumption of typically public services by the
private facility"
In the instance of Reading Woods, its location along a major highway; its location within an
existing and highly successful retail corridor; and the fact that it does not create new police or
fire service zones, are the reasons for applying the lower end of the cost scale to the Project.
13
GSDOCM008240.4
35
About the Author
John W. Connery
Connery Associates
Principal
Education: Master of City Planning
Ohio State University 1971
Bachelor of Arts
Boston University 1969
Experience:
Mr. Connery has 39. years of community planning experience. He has worked in the Mid West
and for the past 37 years in New England. As founding principal of Connery Associates in
1980, he has had over 250 municipal and private clients. Mr. Connery has developed an
expertise in municipal zoning, fiscal impact analysis, and project permitting. His professional
assignments have included numerous downtown redevelopment projects, community master
plans, zoning studies, and cost of development / fiscal impact studies.
Working with Goody Clancy and Associates in 2001 he completed and had adopted the Zoning
Plan for Eastern Cambridge with the associated fiscal impact analysis. Mr. Cannery's current
private sector projects include various residential and commercial fiscal impact studies in
Massachusetts including the Mashpee Commons, the Natick Collection, expansion of the South
Shore Mall, and life style shopping centers in Dedham, Lynnfield, Burlington and Westwood
Massachusetts. Further, Mr. Connery has also recently prepared fiscal analyses for senior living
facilities in Lynnfieid, Braintree, Sharon, and Dedham Massachusetts. He has also prepared
numerous fiscal impact studies for various 40B developments, and three 40R developments
throughout the Commonwealth; and he is currently preparing comprehensive zoning
amendments and fiscal studies for Everett and Brookline Massachusetts.
With Judi Barrett (principal author) of Community Opportunities Group he has assisted in the
development of a 42 community case study regarding the relationship of school aged children
and multi-family housing and the resulting fiscal impacts. Mr. Connery has also taught one-
semester courses in urban planning at the University of Massachusetts at Boston and at Boston
University, and has been a guest lecturer at both Harvard and Tufts University Graduate Schools
on a number of occasions. He has been employed as an expert land use and zoning witness
before both the Land Court and Superior Court for both public and private clients. He is a past
president of the Massachusetts Consulting Planners Association and an active non-professional
member of the American Institute of Archaeologists.
Telephone: 617 835 3956
E-mail: johnconnery@comcast.net
14
GSDOCS12008240.4
i
36
Page 2 of 3
email finance aci.reading.ma.us
Please let us know how we are doing - fill out our brief customer service survey at http://readingma-
surveyvirtualtownhall net/survey/sid/887434dd9e2l30b7/
From: Ellen Doucette [mailto:ecdoucette@brackettlucas.com]
Sent: Monday, January 31, 20119:46 AM
To: LeLacheur, Bob
Cc, Hechenbleikner, Peter
Subject: Fw: SEC regulations regarding "municipal advisors"
Bob,
I provided the advice below to one of our municipal clients.
you to have the information just in case.
You may already be aware of this regulation, but I wanted
Regards,
Ellen
Good afternoon Helen,
Gary asked that I review and respond to your email regarding the Millville Fincom's concerns about whether o
not they were required to register as "municipal advisors". I have reviewed the SEC's Permanent Proposed
Rule (the "Rule") and various other documents interpreting such rule and, in my opinion, the requirement for
registration as a "municipal advisor" is not applicable to local government Fincom members. I found this to be
an interesting question as I serve as a member of the Finance Committee in my community.
A brief explanation is necessary, as this is a very complicated issue deserving of more than a simple yes or no
answer. Section 1513(a)(1) of the Securities Exchange Act was amended by the recent passage of the Dodd-
Frank,Wall Street Reform and Consumer Protection Act. This amendment makes it unlawful for "municipal
advisors" to provide advice to, or on behalf of, a municipal entity with respect to municipal financial products
or the issuance of municipal securities, or to undertake the solicitation of a municipal entity, unless they are
registered with the SEC. For purposes of the Rule, the definition of "municipal advisors" include financial
advisors; guaranteed investment contractbrokers,.third-party marketers, placement agents, solicitors, finders,
and swap (derivative) advisors, if those persons advise a municipal entity as previously described. If a person
or company has to register with the SEC under this Rule, they must also register with the Municipal Securities
Rulemaking Board (MSRB) which requires a filing fee and annual dues.
