Text of the CEC Report to Town Meeting FY04
as presented by George Burnell
to accompany the PowerPoint slides
Capital Expenditures is your handy dandy maintenance squad.
We're here to fix the roofs before they leak, to pave the
road before the pot hole and to plant plastic grass that
never turns to mud. It has been an interesting year. Let me
tell you about it.
CAPITAL EXPENDITURES COMMITTEE REPORT TO THE 2004 ANNUAL TOWN
MEETING
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Cash Capital policy sets aside 5% of
revenue after enterprise funds or (5% of basic operating budget)
for capital needs. Take that number and subtract the Tax Levy debt
service (Principal plus Interest). The balance is intended to pay
cash for capital items in that FY.
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This year, for example, the number
is $4,806,314. Out of that, we're paying $4,041,446 in principal
and interest on existing tax levy debt, plus $275,000 of short term
debt. That leaves $489,868 for available cash capital.
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Because our reserves have dipped so
low, it was decided to set that amount aside in the reserve fund
and to borrow for the expenditures.
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In FY04 we will pay down $3,253,000
in tax levy debt and $3,701,000 in FY05. Consequently, we will be
borrowing $2,530,000 this year and paying down $3,701,000 in
principal, reducing our debt by $1,171,000.
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What have we accomplished?
We have restored the High School and both middle schools.
We are now in the process of building two new elementary
schools.
We are bringing our streets up to
acceptable standards, thanks to a $7M exempt override in 2002.
We have built three all weather athletic fields. And I might add it
is with some satisfaction to see soccer matches played in the
rain.
We have a marvelous new library.
The Water, Sewer, and Recreation Enterprise facilities continue to
function normally.
And having served it's tour of duty as a library, Cary Hall is now
undergoing a much needed face lift.
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This does not come without a cost. This chart shows the additional
exempt tax burden over the next 10 years. This is on top of the
regular Tax Levy. The SBA reimbursement we expected for the schools
is still up in the air as to when it will happen or in what form it
will take (lump sum?). The good news is that all current school
projects are approved for eventual reimbursement.
The exempt tax on an average house
increases from $240 this year to $400 in FY05, $490 in FY06, and
$500 in FY07 before it gradually recedes to less than $100 in
FY2023. At that point State reimbursement will exceed the few
remaining debt payments --- assuming we don't have any further
Capital overrides, not a likely scenario.
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Capital assets
17 municipal buildings, 220,396 sf, replacement value
$36,359,399
11 school buildings, 1,077,199 sf, replacement value
$223,122,142
139 miles of streets.
1,300 acres of conservation land at
a cost of $3,800,000
160 pieces of DPW equipment, average
life 15 years, Replacement value $3,800,000
17 pieces of Fire equipment, average life 6 to 18 years,
replacement value: $2,600,000.
305 miles of Water & Sewer line: Cost Basis: $72,321,446.
Recreation: In addition to the buildings included in the municipal
assets, we have $19,000,000 invested in the golf course, pools, and
Lincoln Park plus an undetermined value in playgrounds, athletic
fields, tennis courts, and 11 miles of bikeway.
The total value easily exceeds a
half Billion Dollars.
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The bulk of maintenance is in the operating budget, but when
maintenance items exceed $25K, that normally becomes a capital
expenditure. Maintaining boilers, HVAC, windows, electrical, and
roofs generally become building envelope expenditures. When we
maintain our school buildings, that's part of the tax levy. But
when there's a major restoration, that has normally been considered
a debt exclusion. Note that it doesn't need to be -- we could take
it out of the tax levy. On the streets, it's a combination of ch.
90, which is State funding, Tax Levy funding, and for the current
major restoration of streets, the 2002 debt exclusion.
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There are five major issues outstanding:
These are the four elementary schools, the White House, the DPW
Barn, the East Lexington Library, and the Munroe Arts Building
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Elementary Schools:
Estabrook is most likely to be the next school to be addressed.
