Council And Finance Committee Move Forward On New Elementary School And Water Plant

Report On The Meetings Of The Amherst Town Council February 6, 2023 And The Amherst Finance Committee February 7, 2023

This article summarizes the discussions at both the Town Council meeting and the Finance Committee meeting. Both meetings were recorded. The council meeting can be viewed here. The Finance Committee Meeting can be viewed here.

Financial Implications Of Funding New Elementary School Through Debt Exclusion
Finance Director Sean Mangano gave the same presentation on financing the proposed new elementary school to the Town Council and to the Finance Committee. The PowerPoint presentation shows the anticipated cost of the project at $98 million, with $42.7 million being provided by the Massachusetts School Building Authority (MSBA), and the town contributing about $55 million. The bulk of the town’s share will be paid for by a debt exclusion override if approved by the council by a two-thirds vote on April 3 and a majority of voters in a May 2 election. The $55 million town’s share will be reduced by $1.6 million in credits from Eversource because of the plans to use ground source heat pumps, $700,000 in Community Preservation funds for restoration of the school’s athletic fields if approved by the council, and probably some rebates from the federal Inflation Reduction Act (IRA) for the solar panels.

Mangano explained that a debt exclusion override is a temporary increase in taxes to fund a specific project. It allows the town to increase taxes above what is allowed under Proposition 2½ , but the increased assessment goes away when the project is paid for. He said Amherst’s last debt exclusion override was in 1994 to expand the high school, and that was paid off in 2017. He explained that the town is committed to four major capital projects, the new school, the Jones Library project, a new Department of Public Works building, and a South Amherst fire station. Although the town has $27 million in reserves, including $10 million in the capital reserve fund, the town says it will only use that money for the other three projects, despite urging from Councilors Michele Miller (District 1) and Ellisha Walker (at large), and Toni Cunningham in public comment, to use some of it to lower the tax impact of the override on residents. 

It is estimated that property tax rates will rise by $1.07 per $1,000 in valuation, or about $478 per year for the average Amherst home. This number could be reduced if growth continues, as it has over the last five years, raising the property tax collected. Mangano also said that the project will probably be funded with short term Bond Anticipation Notes, where only interest is paid during construction, beginning in 2025. Principal and interest would be paid beginning in 2029 with the debt exclusion terminating in 2056. 

Councilor Ellisha Walker urged the town to develop a means of assistance for people who will be negatively affected by the tax hikes, “people who will not be able to remain in this town because of the cost, whose children will not be able to go to that school.”

The completed application and preliminary design will be submitted to the MSBA on March 2. The Finance Committee unanimously approved holding the debt exclusion vote on May 2. This will need to be approved by the full council by a two-thirds vote, but President Lynn Griesemer (District 2) pointed out that if the vote is not held in the beginning of May, it would have to be pushed back to September and would delay the project. At the February 21 Finance Committee meeting and February 27 council meeting, the wording of the ballot question must be approved by two-thirds of the councilors. The council must authorize the debt exclusion by a two-thirds vote, which will take place on April 3. 

Nonvoting Finance Committee member Bob Hegner said he worries about the accuracy of the cost estimates, given the “scary increases” in the costs of other projects (i.e. the Jones Library and Centennial Water Treatment Plant). He noted that there will be some savings in personnel and energy costs with the new school, and wondered if the town could use these savings to draw down the debt and ease the burden on taxpayers. He said he also worries about the tax increases being passed down from property owners to renters. Mangano answered that he has confidence in the cost estimates, since they were done in January by two reputable firms, although actual numbers will not be available until the project goes out to bid. Bernie Kubiak, a nonvoting Finance Committee member, was sure, based on his experience, that savings will be put into the general fund and not used to lower the tax increase.

Walker said  she is sure that tax increases will be passed on to renters. She said that the government does not seem to consider the less fortunate residents in town, and strongly urged that outreach be done to “vulnerable taxpayers” as to the implications of the vote, especially since the wording on the ballot question required by the MSBA and the state is so unclear. She also urged the town to develop a means of assistance for those who will be severely affected by the tax hikes, especially “people who will not be able to remain in this town because of the cost, whose children will not be able to go to that school.” In addition, she said, the issue has  to be dealt with “on the front end, not afterward.” 

Council President Lynn Griesemer cautioned that if the debt exclusion vote for the school fails, “We won’t be able to go back to the MSBA in our lifetimes, after turning down two grants. We need to think of the costs of running two old schools for another 25 years. They are in bad shape…. Also, I don’t want to keep hearing about other uses for Wildwood — it is not a good building.”

Councilor Dorothy Pam (District 3) said she is also worried about low-income seniors being able to afford the increased taxes. Mangano said those seniors on limited incomes could meet with the assessor to see if they are eligible for exemptions. 