A temporary registration requirement was put in place in September 2010 requiring all municipal advisors to
register by October 10, 2011. This temporary rule expires December 31, 2011. Interestingly, I checked the
registered "municipal advisors" on the SEC website, and none appear to be Fincom members, but companies o
persons who are employed by financial investment companies.
The Rule provides for specific exemptions including "employees of municipal entities". However, the SEC
does not interpret "employee" to include appointed board members who are "unpaid volunteers" their
reasoning being that elected or salaried employees are held accountable for their actions, intimating somehow
that appointed board members are not similarly held accountable. The fact that appointed board members are
not excluded, however, does not mean that Millville's appointed Fincom members will have to register. The
advice being provided, which the Rule seeks to regulate, goes well beyond that which is given by a municipal
Finance Committee which is often, like in Millville, tasked with reviewing and making recommendations to
Town Meeting on the annual budget and the appropriation and expenditure of town funds, whether or not such
advice may include, if necessary, a recommendation on authorizing the Town Treasurer to borrow money.
However, if the Finance Committee were actively involved in making recommendations for instance, on
37
2/8/2011
Page 3 of 3
investments, my opinion would be different.
Please call if you have any questions regarding the above matter.
Regards,
Ellen
Ellen Callahan Doucette
Brackett & Lucas
19 Cedar Street
Worcester, MA 01609
(508) 799-9739 begin-of the-skype-highlighting
38
2/8/2011
aSS~~n d2~vl~'I y'2Sa~ D '
FePe nfI ~•f' P,~cG~~d` z ~
~411/X flds',~r
~f-t-caP, ~9
P (us X30
~'Sl 8 C OS'f S
+50/yr 9ft-a I-ru
X2 3 e ju 6 Est, fi~7?
a
14 JYly
i-,y 6 Volts
Ve s Aw4- -
GiAfror --804-
MM MM
(a I
Board of Selectmen
February 8, 2011
In 0005
FYI 1
FYI 2
FYI 3
FY14
Projected
$74,021
$73,936
$75,428
$77,314
Revenues
(-0.1%)
(+2,0%)
(+2.5%)
(no use of
reserves)
Accomm.
$29,142
$29,400
$31,062
$32,615
Expenses
(+0.9%)
(+5.7%)
(+5.0%)
Wages/Exp
$46,292
$46,292
$46,292
held at 0%
Budget
($1,253).
($1,756)
($1,926)
($1,593)
Gap
Board of Selectmen
February 8, 2011
In 000s
FYI 1
FY12
FY13
FY14
Budget
($1,253)
($1,756)
($1,926).
($1,593)
Gap
Use Free
$1,253
$1,500
$1,000
$500
Cash
Cuts from
none
($256) or
($926) or'
($1,093) or
0% Oper.
-0.5%
-2.0%
-2.4%
Budgets
Reserves
$6,284 -
$4,784
$3,784
$3,284
left
or 8.7%
or 6.6%
or 5.3%
or 4.6%
a5 S1 00 i~ 4,ce of CAS.
39
1
: Town of Reading - FY12 Budget Index
http://www.readingma.gov/Pages/ReadingMA_Finance/Budgets/FY 12...
JU Y 12 .t51< ageT inn ex
Printer-Friendly Version
Summary for FY12 Budget (in progress) Finance Committee
FY12 Budget Calendar Detailed Budget calendar - March 2011
Town Manager Budget Message October'10 budget outlook
Presentation to Selectmen 1/11/11 Expense Cutting Ideas
Message to Town Meeting Revenue Ideas
Fini Forum 1/26/11 presentation FY11 Average Homeowner
Benefits (text) Capital Policy
Benefits (budget) Capital (details)
Debt (details)
Operating Budgets (Text)
Operating Budgets
Google
Search
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Town Administration
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Accounting
Accounting -
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Finance
OciiOA0
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Library
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Town of Reading, Massachusetts 16 Lowell Street, Reading, MA 01867 Website Disclaimer
Virtual Town Hall Website.
40
of 1 2/9/2011 1:57 PM
Fax: (781) 942-9027
Website: www.readingma.gov
To: Board of Selectmen
From: Bob LeLacheur, Asst Town Mgr/Finance Director
Re: FYI 2 Budget Overview
Date: 1/10/11
FINANCE DEPARTMENT
(781) 942-9005
The FY12 Finance budget reflects an overall decrease of 5.6%, from current FYI 1 spending
levels.
Wages
Two reductions in staffing are included: the elimination of a seasonal appraiser position and a
reduction to a part-time clerical position by 5.5 hours/week. On an FTE basis, this represents a
small cut of 3%. Because +2% steps are included in this budget, the overall budgeted wage costs
are reduced by only 1.6%.
