Natick, Massachusetts - Board of Selectmen Minutes 3/16/09

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Board of Selectmen Minutes 3/16/09

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BOARD OF SELECTMEN

Natick Town Hall

March 16, 2009

6:00 p.m.

The meeting was called to order by the Chairman John Ciccariello at 6:00 p.m.

PRESENT: John Ciccariello, Joshua Ostroff, Carol A. Gloff, John Connolly. Absent: Kristine Van Amsterdam.

ALSO PRESENT: Michael Walters Young, Deputy Town Administrator; Donna Challis, Secretary

WARRANTS: Payroll warrants were signed by the Board of Selectmen on March 16, 2009 in the amount of $1,679,550.60. This figure was included in total warrants signed by the Board of Selectmen of $4,572,774.45.

DISCUSSION OF FISCAL 2010 BUDGET & TOWN MEETING WARRANT ARTICLES

Pegan Cove & Organic Farm
Article 2; b. Article 3

Ms. White advised that Article 2 and Article 3 involved similar proposals. It was being proposed that both properties be conveyed to the Conservation Commission so that funds from the Conservation Fund could be used to maintain the properties.

At Pegan Cove there were a series of trails that haven’t been maintained the Conservation Commission could use their funds to maintain the property. The Commission can’t spend money on properties they don’t own which was why the transfer was being sought. Pegan Cove was a lease and she (Ms. White) was working with DCAM to figure out the simplest way to do it. She was hoping a sub lease from the Board of Selectmen to the Conservation Commission may work and with the Conservation Commission’s funds they would be able to enhance the property at no cost to the taxpayer. The money would come out of the Open Space Fund. She believed this had the support of the Conservation Commission and believed it was a straightforward proposal.

Superintendent of Recreation and Parks informed the Board that the Recreation and Parks Commission was 100% in favor of both proposals (transfer of the farm and Pegan Cove). The existing terms of the lease for Pegan Cove called for certain things to be maintained, but the Town didn’t have the financial resources.

Mr. Ostroff inquired if there would be any issues with projects done, i.e. by an Eagle Scout on property controlled by the Conservation Commission.

Matthew Gardner, Chair of the Conservation Commission, saw no reason that couldn’t happen. In the past the Commission was very open to those projects and he was sure it would continue.

Mr. Ostroff asked about environmental issues at Pegan Cove and what kind of mitigation this would obligate the Town to. Environmental Compliance Officer Robert Bois noted that DCR owned the property and they were responsible. There was a release and it has been under investigation for awhile, but the Town wouldn’t assume any liability.

Mr. Ciccariello asked if the present lease protected the Town from any environmental issues and Ms. White responded that the Town was leasing Pegan Cove and this just would just lease it to a different Town entity. Nothing else would change.

At the entrance to the park was an Annaballi Memorial and Mr. Connolly noted that the family had asked to have that beautified. If it were under the care of the Conservation Commission, Mr. Connolly asked if that obligation would be taken care of by the Commission.

Mr. Gardner responded that the sense of the Commission would be to maintain and beautify the property. As long as the expense was within the letter of the law of the Conservation Fund, the Commission would be open to working with the family to maintain the property to the standards they would want.

On a motion by Mr. Ostroff, seconded by Ms. Gloff, the Board unanimously voted to support favorable action on Article 2.

With respect to Article 3, Ms. White explained it was similar to Article 2 but a little more complicated because it was an active farm and it was owned by the School Committee. She has been meeting with the School Committee, farm representatives, Mr. Cugini, and the Conservation Commission. She thought the School Committee had been scheduled to vote on this tonight, but the meeting has been rescheduled.

Ms. White noted that currently the Town contributes nearly $100,000 for three farm workers and in Fiscal 10 would be reimbursed for two positions by the Farm Board. There were some concerns and Town Counsel drafted a motion that covered the concerns. The School Committee wanted to protect the farm in perpetuity or as long as it wanted to exist and wanted the farm to continue to offer free programming to the schools as currently provided. The Conservation Commission wanted to be sure they had a role in the farm’s operation and included in the articles of organization would be a representative of the Conservation Commission to serve as a permanent member of the Farm Advisory Board.