Griesemer cautioned that if the debt exclusion vote fails, “We won’t be able to go back to the MSBA in our lifetimes, after turning down two grants. We need to think of the costs of running two old schools for another 25 years. They are in bad shape…. Also, I don’t want to keep hearing about other uses for Wildwood — it is not a good building.” 

She explained that using reserves to lower the cost of the override would require “revisiting the financial models to see the impact on the other planned capital projects in the future.” Finance Committee Chair Andy Steinberg (at large) said that using some reserves for this project could mean that one or more of the other projects would require a debt exclusion vote, and that  “elections cost money that must be borne by the town”.

Ana Devlin Gauthier (District 5) suggested reducing or eliminating $250,000 in the budget for art under the “Percent for Art” bylaw. However, this would not produce a significant reduction in the cost of the school.

At the onset of the meeting, nonvoting Finance Committee member Matt Holloway disclosed that he is co-chair of a committee formed to encourage residents to vote for the elementary school project. He said he will “put a firewall between his work on the Finance Committee and fundraising to support the school”.

Town Clerk Presents Options For Debt Exclusion Vote
Town Clerk Sue Audette came to the Town Council meeting to get councilors’ input for the May 2 vote. She noted that after no-excuse mail-in voting was instituted during the pandemic, 50% of residents voted by mail, and early in-person voting dropped from 25% to 7%. She said she is thinking of offering one week of early voting at Town Hall, including at least one evening, for this election.

Councilor Mandi Jo Hanneke (at large) suggested that one day of early voting be held on the UMass campus. Audette said she will look into it, but her staff is already “stretched” and it would pull one person out of the office for the day. She questioned whether offering early voting on campus is worthwhile when there are only 250 registered voters on campus.

Walker and Shalini Bahl-Milne (District 5) voiced concerns that the language in the ballot question is unclear and might confuse voters. Mangano said that the town has little leeway into the language on the ballot, but will do an extensive education campaign so that voters are aware of what they are voting for.

When Pam expressed concerns about getting people out to vote for this special election, which will take place at an unfamiliar time of the year, Audette said that she has permission to use the police department’s automated sign to announce the election and that the town has many lawn signs that it can place widely  to inform residents of the vote.

High Bids For Centennial Water Treatment Plant Necessitate New Appropriations
Last year, the town allocated $18 million to rebuild the Centennial Water Treatment Plant that was damaged by a lightning strike in 2018 and has been inoperable since. The original $7.5 million cost for replacing the plant has increased over the past five years, and was estimated to be $17.9 million in 2021. However, DPW Superintendent Guilford Mooring said the cost of filters has risen by several million dollars recently and, with inflation, the lowest bid received was $21.5 million. As a result, the council has to rescind the original authorization to borrow $18 million and replace it with an order for the new amount. The Finance Committee voted unanimously to recommend raising the amount of the authorization. It will be brought to the full council for a vote on February 27.

Mangano said that the state has a revolving fund for infrastructure projects that offers a loan at 1.5% interest, and that up to $4 million of the loan might be forgiven. Mooring said that the DPW will seek offsets from Eversource because of the increased energy efficiency of the new plant. It is possible that some American Rescue Plan Act funds can be used for the project, but Mooring thinks the federal Infrastructure Act money awarded to the state is being used to pay for the revolving fund program.

Water rates are expected to rise 13% beginning in 2026 to help pay for the construction, in addition to a  rate increase approved earlier  of 3.3% for water and 6.1% for sewer. Mangano noted that despite new construction in town, water use has not returned to pre-pandemic levels, so increased rates are needed to cover costs.

Finance Committee Fails To Agree To Shift Of Water And Sewer Lines Ownership To Town
Proposed water and sewer regulations have received support from both the Town Services and Outreach (TSO) Committee and the Finance Committee, but the two disagree as to when the town should assume ownership of the water and sewer lines from the main to the owner’s property line. As it stands, a property owner is responsible for any repair distal to the main, even if the problem is under the public street. 

Because of the  increase in water and sewer rates, and the possible  costs to taxpayers in the future for a new  elementary school, both the TSO and Finance Committee felt that this is not the right time to add an estimated $7 per month to residents’ water and sewer bills. TSO members recommended that  ownership be changed from property owners to the town automatically in two years. while the Finance Committee wants the town to reexamine the issue in two years.

New Finance Committee member Devlin Gauthier (who was previously a member of TSO) argued that this switch is the right thing to do, especially for owners of older properties with old pipes, and that it should not have to be debated again in two years. However, her motion for the change to go into effect automatically did not receive a second.

The two opinions on water and sewer line ownership will be brought to the full council for a determination. Town Manager Paul Bockelman estimated that purchasing an optional homeowner policy covering water and sewer lines costs about the same as the projected increase in water and sewer charges  if the town covers repairs, about $7 or $8 a month.

The Finance Committee meets again at 3 p.m. on February 21.