An internal review of scheduled hours in the various functions combined with the focus on
resident/customer direct contact has led to some staff scheduling changes that will be
implemented between March and June 2011. Despite the 3% reduced total hours, the amount of
direct contact will be increased. Further, employee cross-training -in different responsibilities will
lead to more flexibility to increase staffing instantly when an area experiences increased
customer activity. A plan'to further cross-train Accounting, Finance and Community Services
employees to assist each other has also been discussed extensively during the budget process and
stands ready to be implemented as needed.
The seasonal appraiser will be replaced by a need to hire consultants every three years to assist
with the revaluation process, as has been done during this last cycle. This position had relatively
low direct interaction with customers at Town Hall, so the 19 hrs/week lost should be more than
offset by a shift in clerical coverage that will add 5.5 hrs/week of direct contact.
FTEs
FYll
FY12
change
Technology
4.0
4.0
0%
Assessor
3.9
3.6
-9%
Collector
3.6
3.3
-9%
Treasury ATM/Fin. Dir.
3.2
3.2
-1%
Town Clerk
2.9
3.0
+3%
Human Resources
2.0
2.0
0%
TOTAL
19.6
19.0
-3%
Town of Reading
16 Lowell-Street
Reading, AIA 01867-260
41
Expenses
Total expenses are reduced by over $70,000 (or 14%) in this budget. Some of the reductions
would have occurred regardless of the budget (fewer elections save $3,000; no assessing
revaluation saves $12,000). Most of the reductions will have a consequence and are described
below.
Professional Development
A combined $6,650 in FYI 1 will be reduced to $4,800 in FY12. Annual demand for this expense
is over $20,000 per year, and when one considers the rapid changes in technology, personnel law
and mandated financial rules and regulations this cut may not be sustainable for a long period of.
time. Shifts from meetings with travel and lodging costs to online seminars will help to
ameliorate the impact of the budget cuts.
Treasur3 /Collector
Actual tax title expenses may have peaked at below the budgeted $20,000; so a $5,000 reduction
should not have an impact. Staff developed the idea to bring the lock-box function in house
which will save about $16,000 annually - the cost of 0.5 FTE of a clerical position. Improved
technology and financial systems has freed up the time needed for this activity. A $5,000
reduction to postage will reduce the additional warnings that the Town has provided to customers
in the past few years when their payments are past due. An opt-in system using the new mass
communications system will be offered instead of U.S. Mail reminders.
Human Resources
A $2,000 reduction to advertising will have no impact as hiring for the Town has slowed
significantly.
Technology
A $22,500 reduction in technology expenses will have some known and some unknown
consequences. Among the former, a slower PC replacement cycle closer to four years (instead of
three years) is expected. Budgets to defend against `things that might go wrong' will all be
reduced, and the division will go more to a reactive stance than a proactive one. Network
integrity and data security efforts will not be compromised in this budget. The Town is working
closely with the school department, RMLD and neighboring towns to ensure an adequate
emergency response capability. For a few years this division has been able . to upgrade
infrastructure with leftover operating funds near year end. With this budget, that practice is
expected to be discontinued, and capital requests may arise in the future.
42
Revenue Enhancement Ideas from.Reading Financial Forum September 15, 2010
Bucketed List
Evaluation Criteria
Opp Cost /
Being
Ease to
Implement
Ongoing
Community
Unintened
Who Should
FinCom Next
Ideas That Received Votes
#
Votes
Done
Revenue
Implement
Cost
Cost
Impact
Consequences
Carrv Forward?
Contact Steps
_
ONE TIME REVENUE
Sale of Town Land (Oakland Rd-last big parcel)
25
High
Medium
None .
TBD
Varies by lot
Selectman
ONGOING REVENUE
1 School and Town Land: Opportunities
49
Cell Towers
20
Yes
Medium
Low-Medium
TBD
TMgr/Selectman
Advertising/Billboards
15
Yes
Medium
TBD
Selectman/SC
Wind/Solar Power Generation and Sell Back
9
No
RMLD
Sell Timber in Town Forest
5
Yes
DPW/Town Forest Committee
2 School and Town Facilities: Opportunities
24
max. for schools;
Rental of existing space
15
Yes
Low-Med.
Medium
Medium
High
Medium
Medium
Selectman/SC
ID Town Bldgs contact
Naming Rights
9
No
Low
Medium
Low
Low
Medium
Political
Selectman/SC
success elsewhere?