The drafted motion has been sent to the School Committee, the farm, and the Conservation Commission and information had been received back from at least the Chairs. There was one minor issue that remains. The Police Chief put forth a budget that eliminates 7 out of 14 crossing guards and the Schools were concerned. The Police Chief and School Superintendent have set up a meeting for later this week. The Superintendent was speaking to all the principals with respect to the need for crossing guards around their location and together they will come up with a compromise. She (Ms. White) has not been able to offer the School Committee a firm commitment on the crossing guards but has pledged her support to whatever the Superintendent and Police Chief work out. That was the only glitch.

Continuing, Ms. White noted that having the Conservation Commission own the property they could contribute their funds in support of the operation. There will need to be some work by Town Counsel to determine which work best matches the use of the Conservation Commission funds. She thought the easiest thing would be for the Conservation Commission to pick up the costs incurred by the Town now. Those don’t necessarily match what was allowed, but there were other parts that do match up. The Conservation Commission was essentially committing initial funding in the range of $100,000 annually. This was seen as a win/win and would help ensure the longevity of the farm. The farm has been in operation for 30 years so it was a fabric of the community.

Mr. Connolly asked individually if the farm people were OK with this, the Conservation Commission, the Recreation & Parks Commission, and the Schools. Ms. White’s response to each was, “yes”. For the Schools she added that they just want to preserve adequate crossing guards. Mr. Connolly questioned if the School’s support was reliant on the crossing guards. Ms. White noted that the School’s hadn’t taken a vote as of yet, but acknowledged that they were looking for a compromise on the crossing guards.

Mr. Ostroff thought this was wonderful and a great solution to a number of things.

Ms. White didn’t know the cost of 7 crossing guards, but knew it was considerably less than the $100,000. She believed it to be around $61,400. If an agreement were worked out for 7, there would be some net savings.

Mr. Ciccariello noted there was an anticipated $144,000 in savings but the Schools would like to take $61,400. Ms. White corrected Mr. Ciccariello’s understanding noting that the $144,000 was the amount appropriated by the Town but the Farm reimbursed the Town. The net cost for the farm salaries was about $62,000 but the Town also paid for health insurance so it was somewhere in the range of $100,000. Mr. Ciccariello didn’t think it cost $40,000 for three individuals for health insurance, but Ms. White pointed out that it would depend on the program plus some of the people were eligible for retirement.

Mr. Ciccariello questioned if the Town would be saving any money. Ms. White’s reply was, “absolutely”. It was a better deal for the taxpayers. Ms. Gloff pointed out that if the decision were made to keep all 7 crossing guards for about $61,500 and if it was $100,000 the Town didn’t have to expend for the next year, that ended up with the split agreed to.

Mr. Gardner encouraged the Board to support the article. He felt it was a great example of how the Conservation Commission funds could be used to support a key piece of the community.

To Mr. Ciccariello’s comment that he didn’t see where this was in perpetuity, Conservation Commission member Jason Makofsky responded that it was his understanding that land that went into conservation land would require the full vote of Town Meeting and the State Legislature to come out of conservation.

Mr. Cugini reported that the Recreation Commission supports this proposal and he commended the Town Administrator for coming up with this idea. Anything that helps protect and preserve land for this type of use was wonderful.

On a motion by Mr. Ostroff, seconded by Ms. Gloff, the Board unanimously voted to support favorable action on Article 3.

MATHWORKS TIF PROPOSAL

Ms. White explained there were three articles pertaining to MathWorks – Article 25, 26, and 16 although Article 16 was unrelated to the TIF (Tax Increment Finance).

Article 25 would designate the property located at 1 Apple Hill Drive as an Economic Opportunity Area and Article 26 authorized the Board of Selectmen to enter into a tax increment financing plan for the MathWorks expansion.

