REPORT: FINANCE COMMITTEE MEETING (7/24/19). UPDATE ON NEW CAPITAL PROJECTS SIMULATION TOOL

An updated capital project planning simulation tool was a major topic of conversation at the Finance Committee meeting of July 24. 

The interactive software tool is meant to help town staff, officials, and the public determine what impact multiple proposed capital projects could have on the town’s debt limit, and on individual taxpayers.  Sean Mangano, School Finance Director and Town Capital Projects Manager, presented the revised version, which was based on a tool originally created by former town Finance Director Sandy Pooler and revised by Mangano in response to prior committee input.  

The simulation tool focuses on four major capital projects: the Jones Library, South Amherst Fire Station, Department of Public Works facility, and elementary school buildings.  The cost estimates themselves for each project were not presented nor discussed by the committee at this meeting, although they have been discussed in the past (see https://www.amherstindy.org/2019/03/31/amherst-unable-to-fund-four-major-capital-projects-at-once-state-law-caps-borrowing-at-105-million/).

Finance Committee Chairman Andy Steinberg indicated that this tool will be used to develop a capital building plan for the four major projects. Town Council President Lynn Griesemer said that she wanted each District to hold public meetings about the capital projects by the end of October, and emphasized that the town needs to understand the realities of what can and can’t be done financially. 

For the library and school projects, the simulation includes estimated funds from state reimbursement.  The user can select either a single 600-student school, or Wildwood and Fort River Elementary Schools as separate projects.  It is unclear, however, whether the cost estimates currently used in the program for these two approaches to addressing elementary school infrastructure are consistent with each other in terms of grade span and total enrollment.  For instance, cost estimates for a 600 student K-5 school must be compared to cost estimates for Wildwood and Fort River as K-5 schools and a similar total enrollment, not for their current total of over 700 K-6 students. 

Not included in the tool are other potentially expensive projects such as the regionally-owned and town athletic fields, the North Common improvement project, and a new senior center.  Roads and sidewalks, which are currently funded out of the general capital needs budget and dedicated state funding, are also not included as a separate project in the simulation tool, although Griesemer asked if the estimated $16 million road repair backlog could be listed as another project.  

Users can select varying total project costs and the start dates for these projects, as well as whether they are paid for with existing capital funds or through a debt exclusion override that would impose additional property taxes above the 2½ percent annual increase for the lifetime of the associated bond.  Other factors that can be modified include the borrowing interest rate, annual escalation rate, percent of construction that goes toward net zero building, and annual funding for other capital needs. The tool then produces graphs that indicate the total town debt per year and whether it exceeds the debt limit as well as the impact of debt exclusion overrides on the tax burden for homeowners (currently provided for the median home value in town of a little over $300,000). 

Committee members, including the newly-appointed resident non-voting members, offered feedback to Mangano.  

Town Councilor Cathy Schoen requested an option enabling users to view the impact of a debt exclusion override on varying property values. She also sought an option showing both Fort River and Wildwood building costs that include state reimbursement. The simulation tool currently defaults to having one building as an MSBA project while the other is entirely town-funded. 

Resident non-voting member Robert Hegman asked for a wider range of project start dates to better illustrate the effect of stretching the projects further into the future.  He also pointed out that the operational savings from net zero buildings are not reflected by the simulation tool.  

Resident non-voting member Marylou Theilman, asked about the bond duration. The tool assumes 30 years but Mangano indicated he could add a 25 year option.  Griesemer asked if a $10 million library renovation project could be added as an alternative option to the $36 million new construction. She also expressed interest in creating a fund against which the town could borrow for net-zero construction, to be replenished from operational savings that result from the higher efficiency and renewable energy systems used in that type of building.  

Andrew Steinberg asked if the current assumption of a 10% annual tax levy could be modified, and if the impact of a Percent for Art bylaw could be indicated. He cautioned that net-zero building is complicated, and suggested that the current bylaw also permits net zero-ready construction, as opposed to net zero building that actually includes renewable energy such as photovoltaic panels. Resident non-voting member Sharon Povinelli said she was concerned that the fine-tuning proposed, while useful to the Finance Committee and other town officials, could make the tool less useful to the general public.

This tool is not yet available to the public (nor to Town officials and staff), although the council has indicated that it intends to make it so.