3 Fees: Introduce New Ones
18
Pay as You Throw Trash Fee
6
No
High
Low
Medium
Medium
High
Incr. Recycling
Selectman
Preferred Parking Fees at RMHS
6
No
Low
Medium
Low
Low
Low
Incr. nbad pkng
Schools
use fees for?
Billing At Fault Accidents
5
No
Med-low
No
Medium-High
Staff time
High
Ins. Co. battles
Public Safety
Gtwireless air rights billing
1
No
4 Economic Development
17
Town Economic Development/PR
12
Yes
Medium
Requires $
Medium-High
Yes
Positive
Selectman
Tax Incentives for New Business
5
No
Selectman
5 New Initiatives
16
Grant Writers to Bring in
S
No
Selectman/SC
Endowed Positions at Schools
5
No
no comps in
MA - all answers are unknown
Schools
Road Races Program
3
No
Low
High
. Low
Low
Low
Low
Recreation
Reading Branded Credit Card
2
No
no comps in
MA - all answers are unknown
Selectman/SC
Remove state gas tax on Town'
1
No
Legislators
6 Fees: Increase existing
12
Parking Fee at Depot
10
Yes
Selectman
Raise Parking Tickets & Fines / Parking Meters
1
Yes
Selectman
Increase RMLD annual in lieu of Tax Payment
1
Yes
Selectman
Increase Ice Arena payments
0
Yes
Selectman
7 Gifts/Donations/Sponsorships
12
Sponsoring Town Trees, Benches, Lights, etc.
7
Yes
Selectman
Focused Approach for Gifts/donations
5
No
Selectman/SC
8 Expand Service Offerings
6
Offer Ambulance Services to Other Towns
6
No
Medium
High
High
Medium
none
Selectman
Total Votes
179
Expense Management
Evaluation Criteria
Opp Cost/
Being Ease to Cost to Ongoing Community Unintened Who Should FINCOM Next
T
T
ch
ONE TIME EXPENSE
Arrange MSBA early payments on RMHS
Refinance old School debt
impact on CIP FY09-FY13
Coolidge debt
Facilities Department constructed some election
equipment, vs purchase
Y Medium High effort None Yes(1) Yes(2) Finance
(1) To reduce the amount of the override that we assess to the taxpayers. .
(2) Additional interest expense on the MSBA portion of the $35 million debt if we don't refinance in a few years.
Y $205k npv Easy Low None None None
+$557k
Finance
Y $2,100 Easy Low 'None None None
Refi in FY14
None
Refi in FY12
None
ONGOING EXPENSE
Benefits/Personnel
Y
$590k/yr
Coll Barg
High effort
None
Costs shift to
'
T/5
Health Insurance-tiered program
emp
ee
4_*_
Less emp'ee
Change from social security to ICMA OKRA for those not in
Y
$105k/yr
Difficult
High effort $20k/yr
None
investment.
T/S
a retirement system
choice
Email direct deposit advises to staff (22% and increasing)
Y
Easy
None
None
T
to avoid printing costs
Modification of non-union benefits (sick leave, sick leave
Y
Medium
High effort
Less emp'ee
T
buy-back)
benefits
Sch
Offering early retirement to all school employees
N
Collective Bargaining - constrained salary increases and
modification of benefits (sick leave, sick leave buy-back,
Y
Coll Barg
High effort
Less emp'ee
T
vacation) ,~~nl
J
benefits
O
Less
T/S
Freezing salaries non-union employees
Y
Medium
High effort
T
Reduced hours of work across the board
N
T/S
Imposed unpaid furloughs
N
T
Cut salaries
N
Reduction of staff (attrition where possible to avoid
S
QtA.n
,
1 J Y
Medium
Low
T -
unemployment expenses) 7
Tasks done by
T
a. Eliminate Coordinator of Volunteers
Y
3 depts.