Ms. White explained that MathWorks was looking to have their proposed expansion at One Apple Hill Drive designated as an Economic Opportunity area and that the associated investment be granted benefits through a Tax Increment Financing (TIF) Agreement. Subsequent to MathWorks making a presentation to the Board, she (Ms. White) met with representatives from The MathWorks on three occasions. At two of those meetings she was joined by Ms. Gloff and by Mr. Griesmer of the Finance Committee and Mr. Palmer, Finance Director at the latter of the three meetings.

The MathWorks initial proposal for the TIF Agreement called for a property tax exemption of 15% for each of the 20 years of the Agreement. After considerable negotiation and analysis of impact, the proposal was modified considerably and was detailed in the attachment given to the Board.

The current proposal called for a modest exemption of 5% for the first 6 years. Having a lower exemption early in the project enabled the Town to maximize the tax benefit from the new growth associated with the new development. In years 7 through 12 the exemption grew by 1% per year to 11%; then through years 13 through 20 the maximum proposed exemption of 12% applied. The project was already approved.

As to why the Town should provide a TIF at all, Ms. White said she would suggest there were at least two compelling reasons:

To ensure that Natick residents were afforded priority for a share of the 600 new jobs that would be created. Many of those were top end, high salaried positions as well as support positions. In the TIF Agreement, The MathWorks has pledged to work with the Town Administration to maintain the current ratio of 10% of all jobs being held by Natick residents. Additionally, 25% of the new jobs were targeted to residents of the regional Economic Target Area, of which Natick was a member. Ms. White pointed out that The MathWorks had exceeded the job creation targets that it set under the first TIF Agreement with the Town; specifically they committed to creating 400 new jobs whereas 670 were created. Through the TIF Agreement, The MathWorks would be required to submit annual reports as to job creation and capital improvements.
To further the Town’s beneficial relationship with one of its major employers, highest taxpayers and best corporate citizens. The MathWorks currently pays about $843,000 in taxes to the Town of Natick; this amount was projected to grow to $1.4 million upon completion of the expansion project even accounting for the proposed tax exemption. The MathWorks has been very generous to the Town, contributing substantially to both one-time projects (such as The MathWorks field) and recurring programs (such as The MathWorks Scholarships as well as contributions to the school, police, and fire departments and local charitable groups including TCAN, sports organizations, Rotary Club, organic farm, Service Council and others). Each year The MathWorks provides employees with 8 hours of paid leave to devote to community service and many employees volunteer their time with Natick organizations and programs.

The Board was in receipt of a letter from Bruce Whitney requesting support of a 10% resident clause in the TIF agreement. Ms. White advised that she brought Mr. Whitney’s request to the attention of the representatives from The MathWorks and felt that this, too, may be a reason to support the TIF if it provides a means to ensure local construction jobs as well as the permanent jobs.

Ms. White noted that approval of this TIF would allow The MathWorks to access important tax incentive programs from the Commonwealth. She further noted that subsequent to the Town’s approval of the prior TIF for The MathWorks, the Massachusetts Department of Revenue issued regulations prohibiting “de minimis” TIF Agreements which was generally defined as anything less than a 5% exemption. Further, the Agreements were carefully scrutinized to ensure that other contributions that the company made to the community to ensure that such contributions do not effectively offset the tax exemption.

In conclusion Ms. White felt the tax exemption as presently proposed was a fair and equitable approach for both the Town and the applicant and she urged the Board’s support of this Agreement.

Advisor to The MathWorks on the development and construction, Jack O’Neill of National Development felt that Ms. White had properly articulated the summary of the agreement.

Mr. Ostroff inquired if an exemption had any impact on a re-distribution to other taxpayers. Ms. White noted that the tax levy was the tax levy. The pie was a certain size and it got divvied up certain ways. The taxes were paid whether it be through other forms of abatement, i.e. elderly exemption were a piece of that which was made up by others. On the other hand the project brought in tremendous new taxes.

