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 Board of Education Conference Room of the Simsbury Town Offices. The following members were present: Michael Wade, Peter Askham and James Belfiore. Candace Fitzpatrick arrived at 6:07 p.m. and Mary Glassman arrived at 6:08 p.m. Also present were Kevin Kane, Finance Director, Anita Mielert, First Selectman, Joel Mandell, William Garrity, John Romano, Thomas Vincent, Madeleine Gilkey, David Holden, Business Manager, Richard Sawitzke, Town Engineer, Mike Wrabel, Public Works Director, Richard Lange, WPCA Chairman, Jim Clifton, WPCA Supervisor, and other interested parties.

Mr. Holden distributed the BOE six year CIP. He noted that the principal change from the previous plan is the removal of the high school construction project from fiscal year 2001/2002. Mr. Holden stated that the BOE is working with the architect and consultants to develop a plan which they can bring forward before June 30, 2001. He noted that the conversion of the existing high school to a middle school has also been eliminated from the plan. He stated that soon the BOE Building and Grounds Subcommittee will begin work with O&G to modify the needs in the schools in order to stay within the $40 million parameters.

Mr. Askham questioned when the BOE will bring the high school project forward. Mr. Holden stated that plans need to be submitted to the state by May 29th in order to fall within the time frame of the current legislative session. He stated that prior to June 30th the BOE plans to have a cost estimate which will meet the needs of the high school and elementary schools.

Mr. Belfiore noted that the Information Technology Advisory Committee recommended that computer equipment be incorporated into the operating budget. Mr. Holden stated that with the additions and modules, new areas will need to be wired and the amount of future operating budgets is unknown. He stated that the BOE wants to keep the computers in their program, noting that they have already made a $3 million investment.

Ms. Glassman stated that she is anxious to send a referendum on the high school project before the voters. She questioned the time frame for the BOE’s proposal to come before the BOF and the BOS. Mr. Holden stated that the BOE hopes to put a proposal forward in mid-April. He pointed out that the authorization of funding from the legislature would come at the earliest in the end of May. He suggested that a referendum could not be held before the fall.

Ms. Mielert stated that the BOS will hold a meeting tonight and possibly vote on their six year CIP. She stated that it is feasible that one project will be put forward this year, which is the renovation, expansion and de-nitrification of the Sewer Treatment Plan. She stated that the first phase of this project would involve the design of the facility and the second phase would involve the construction.

Mr. Askham stated that after the CCM seminar on school construction he, Ms. Mielert, Mr. Henault and Dr. Townsley held a meeting to discuss a possible strategic plan process with Gilbane. Mr. Askham stated that Gilbane could provide a plan for the Town to address all of the long-term capital projects. He suggested that representatives from the BOF, BOS and BOE hold a meeting next week to determine whether the Town has a need for this type of plan. Ms. Glassman expressed concern with discussing a plan with one firm if the proposal were to go out to bid. Mr. Kane noted that there is no requirement to go out to bid for a consultant. Mr. Askham suggested that they look at their purpose and goals to determine what the project would entail. He suggested that a harder plan be provided which has the consensus of the BOF, BOS and BOE as to what projects will be done each year. Ms. Glassman questioned what other towns use this method of planning and competitive pricing. Ms. Fitzpatrick suggested that it would be helpful to have a model of how this company has worked with a town.

Ms. Mielert introduced those present to address the proposed project. She stated that timing is important with regard to being placed in the queue with the DEP for approval and funding. Ms. Mielert noted that approval of the design phase of the project could occur at the Special Town Meeting. She expressed concern that Simsbury is in danger of having a moratorium due to the capacity issue at the plant.

Mr. Lange stated that the plant is 25 years old and 4 years ago they realized that the plant was approaching capacity at a rapid rate. He stated that the mirror image capacity of the facility is not worth considering due to the current technology. Mr. Lange stated that a complete facilities plan was completed 1.5 years ago which outlines the plans for the facility and allows for consideration by the DEP of low interest rate funding.

Mr. Wrabel stated that this project has been on the 6 year CIP since 1990. He stated that they hope to complete this project through funding from the Sewer Use Fund. Mr. Wrabel stated that the cost for nitrogen removal at the plant is $3.5 million and cannot be completed without a renovation of the plant. He noted that it is becoming more difficult to meet permit levels and the Avon interceptor line is about to come on-line. Mr. Sawitzke stated that the expected life span for the plant is 30 years.

Phil Schenk, Avon Town Manager, noted that there are two methods to financing this project with Avon and Granby. He stated that (1) Simsbury could be the lead community and the other communities could pay Simsbury under the contract, or (2) each community could pay their own way. Mr. Schenk noted that the second method puts additional administrative services on the community and the cost of floating a bond issue. He stated that Avon prefers that Simsbury be the lead agency and Avon will pay their proportional share of bonding and administrative costs. Mr. Schenk stated that he has provided a draft letter to Mr. Lange which commits Avon to a proportionate share of the project cost.