T
b. Eliminate Assistant Bldg Inspector
Y
Expense Management
Being
#
Done
T
c. Eliminate Technology Librarian/Instructor
Y
T
d. Eliminate one Firefighter
N
T
e. Eliminate Permits Coordinator
V
r~
T
f. Eliminate Staff Planner
N
T
Reduced hours of staff where feasible (T Mgr office)
Y
T
Reduce hours of seasonal Assesso
T
Reduce hours of seasonal DP )I I-A
Reduced staffing levels for library. Sunday hours (skeleton
Y
T
crew)
5ch
Reduction in school department personnel:
Y
Sch
a. Teachers - 7.0 teachers over last two years
y
b. Paraprofessionals -18.1 paraprofessionals over
Y
Sch
last 2 years
Sch
C. Secretaries -1.2 Secretaries this year
y
Sch
d. Custodians - 5.0 custodians over last 6 yrs
Y
Sew
e. Administrator-Assistant Dir. of Facilities
Y
5Y
f. Administrator - Assistant Superintendent
N
Outsourced custodial services at RMHS and one shift at
Y
Sch
Coolidge Middle School
Sch
Outsourcing custodial services at all buildings
N
Sch
Maximize the use of student teachers and volunteers
Y
Increased volunteer hours and senior tax workers (Town
Y
T
Clerk's office)
Sch
Use of parent volunteers to teach classes
N
Expanding online learning to replace existing teaching staff
N
Sch
Sch
Going to a 4 day school week
N
Sch
Reducing number of student days from 181 to 180
N
Expenses/Personnel
Reduction in professional development/increased use of y
T electronic webinars
Reduction in curriculum and instructional materials-65% y
5ch reduction over last 2 yrs
Reduction in professional development- 65% reduction Y
Sch over last 2 yrs
Eliminating professional development inservice time for N
Sch non-teaching staff
Evaluation Criteria
Opp Cost/
Ease to Cost to Ongoing Community Unintened Who Should FINCOM Next
Expenses Implement Implement Cost Impact Consequence Carry Fwd Contact Steps
Easy
Low
None
Less PD
Easy
Low
None
Less PD
Expense Management
Eliminate out of state Professional Development
Reduce Assessors use of outside consultants
Expenses/Financial
MIIA Rewards seminar participation - earn credits on
'/S insurances
Earn upgraded bond ratings
Establishment of some revolving funds to tie expenses
directly into revenues (Inspections, Mattera Cabin, Health
Y
Clinics, Library Materials)
Purchase hand-held scanners ($1600) to save annual lock
box fees, as well as improve accuracy of information and
speed of processing payments
Reduce library Y. materials budget - rely on gifts. _ y
N
Expenses/Operational
ch Performance Contracting to reduce energy expenses
Y
rn Amend hours at Town Hall to save operating costs, and
Y
improve customer service
Removal of small appliances (refrigerators, microwaves,
Y
ch etc.) from all classrooms
Use of computer software to automatically shut down all
Y
ch computers each night
ch Use of automated software based on facility rentals
y
Server and computer virtualization which reduces
Y
ch hardware and energy costs
Network virtualization to reduce energy costs, improve
y
reliability and allow remote access U
Slow down PC replacement cycle
Cancelled PC repair and maint. contract w/ Noble
Y
Conversion of fleet to hybrid to reduce fuel expense
Y
Anti vehicle idling to reduce fuel use (and improve the
/S envirionment
Y
Aggressive preventative maintenance to prevent costly
Y
ch emergency repairs
Use of parent volunteers to maintain PCs or technology
N
ch infrastructure
Modification of rubbish'and recycling program
Y
Being Ease to Cost to
Done Expenses Implement Implement
Y Easy Low
N
Y
Y
$35k/yr
Y $10k/yr
$325k/yr
$20k/yr
$6k/yr
Evaluation
. Opp Cost/
Ongoing Community Unintened Who Should FINCOM Next
Cost impact Conseauence Carry Fwd Contact Steps
None Less PD
High effort None None
High effort None None
Easy None None
High effort High effort
High effort
Difficult $50k+
$5-10k/vehicle
High effort
None All Staff
None Finance
None
Expense Management
Elimination (phase-out)-of plowing church parking lots to
reduce snow plowing expense (also to comply with State
T Constitution)
Public/Private partnerships (tree watering, adopt an
T island))
T In-house PBX phone system
Sch Increased recycling
T/S Active paper re-use and reduction efforts
T/S Elimination of ink jet printers
T/S Networked photocopiers and printers
Sch Setting photocopier settings to automatically duplex
T Document storage initiative to reduce paper
Greater use of electronic communication to reduce
printing/mailing costs (YCC, Board agendas, electronic
T/S forms to parents)
Sc{ _ Use of electronic education tools (blogs, wikis, etc.)