To Mr. Ostroff it sounded as though The MathWorks was being given the minimum allowed under the law. Ms. White responded that 5% was the minimum and took into account the extensive mitigation the company was providing through the Planning Board and being cautious about the DOR regulations regarding other contributions being made vs tax incentives.

Mr. Ostroff asked about the building permit fees and Mr. O’Neill advised that the first thing was the expansion of the east garage. The permits were just picked up. Those fees just went up and The MathWorks graciously paid. $33,000 was budgeted and $44,000 was paid. In the presentation initially made to the Town the anticipated permit fees were $700,000 and because of the increase it went up about 20% or $800,000-900,000. Construction on the larger project was expected to start in Fiscal 2010.

Mr. Ostroff inquired as to when the building permit fees would hit the revenue stream and Ms. White that the building permit fees would be immediately. As to when it could be budgeted in terms of falling out to free cash, it would be 2011.

With regard to Mr. Whitney’s proposal requesting a 10% residential clause for construction jobs, Ms. Gloff inquired as to what The MathWorks thought. In addition to serving as the development advisor, Mr. O’Neill told the Board that he was retained as the construction manager and signatory to the carpenter’s agreement and that would cover 40-45% of the project. As a result of that affidavit he suspected there would be a lot of local employment. The difficulty to agreeing to 10% of the work force being Natick, he thought the reality was that when you got into a project of this magnitude with budget commitments and schedule commitments it was difficult to say 10% of the employment would be from Natick. He would be happy to work with the different organizations and work with people to be involved in the bidding process, but he would like to avoid a requirement of 10% because he thought other issues need to be addressed in a project.

Bruce Whitney noted that as it stood a signatory contractor could take anybody from anywhere. It was not required like it used to be where 51% come from the local area. There was a clause in the agreement 6-7 years ago that allowed this to happen. It allowed more competitive bidding. With so many people out of work they tried to put these clauses in. What happens now the contractors take all of their men and bring them into here and the local guys in Natick that got laid off don’t have an opportunity. It probably would be impossible to put 10% of local people in the job; however, if they shot for 10% and there were not enough people then they can find others. Mr. O’Neill said he was inclined to help out, but without anything in writing what Mr. O’Neill says and what the contractor did could be different. He (Mr. Whitney) was trying to put local people in the area to work.

Mr. Connolly inquired as to the dollar amount per year that would be exempted. Ms. White referred to a chart and pointed out that the first year would be $11,255; the second $23,073 and the forward for a 20 year period. Mr. Connolly believed the overall amount of dollars would be just over $1 million and Ms. White confirmed that to be correct.

In response to Mr. Connolly’s inquiry as to what the Commonwealth did for MathWorks, Jonathan Speros of Price Waterhouse advised that the primary impetus was not the $23,000 tax break. The primary benefit was from the Commonwealth of a 5% tax credit. A project of this size between construction and equipment was over $90 million for a potential tax break of about $4.5 million. That was an important factor to MathWorks. The mitigation MathWorks was providing was approximately that amount of money so it helped defray a portion of that.

Mr. Connolly inquired as to the benefit from the State to The MathWorks over the next 20 years and Mr. Speros responded that it was maybe $5-$6 million. Most of it was front loaded.

Mr. Connolly then inquired if the building was being built whether the TIF was approved or not. Mr. O’Neill noted that the TIF was a critical element in the financing. The MathWorks did not yet own the property. They had an option to purchase. They had a building permit for the east garage and were expecting to move forward. If the TIF agreement did not pass, The MathWorks would have to step back and determine whether it was in the best interest to move forward.

It was Mr. Connolly’s understanding that the original MathWorks project had mitigation money attached. Mr. Ciccariello advised that was correct, noting that The MathWorks contributed $250,000 for soccer fields.

