Simsbury, CT - Board of Finance Minutes

Paul Henault, Chairman, called the Regular Meeting of the Board of Finance to order at 6:04 p.m. in the Main Meeting Room of the Simsbury Town Offices. The following members were present: Candace Fitzpatrick, Peter Askham, James Belfiore and Mary Glassman. Michael Wade arrived at 6:14 p.m. Also present were Kevin Kane, Finance Director, Joseph Townsley, Superintendent of Schools, Mary Margaret Girgenti, Board of Education Chairman, Anita Mielert, First Selectman, Sharon Wilcox, Blum Shapiro and other interested parties.

Ms. Wilcox stated that the Undesignated Fund Balance is 8% which is in-line with the Rating Agencies. She noted that the 99% tax collection rate is very high. Ms. Wilcox reviewed the required communications: (1) there has been no change in the accounting policies, (2) there have been no changes in the financial statements, (3) there are no unrecorded audit adjustments, (4) there are no disagreements with management, and (5) there is no different performance audit. She noted that there were no findings in the single audit reports and no management letter outlining recommendations and findings. Ms. Wilcox pointed out that GASB 34 will change the way financial statements are presented and goes into effect fiscal year 2003, which will require a change in reporting procedures for financial statements. She noted that this change is designed to make the financial statements more user friendly to citizens. Ms. Wilcox stated that the changes will require more resources and she suggested that a committee map out a plan so that the Town is prepared when GASB 34 goes into effect.

Mr. Kane stated that in the past the average CNR appropriations have been $600,000, but last year $800,000 was appropriated. He expressed his concern that if CNR continues to be used at a level of $800,000 then CNR will move into a negative number. Mr. Kane suggested that, based on past history, the BOF set a CNR guideline of $725,000. He recommended a breakdown of $312,000 for the BOS and $413,000 for the BOE. He noted that moving technology items out of the capital budget have not been included in his analysis.

Mr. Askham questioned why Mr. Kane is recommending $725,000 if the average is below that amount. Mr. Kane suggested that there be a $100,000 fund balance which is 10% of the $1,000,000 which is usually appropriated. He noted that the BOF can set the fund balance where they choose.

Mr. Belfiore suggested that the BOF deal with the CNR level when the budget requests come forward from the BOE and the BOS. Ms. Fitzpatrick suggested that a letter be sent to the First Selectman and the BOE Chairman letting them know the BOF is working on a target range, pointing out the historical figures, and noting the guideline. Ms. Glassman noted that Ms. Mielert and Ms. Girgenti are present at tonight’s meeting and they will be aware that requests above the recommended guideline are in jeopardy of not being approved. She suggested that a letter be sent rather than setting a policy.

Ms. Glassman reviewed the economic data and noted that the economy appears to be slowing, but unemployment is still low. She pointed out that new home construction is slowing and the Grand List growth, based on real estate assessments, is only increasing by 1.5%. Mr. Kane stated that they are still waiting on the figures for motor vehicles and personal property. He stated that the Town does not yet have information regarding revenues from the State. Chairman Henault noted that if the tax abatement plan for firemen and ambulance personnel is passed it will equate to a $56,000 reduction in the Grand List.

Chairman Henault noted the receipt of preliminary budgets from the BOE and BOS. Dr. Townsley reviewed the preliminary budget figures (Addendum 2). He discussed the cost of educating special needs children and its .5% effect on the budget. Dr. Townsley stated that 11 retirements are projected for next year and could result in a 1% decrease in the budget. Mr. Askham questioned the projected enrollment. Dr. Townsley stated that current enrollment is 4,888 and they expect next year’s enrollment to be 5,159. He stated that this year’s enrollment slightly exceeded their projection.

Mr. Kane reviewed the preliminary budget for the BOS (Addendum 3). He noted the increase in utility and insurance costs. Mr. Askham questioned whether there will be a reduction in the retirement expenditures. Mr. Kane stated that the retired police officers are fully funded, but they need to fund the new young officers. He noted that the Auditor is working on those figures.