Being Ease to Cost to
Done Expenses Implement Implement
$10,000 to
Y $25,000
peryear
y
Y
Y
Y
Y
Y
Y
Y
Y
Y
J
*
Expenses/Cooperative Efforts
)VfAI
V%
NAW
D
T Regional programs (Veteran
s Services)
S G~t
ional programs (Dispatch)
T Re
Y
BA
,
g
l`~
T Regional programs (Asse
~
y
BA
i
T Regional programs (GIS)
BA
T Regional programs (Technology)
BA
Use of regional transportation collaborative for out-of-
Y
Sch district special education
Special education collaborative programs whenever
possible for special education children who need special
y
Sch programming not offered in Reading Schools
Coordinate bulk shipping of text and materials with other
N
Sch districts
Purchasing materials through Staples and WalMart when
N
Sch thev have sales
Participate in joint purchasing collaborative with 65 other
y
Sch communities for school, office, and custodial supplies
Joint bidding/purchasing (Office supplies, sand and salt,
y
T fuel)
Library saves on processing supplies by participating in
Y
T statewide purchasing cooperatives
$30k/yr Medium
Easy
Easy
Easy
Easy
Difficult
Difficult
Difficult
Difficult
Easy
Easy
Evaluation Criteria
Opp Cost/
Ongoing Community Unintened Who Should FINCOM Next
Cost impact Consequence Carry Fwd Contact Steps
High effort
None None None
$50k+
Expense Management
Evaluation Criteria
Resource sharing/Reciprocal borrowing and lending
results in 33,000 books borrowed for Reading residents
from other libraries in one year, savings = $66D,000
T (purchase cost = $20 each)
With the recent municipal reform act passed in July, we
are now able to purchase from national collaborative; we
have, as a result, just joined the National Joint Powers
Sch Alliance.
Use of state contracts whenever possible (technology
purchases, photocopiers, maintenance supplies,
Sch maintenance services, etc.)
Re-negotiation of maintenance contracts and equipment
Sch leases
Creation of in-district special education programs to bring
students back to Reading from costly, out-of-district
Sch placements
In-sourcing of costly special education consultative and
Scbotherapeutic services
In-sourcing of maintenance services (carpet shampooing,
Sch exhaust fan maintenance, etc.)
Opp Cost/
Being Ease to Cost to ongoing Community Unintened Who Should FINCOM Next
Done Expenses Implement Implement Cost Impact Consequence Carry Fwd Contact, Steps
Y
Y
Y
Y
Y
Y
Y
Easy
OFR690
Financial Forum.
January 26, 2010
639INCORQ~P Reading Senior Center
The meeting convened at 7:00 PM in the Senior Center at Town Hall.
FINCOM Members Present: Chair Marsie West, Vice Chair David Greenfield, Mark Dockser, Bryan
Walsh, Barry Berman, Kevin Leyne, Hal Torman and Paula Perry.
Members Absent: Francis Fardy
Also Present: Board of Selectmen Chair James Bonazoli, Vice Chair Camille Anthony and member
Steve Goldy, School Committee Chair Chris Caruso, Vice Chair Chuck Robinson, and member Lisa
Gibbs, Town Manager Peter IIechenbleikner, Assistant Town Manager/Finance Director Bob LeLacheur,
Town Accountant Gail LaPointe, Superintendent of Schools John Doherty, Assistant Superintendent Patty
de Garavilla, School Finance & HR Director Mary DeLai, Community Services Director/Town Planner
Jean Delios, DPW Director Jeff Zager, DPW Business Administrator Jane Kinsella; Town Engineer
George Zambouras, Fire Chief Greg Bums, Joshua Easton Principal Karen Fenney, , Marry Ann Quinn
(42 Benton Circle), Pamela Higgins (315 Summer Ave.), Erin Calvo-Bacci (494 Main St), Town Meeting
member Jeff Struble,, Michelle Hopkinson (21 Sherwood Road), Reading Patch Matt Casey, Council on
Aging Chair Steve Oston, and recording secretary Abby McCabe.
There being a quorum the Finance Committee (FINCOM) Chair called the meeting to order at 7:15 pm.
The Chair of the Board of Selectmen called the meeting to order at 7:15 pm.
Ms. West gave an introduction to the third financial forum of the FY12 budget year. The'forums are an
attempt to keep the community involved in the budget process and to maintain transparency in
government.
Update on Revenues & Free Cash Status
Mr. LeLacheur noted that the complete budget is posted to the Town's website. The Finance Director
briefly summarized the Town's revenues and sources of funds and gave an example of how the average
homeowner's taxes are., distributed throughout education, employee benefits, public safety, public works
etc. The Town Accountant reviewed the FY12 projected revenues and compared them to FYI 1 which are
expected to be less in FY 12. The local revenues for FYI 2 are expected to increase slightly because of the
local meals tax that was recently adopted but the intergovernmental revenue (state and federal aid) is
expected to decrease by 12%. The proposed budget plans to use $1.5 million in free cash. Ms. LaPointe
explained that the projections of state aid were calculated by reviewing the Governor's budget over the
last several years and analyzing how they changed in the legislature. The legislature has recently created a
more conservative budget than the one the Governor proposes.