Mr. O’Neill explained that what had happened since that time was that the Commonwealth changed the rules for what communities can and can’t do. There was a history of giving diminimis TIF and then extracting other funds. There can no longer be other financial covenants to the Town and still be eligible for the tax break. The Towns have to be doing something meaningful and that was interpreted to be 5%.

Mr. Ciccariello added that from the state standpoint the intent of the TIF was to create economic development opportunities and they were willing to share in the investment by giving investment credits. Mr. O’Neill agreed, noting that the intent was to create an incentive for people to stay in Massachusetts and create jobs.

Mr. Connolly commented that the original mitigation money from The MathWorks had nothing to do with the TIF. Mr. Ciccariello noted that the original development was done by a different developer. That developer provided mitigation money to the Planning board for the purpose of transportation.

Mr. Connolly questioned if that mitigation money was used up and if so for what. Mr. Ciccariello advised that the Planning Board used it for everything to do with transportation. The money had to be spent within 10 years, but he didn’t know if it was all expended.

Asked if there was a timeline for the mitigation money to be spent, Mr. O’Neill responded that the mitigation payment was for the density under the MORE grants. There was a detailed schedule attached to the Planning Board’s decision that said where the money would be spent. It involved the re-creation of a signalized u-turn; redesign of the Oak/9 and Route 27/9 intersections; sidewalks from The MathWorks to Walnut Street. There were 24-25 projects including the Open Space Fund.

With the Town laying off people of which some will be firefighters, Mr. Connolly didn’t know what to tell someone who asked why the Town was doing this for The MathWorks.

Mr. Ciccariello responded that he thought when projects like this came to a community the community had to decide whether it wanted to stimulate economic development and had to take into account whether it wants to encourage an existing employer in the community. At times businesses have relocated down south because it was more advantageous. The community had to look at the number of jobs created and how much the business spent in the community with other things they provide. This business provides a lot to the Schools, etc. Those things had to be looked at besides the potential loss in taxes. The Town may be picking up revenue from other sources. The MathWorks rebuilt the soccer field at the gravel pit when the Town had no money to invest in the Oak Street soccer field. The residents in that area have benefitted from that and a lot of other benefits than the dollar figure.

Mr. Ciccariello asked Mr. Griesmer to elaborate on his participation in setting the percentage. Mr. Griesmer responded that he was a member of the Finance Committee and was asked to help out in one negotiation session. A couple of things were done with this agreement. The question he had was whether the amount exempted the first year would be excluded from the new growth and it was confirmed with the DOR and Assessors that if the first year was 15%, 15% of new growth would be carved out. He requested that in the early years the percentage of exemption be as low as possible. He tried to get it down to zero, but the information from the DOR was that it could never go below 5% or the whole thing fell apart. The 2014, 2015, 2016 were the years when the debt for the municipal complex was paid off and some money would be freed up.

Whether one should grant the TIF or not was a separate issue, but if a tax break were going to be granted, he would rather grant the guts of it when it didn’t present as much of a strain on the budget. The tax break to The MathWorks starts at $11,000 and ends at $86,000 but that was in inflated dollars. He tried to minimize the amount the Town would have to give up.

Mr. Ostroff didn’t think you could look at any benefit to The MathWorks without considering the benefit to the Town. If The MathWorks was getting a 5% break, the Town was getting a 95% break. You couldn’t assume this project would happen absent this.

Mr. Griesmer clarified that it was one thing to try to do the best TIF for the Town and another to say should a TIF be done at all. This project went through the Planning Board and was passed. There was a chance it wouldn’t happen. Some of it would be financed through debt borrowing and some through corporate funds and the $5 million from the state would support the corporate funds and he believed that would lock in the certainty. If they (MathWorks) got the $5 million tax break from the state in return for Natick shaving off $10,000, it raised the likelihood of them actually doing the project. The building permit fees could be used now and if they were committing to 10% of the jobs for Natick residents that was 60 jobs and that was key to the economy with people out of work.