Chairman Henault reviewed the budget information. He stated that the BOS anticipates a 6.52% budget increase, the BOE anticipates an 11% budget increase and an 11% non-public schools budget increase. He noted that utilizing debt retirement at 7%, grand list growth at 1.5%, and a tax collection rate of 98%, the tax increase would be 9.88% using $200,000 of surplus and 10.17% using no surplus. Mr. Kane distributed a document outlining the projected mill rate based on these figures.

Chairman Henault noted receipt of Mr. Kane’s December 19th memo regarding the debt policy (Addendum 4). Mr. Kane stated that with the Sewer Treatment Plant expansion there is not much capital available over the next five years if they stay within the debt policy. He suggested that capital expenditures for 2003/2004 should be reduced to $1 million in order to stay at the 5% level, with an additional 5% towards the high school project. He stated that the high school project should not exceed $43.5 million to stay within a 10% debt policy.

Mr. Askham questioned the tax impact of a 10% debt service policy. Chairman Henault stated that a 10% debt service policy would equate to an approximate 6% tax increase. Members of the board agreed upon a 10% debt service policy including the high school project.

Chairman Henault noted receipt of Mr. Kane’s December 15th memo regarding RESERVES. He stated that the $4.5 million in RESERVES has been consistent over the past 5 years. Mr. Askham questioned whether a Rating Agency would view RESERVES of 8% differently than RESERVES of 10%. Mr. Kane stated that Simsbury currently trades at a AAA rating. He noted that an 8% level of RESERVES is low compared to most AAA towns. He suggested that the Town strive for a 10% level of RESERVES, particularly since the results of revaluation is unknown.

Ms. Girgenti reported that 750 residents attended the high school informational meetings held by the BOE in November. She stated that the BOE has looked at ways to reduce the cost of both the proposed new high school and the renovation project. Ms. Girgenti stated that the BOE has also considered a renovation at the suggested cost of $38 million. She pointed out that without a new high school there may be increased costs for the addition of a new elementary school.

Dr. Townsley stated that the cost for the new high school has been reduced from $68 million to $57.7 million by reducing the amount of land acquired, including a State reimbursement of $2 million for the access road, and basing the construction on an enrollment of 1,700 students. He stated that the renovation cost has been reduced from $57 million to $51.7 million by reducing the enrollment to 1,700 students, and reducing the cost to acquire land for athletic fields. He noted that they cannot accommodate all of the athletic fields with either of these plans. Dr. Townsley stated that the revised proposals will go before the BOS at their January 8th meeting, and the BOE supports the new high school plan.

Mr. Askham expressed his concern that the reduced prices are still not in the necessary price range. He suggested that the committee with representatives from the BOS, BOE and BOF may want to meet to decide where to go from here. Chairman Henault stated that there is still the issue of what the BOF is comfortable with and the needs seem to outstrip the resources. He stated that if either of the current proposed plans comes before the BOF it is unlikely that it will be approved.

Mr. Askham discussed a similar situation with an addition at the Ridgefield High School which is costing $41 million. Dr. Townsley suggested that comparisons to other communities should be discussed with O&G. He proposed that the BOF have a work session with O&G and the two architects. Ms. Glassman suggested the BOE should be involved in that process. Mr. Askham suggested that the committee with BOE, BOS and BOF representatives may want to meet with O&G.

Chairman Henault noted that the BOF needs to address the BOE request for modules at the high school. Dr. Townsley stated that he has modified his request from 7 modules to 4 modules. He stated that they will need 7-9 modules to get to 2004. He noted that there is a six month waiting period to obtain modules.

Mr. Askham questioned whether there are empty classrooms at the high school during the course of the day. Dr. Townsley stated that there is an 85%-90% occupancy rate. He stated that the 4 modules would hold 7 classes per day. Dr. Townsley pointed out that the freshman class is 125 students larger than the previous senior class and there are 50 new students. Mr. Askham questioned why the proposed new high school increases the square footage by 75% when the increased enrollment projection is only 30%. Dr. Townsley stated that the proposed square footage is what the State permits for the number of students. He stated that he anticipates needing 35 modules overall and he noted that the debt policy doesn’t address the elementary schools.