Update on Accommodated Costs
Mr. LeLacheur gave an update on the FYI 2 accommodated costs. Energy and out of district special
education costs for FYI 2 declined since the last October Financial Forum, so the operating budgets only
need to be reduced by -0.5% instead of -1.75%. Health insurance is still unknown at this time but the
budget assumes it will be around 10% for FY12 ($8,387,500). The Finance Director showed the
projected revenues, accommodated expenses, wages and budget gap from FY 11 through FY 14. Over the
past twenty years revenues have increased at 3.0% to 3.5%, but the Town is currently struggled with
lower revenues and a future with below-average revenue growth forecast. Free cash will help over the
next couple of years but usage must be reduced each year from the $1.5 million level so the operating
budgets can ease into a new fiscal reality. .
49
Overview of Town Budget
In mid-February the Town Manager will present his budget to the FINCOM after the health insurance
rates are set. In March, the FINCOM will begin reviewing the budget in preparation for Annual Town
Meeting in April. Mr. Hechenbleikner reviewed scenarios for alevel service budget, a level funded
budget and the most likely budget with a 0.5% reduction. When budgeting for a level service and level
funded budget it soon became clear that it would not be possible to reduce each department equally. A
-0.5% reduction would mean eliminating 3 police officers and 3 firefighters which were not acceptable
outcomes. If public safety employment is held constant, all other Town departments must be cut by 3.9%.
That is not desirable because library hours would be reduced, a key DPW mechanic position would be
eliminated, and smaller departments (Town Administration & Town Accountant) were too small to be
reduced. Accordingly, Community Services and Finance will be reduced by more than 3.9%. The Town
Manager reviewed the guiding principles that were influential in creating the proposed budget with an
overall -0.5% reduction. The guiding principles include; sustainability, maintaining a strong financial
position, regional opportunities, partnerships, and a direct customer services focus.
The Town Manager's proposed FY 12 budget will reduce the Community Services Department budget by
-11.1%, Finance by -5.6%, DPW by -2.41/o, Town Administration by -1.8%0, and the Library by -0.5%.
The Town Manager reviewed staffing levels across departments over the last few years and compared it to
the FYI 2 staffing levels. The possibility of regionalization is being reviewed for the health, conservation
and elder services. The proposed budget reduces the administrators of these departments to part time and
these positions may be shared with other communities in the future. Staffing levels for conservation,
health and elder services of other communities were also reviewed by the Town Manager. Professional
development funds have been reduced in all departments. The seasonal appraiser position in the Finance
Department will be eliminated. The public safety departments (Police, Dispatch and Fire) will keep the
same number of fall time employees, increase the overtime budget'while professional development and
other various expenses will also be reduced. One seasonal Parks employee will be reduced in the Public
Works budget, overtime will be reduced and one of the engineer positions will move from the general
fund into the storm water fund. The Library will close for 13 Saturdays in June, July and August, hours of
support positions will be reduced and the materials budget will also be reduced.
Several legislative actions are also proposed for the next year. The proposed legislative actions include
rescinding the Reading Wetlands By-Law, amending the General By-Laws to require property owners to
clear their, own sidewalks of snow and ice, amendments to the Zoning By-Laws to streamline permitting,
adopting an expedited permit process for the industrial areas off of Ash Street behind RMLD and
reducing the Historical Demolition Delay By-Law. Several administrative actions will also take places
such as implementing the new CAMA system in the Assessor's office, purchasing the new licensing and
permitting software, and implementing a "carry in - carry out" for rubbish in parks and school grounds. In
the concluding remarks on the FY12 budget Mr. LeLacheur noted that many of the suggestions from the .
October financial forum were implemented or are being considered. '
Overview of School Budget
Dr. John Doherty summarized the major challenges of the FY12 budget which includes the unknown
number of next year's kindergarten enrollment and the various large class sizes in certain grades. The
district's priorities that played a role when developing the budget were protecting low class sizes in grades
K-2, maintaining school facilities to control the long term operating costs of those facilities and
maintaining regular day programs such as art, music, physical education and foreign language. Most of
the American Reinvestment and Recovery Act (ARRA) funds over the last couple of years were used for
recovery expenses such as special education program staff and circuit breaker reimbursement and
investment expenses such as adaptive technology, professional development, and networking and
2
50
infrastructure. Personnel cuts to the. school department workforce from FYI 0 and FY11 were reviewed.