There
are some significant issues there that may involve major
expenditure, at the minimum an addition with asbestos abatement or
perhaps complete replacement. The other three schools have been
well maintained, windows and doors replaced, floors replaced, new
roofs etc. These three need to be evaluated by the School Committee
to determine the appropriate way to move forward, whether it's
continuing maintenance or restoration or rebuilding. We would
expect that the continuing maintenance would be funded out of the
tax levy and that either a complete remodeling or replacement would
be contingent upon future state reimbursement policy.
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The School Administration Building, fondly referred to as the White
House.
This building is a disaster. An employee has stepped through the
floor, the
copier did likewise, and it won't hold a coat of paint. The
deterioration is a disgrace in the center of our Town Office
complex, let alone in the Historic District. We need to do
something and we need to do it now. These pictures give some idea
of the condition of the building. We have met with the Permanent
Building Committee and have jointly come up with a recommendation
that we invest $25K for a professional review of the building to
determine the options to restore the facility in a manner that
makes it acceptable for our use. We believe that it is the best way
forward at this time.
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Pictures: useless drain pipe,
rotting wood, and rotting gutter.
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Pictures: peeling paint.
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Pictures: the fire alarm is so old
that the manufacturers address has no Zip code. The heating is such
a gerry-rigged system that units sit in stairwells, blocking
egress.
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The DPW Facility
There has been some interest in moving the facility to Hartwell
Avenue at a cost of some $12M although Capital Expenditures has
never bought into that suggestion but have rather thought that the
DPW barn, which is in terrible condition, be replaced. The building
is a dilapidated wooden structure with bays so narrow that the
trucks fit in with literally inches to spare. The ventilation is
poor and it is time consuming to park vehicles at night and to
dispatch them in the morning. In addition, we have felt that the
DPW offices should have some modifications and cleaning up -- The
total of which we estimate would run between $3.5M and $5.5M. And
by the way -- the building is subject to the Historic Commission
oversight (not the HDC). In order to better clarify the appropriate
course of action we have recommended, in conjunction with the PBC,
that we invest $30K to do a professional study of that facility,
including options that may not have been previously considered so
that the DPW and the Selectmen can decide on the path forward for
next year's Town Meeting.
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The East Lexington Library
Like the White House, the East Lexington Library is a historic
building owned by the Town which needs to have special attention
because of its historic classification. The building does not have
the floor load capacity normally expected of a library nor does it
have ADA access. The library trustees will need to identify the
specific use of the building before a program can be established to
bring the building up to an acceptable condition.
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The Munroe Arts Building
Munroe School, another visible and large but deteriorating
physical
asset, appears in no significant way on the Town's balance sheet
of
capital investments needed in the future. The building is used by
the Arts Council with the agreement that they maintain the
property. Such maintenance has been minimal and we believe the
building will soon be in need of significant work. This is not on
anyone's list for attention so it will be part of our evaluation
shortly.
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Summary
We are in the process of developing a more comprehensive inventory
of
the Town assets with a projected maintenance schedule for such
items as
roofs, windows, HVAC, and electrical that goes out 25 years, so
that everyone has a better handle on what our future expectations
should be. We expect to have that information well refined by the
next Town Meeting and look forward to working with the School
Committee, the Selectmen, the Selectmen's Building Finance Advisory
Committee and the Permanent Building Committee. We have a great
deal of talent in these committees and in our Town professional
staff which will result in a blueprint for caring for our
assets.
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In the meantime, we would like to
make one more point: When you own a physical asset, you have an
obligation to maintain it. That means that everything we're doing
ties into operating budgets and when the Town wishes to
significantly change, increase or add a physical facility, there
must be a source of operating funds for heat, light, power, and
maintenance. If we're not going to maintain our property
adequately, we shouldn't own it in the first place.
This concludes the report of the Capital Expenditures
Committee.
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