Ms. Mielert presented a map of the proposed purchase of development rights at Flamig Farm. She stated that the Town would purchase tract 1 with an option to purchase tract 2 within five years. She stated that the amount for both tracts has been agreed upon. Ms. Mielert pointed out that 18-24 houses could be accommodated on tract 1 and 2. She stated that the Town will apply for grant funding for tract 2. Ms. Mielert noted that the wetlands were considered in the appraisal and the development rights for tract 1 would be purchased first because it is closer to the road.

Ms. Mielert stated that the appraisal is $32,600 per acre and this is based on the difference between the value if the land is developed and if the land continues as farmland. Chairman Henault noted that $466,000 divided by 16.3 is $28,220 per acre. Mr. Belfiore noted that two appraisals were done. Mr. Askham questioned whether the appraisal is based on both tracts. Ms. Mielert stated that the prices are tied for tract 1 and tract 2 and they would pay the same price per acre for both parcels. Mr. Belfiore pointed out that the value of the property is in tract 2 and the Town would have to commit to the entire package to see the value of the purchase. Ms. Mielert stated that the Town plans to purchase tract 2. She stated that Nevin Christensen has a deal for $1.9 million to develop the land and the Town would pay $1.2 million for both parcels. She noted that there is public sentiment for Flamig Farm and the purchase of development rights allowing Flamig Farm to stay in business.

Ms. Fitzpatrick requested that the BOF receive both appraisals for the property. Ms. Mielert stated that the purchase must close by December 31st. She noted that the Town is taking real estate deals as they become available and there is nothing else in the immediate pipeline, other than the Tariffville property.

Chairman Henault questioned how the one acre in Tariffville fits in with the overall open space plan. Ms. Mielert stated that the owner wants to sell the property to the Town and there is a consensus to have open space in a dense village. She noted that the property could potentially be used for a small municipal parking lot in order to get the cars off of the street. She stated that the Town would apply for a Small Cities Grant if they pursue constructing a parking lot. Ms. Mielert noted that this property owner also wants to close by December 31st. She stated that the land is currently vacant.

Ms. Mielert stated that they have two appraisals for the Tariffville property. The appraisal from 5 years ago is $110,000 and the current appraisal is $90,000. Mr. Askham questioned how the Town can explain to voters why they are paying $110,000 for property appraised at $90,000. Ms. Glassman requested that the BOF receive the appraisals of this property.

Ms. Mielert stated that environmental testing was done on the Tariffville property 5 years ago and it is clean. Ms. Glassman questioned what the Town would do if Flamig Farm does something the Town doesn’t approve of. Ms. Mielert suggested that this would be an issue for the Zoning Enforcement Officer. Ms. Glassman requested that the Mr. DeCrescenzo be consulted as to the Town’s rights if this were to occur.

Mr. Kane reported that all of the EDC’s budget is committed. Ms. Mielert expressed her concern with transferring funds from another department when there is a problem due to the work of volunteers. Ms. Glassman questioned whether the EDC will expend all of their funds by February. Ms. Mielert stated that it will depend upon when Main Street requests their second payment of $20,000. Chairman Henault noted that surplus is usually available at the end of the year. Mr. Kane pointed out that the Town is fully staffed currently and therefore he doesn’t anticipate any surplus.

Mr. Askham expressed his concern with the number of requests for funds from RESERVES. He pointed out that fuel costs and snow removal are items which may need to be addressed with funding from RESERVES. He suggested that it would be prudent to wait until the BOF has better knowledge of the Town’s financial situation. Ms. Mielert stated that she will bring the EDC’s request forward again in February.

Ms. Mielert stated that the $30,000 check has been deposited. She noted that Mrs. Banks has promised a donation of $30,000 each of the next 5 years. Mr. Kane stated that the funds are sitting in the General Fund. Ms. Glassman noted that the arrangements for the fund need to be resolved before they establish a trust fund.