The FY12 budget will likely be reduced by 0.5%. To develop a 0.5% reduced budget for FY12 the school
department will eliminate 6.3 FTEs of Paraeducators, eliminate. 3.7 full time teachers, and reduce the.
hours at the high school after school fitness center.
Budget Process Comments / Questions
The FINCOM Chair explained that the Finance Committee will be reviewing the budget in March and the
Board of Selectmen will hold a public meeting on Tuesday February 1St on the FY12 budget. The Chair
also noted that many of the suggestions from the fall financial forums had been implemented and the
status of the recommendations will be posted -on the Town's website. Mr. LeLacheur asked the audience
to communicate with members of the community not present tonight particularly Town Meeting members
and strongly encouraged Town Meeting members to provide email addresses to stay informed with
budget updates. One meeting member asked why the budgets for police and fire were increasing while the
other departments were decreasing. The Town Manager responded that those departments are currently
understaffed or at the right levels and the proposed cuts in other departments will allow town employees
to receive step increases that were eliminated in the FYI 1 budget._'he Chair of the Council on Aging
expressed concern about the proposed reductions and regional efforts in the elder services department.
The Town Manager explained that the opportunities for regionalization will be with the administrative
staff and he believes this can be accomplished as many other Town's have one administrator in larger
communities.
FINCOM member Paula Perry left the meeting.
Capital and Debt Update
Capital - Mr. LeLacheur reviewed capital spending for FYYI2 and the next 10 years. Forty Four million
dollars is expected to be spent over the next 10 years but the capital spending for school buildings are
projected to decrease after the recent school renovation projects. The Town will need to spend more on
roads in the future since the spending is somewhat low now. Mr. LeLacheur explained that Reading is in
good shape in terms of its capital budget and equipment:
Debt Services - Mr. LeLacheur reviewed debt services'and spending over the next several years. More
money will be spent on roads and possibly the library renovation project in the future as a debt exclusion.
A member of the FINCOM asked when the debt from the high school project will be paid and the Mr.
LeLacheur answered that it will be paid by FY25. He also noted that Reading typically pays off debt more
quickly than many other communities. The West Street design project will also be another expense
expected in FY 12 or FYI 3.
On a motion made by Mr. Bonazoli, seconded by Mr. Goldy, the Board of Selectmen voted to
adiourn at 9:05 PM by a vote of 3-0-0.
The Town Manager explained to the FINCOM that as of today's date the Town has exceeded the money
appropriated in the FYI 1 budget for snow and ice removal. Annual Town Meeting will be reviewing the.
snow and ice budget.
On a motion made by Mr. Berman, seconded by Mr. Walsh, the FINCOM approved spending .
more than what was appropriated in the FYII budget for snow and ice removal by a vote of 7-0-0.,
The FINCOM continued discussion about the FY 12 budget and preparations for Town Meeting in April.
The Committee discussed the possibility of a proposition 2 1/2 override in the future. Committee members
expressed concerns about continuing to spend free-cash as well as cutting services. The Committee should
3
51
take a careful look at the cash reserves and what services could possibly be eliminated. A couple members
thought a proposition 2 %2 override attempt is likely for the FY 13 budget. It was suggested that a future
override be discussed at Annual Town Meeting so that people are aware of it.
The next FINCOM meeting is scheduled for February 9th when the Committee should discuss the
message it will be presenting to Town Meeting. The Committee should be prepared to make .a. full
presentation to Town Meeting. The March FINCOM meetings will take place at the Reading Municipal
Light Department.
On a motion by Mr. Greenfield, seconded by Mr. Dockser, the FINCOM approved the minutes of
December 8, 2010 as written by a vote of 6-0-1 (Mr. Torman abstained).
The FINCOM added a Monday meeting the last week in March to allow the Committee more time to
review the budget and vote on the Town Meeting warrant articles.
The Town Manager suggested the FINCOM prepare a letter and budget information packet be mailed to
Town Meeting members by regular mail to keep everyone informed. A letter to the editor or other
newspaper publication was also suggested by the Committee.
On a motion by Mr. Greenfield, seconded by Mr. Berman, the FINCOM voted to adjourn at 9:48
PM by a vote of 7-0-0.
Respectfully submitted,
Recording Secretary
4
52