Dennis Setzko, Earth Tech, reviewed the need for the project (1) the plant cannot meet the future state water quality requirements and occasionally has difficulty meeting the permit limits, (2) the aging mechanical equipment is in need of replacement, and (3) the plant has no capacity for future growth. Chairman Henault questioned the dates of the state requirements. Bill Hogan, DEP, stated that if legislature is approved the first nitrogen requirement will begin in 2002 and there will be a 1/15 incremental reduction over 15 years. He noted that a nitrogen credit exchange program will be available which will allow towns to purchase credits from towns that are meeting the limits. Mr. Clifton stated that currently the plant produces 250 lbs. of nitrogen per day and the requirement in 2014/2015 will be 107 lbs. per day.

Mr. Wade questioned whether the Town will have an advantage, with regard to nitrogen credits, if they do the renovation quickly. Mr. Hogan noted that the design phase is a 1 year project and the construction takes 2-3 years. He stated that when the plant is up and running the Town will be in the market to sell nitrogen credits to other towns. Ms. Mielert questioned the cost for a credit. Mr. Hogan stated that the early estimate is $2.50/lb. per day. Ms. Fitzpatrick questioned the number of Connecticut towns which are compliant with the new requirements. Mr. Hogan stated that currently ten towns are compliant. Mr. Hogan stated that there will be an even balance between the sale and purchase of credits among the towns.

Chairman Henault questioned what the requirements will be in 2002. Mr. Hogan stated that the proposed legislation is expected to pass with an effective date of July 1, 2001. He stated that when the permit is issued the requirement will be imposed on every community in the state. Ms. Mielert noted that there is a priority system for funding via the Clean Water Fund. Mr. Hogan stated that the DEP uses a priority point rating system which is based upon impact. He stated that Simsbury is in a good position because they have their study ready for design. He noted that only one other community has their study completed. Mr. Hogan confirmed that state funding for this project is part of the state bonding program.

Mr. Askham requested a cost breakdown of the three components which comprise the renovation and expansion of the facility. Mr. Setzko stated that the items are dependent upon a new facility. Maureen Crowley, Earth Tech, stated that approximately $17 million of the cost is due to regulatory requirements. Chairman Henault questioned the amount of additional capacity included in the proposal. Mr. Setzko stated that the facility would be expanded from 2.8 million gallons per day to 3.8 million gallons per day. Chairman Henault questioned how the amount of 3.8 million was determined. Mr. Setzko stated that part of the planning is to determine where the flows will come from in the future. Chairman Henault questioned whether relocating the plant was considered. Mr. Setzko stated that the cost to relocate the facility was prohibitive and they are reusing items at the existing plant. He stated that the cost to the Town is based on future allocation and a 35% buy in by Granby and Avon.

Tom Daukas, Avon Town Engineer, stated that Avon will contribute to the project based on a percentage of the regulatory requirements and a percentage of Avon’s usage of the facility. Mr. Askham noted that if they did not expand the plant Simsbury’s share would be 59% instead of 65%. Ms. Mielert stated that by not expanding the plant they would cause a moratorium to go into effect in Simsbury. Chairman Henault questioned the amount of the increased capacity component out of the $26 million project. Ms. Crowley stated that the increased capacity cost is $6.2 million. Chairman Henault questioned whether the bulk of the expansion will be charged to Simsbury. Mr. Setzko stated that Simsbury will need to negotiate with Avon and Granby regarding percentages. Mr. Kane questioned who will determine the percentages and expressed concern that this issue be resolved. Mr. Hogan stated that the determination on how the cost is paid is between the municipalities, but the DEP can assist in the negotiations.

Chairman Henault questioned whether the odors will be eliminated from the facility. Mr. Setzko stated that the new facility will have an odor control system which currently does not exist. He stated that the professional estimating firm utilized always provides accurate costs. Chairman Henault questioned what percentage of the project cost would be allocated to the design phase of the project. Ms. Crowley responded that the design phase is 8% of the project cost.

Ms. Crowley addressed the costs for the project. She stated that flow allocation was used to determine Simsbury’s allocation. She stated that Avon and Granby’s share of the project would be $9 million. Ms. Crowley reviewed the figures for her financial model to pay the cost of the project. She noted that her model includes payments by Simsbury taxpayers to cover the cost of future sewer users. She stated that Mr. Kane has another method by which to pay the loan. Ms. Crowley stated that Simsbury’s share of the DEP loan would be $14.3 million which equates to an annual debt service of $971,108. She noted that $739,160 of this cost is due to regulatory changes and $231,948 is due to increased capacity for future users. Ms. Crowley stated that if taxpayers pay the shortfall, until the future users come on-line, the mill rate effect is .334. She noted that as users sign-on the project will pay for itself. Mr. Kane stated that the increased mill rate would equate to a 1% tax increase. Mr. Askham noted that this project would use 1% of the 5% debt service budget.

Mr. Hogan stated that Simsbury can make the determination as to whether they want to (1) receive the funds from Avon and Granby and then make the loan payment, or (2) each community could bond and pay back the loan separately. He pointed out that there is a risk if one community doesn’t pass the bond issue.

Ms. Glassman suggested that agreements be in place with Avon and Granby before the project comes before the BOF so that Simsbury knows their cost for the project. Mr. Hogan stated that it would not be in Simsbury’s best interest to wait for negotiations with Avon and Granby to be resolved because the design phase will not alter the project. Ms. Glassman requested a status report so the BOF knows if there is a problem with the amount of the contributions from Avon and Granby towards this project.