Mr. Griesmer continued that he thought it helped to have a major headquarters employer in the Town. The whole recession was about housing failures and somebody looking to add 600 jobs, while he wasn’t saying would cause houses to go up, it would prevent them from going down. He looked at it as 1) There would be more certainty of getting the project (with the TIF); 2) The Town would get the building fees sooner; 3) The Town would get good jobs and an adrenaline shot with the housing piece.

Ms. White pointed out that in yesterday’s Globe there was a story about job losses in the region. The Framingham census says 800 jobs were lost in the professional, scientific area.

Looking at the estimated TIF savings to MathWorks that over 20 years was just over $1 million, Ms. Gloff thought the Town should be looking at the estimated taxes on new construction over 20 years of $11 million so the net was a little over $10 million. She wasn’t saying MathWorks wouldn’t do the project without the TIF but wanted to point out there was some benefit.

For the local electricians, Town Meeting member Larry Forshner and former Electrical Inspector, advised that the union business manager will guarantee a local residential clause. As a Town Meeting member he liked MathWorks and as the former Electrical Inspector he was in favor of the project and in favor of the TIF as there was a signatory of the Electrical IBWEF in place.

Mr. Whitney felt that people should be aware of what he said in the letter. This was the perfect opportunity for the Board of Selectmen to help the local workers who through no fault of their own lost jobs and a perfect opportunity for MathWorks to help local workers survive. This was a win/win for everybody.

Ms. White pointed out there were two separate articles. The first designates the site as an EOA and that was a prerequisite to granting a TIF.

Mr. Ostroff moved to support favorable action on Article 25. Seconded by Ms. Gloff. The motion passed on a 3-1-0 vote. Mr. Ciccariello, Mr. Ostroff, Ms. Gloff voted in favor of the motion. Mr. Connolly was opposed.

In making the motion, Mr. Ostroff felt the article just made it possible and enabled the discussion.

Mr. Connolly commented that he was getting the drift that if the TIF wasn’t supported, MathWorks wasn’t going to do all the wonderful things they have done, but Mr. O’Neill responded that no one was saying that. Mr. Connolly countered that the Board said no to the Service Council and yet was saying yes to this. To him there seemed to be some inconsistency and he was having a difficult time justifying it.

Mr. Ostroff noted that at any point the Board wanted to bring up the Natick Service Council, he would be happy to do it. There was an absence of a policy and that could be addressed.

Ms. White advised that Article 26 was the agreement. Ms. Gloff, Mr. Griesmer and she brought it a fair way from where the proposal started. Having it at 5% the first year will maximize the new growth and insured compliance with the DOR guidelines. She recommended Article 26.

Asked who had looked at the draft agreement for the Town, Ms. White noted that it modeled the prior agreement. It hadn’t been presented to Town Counsel but would be.

Mr. Ostroff noted that Town Meeting could vote favorable action that empowered the Board of Selectmen to enter into an agreement, but that didn’t mean the TIF agreement would go back to Town Meeting for ratification. How close to a final agreement Town Meeting would see?

Barring any changes by Counsel, Ms. White expected the agreement in front of the Board tonight would be the agreement presented to Town Meeting. She added that the Finance Committee was hearing this tomorrow night.

Mr. Ostroff moved to support favorable action on Article 26. Seconded by Ms. Gloff with a proposed amendment that the appropriate representatives of MathWorks talk with the individuals who spoke tonight representing unions about some sort of approach to deal with a residential requirement. Mr. Ostroff accepted the amendment. The motion passed on a 3-1-0 vote. Mr. Ciccariello, Mr. Ostroff, Ms. Gloff voted in favor of the motion. Mr. Connolly was opposed.

Speaking to the motion Ms. Gloff stated that she knew very little about construction. She understood the difficulty of making a commitment for a percentage and was not convinced a commitment was realistic, but she was concerned about individuals in our community that were unemployed. She supported the TIF and was more comfortable with MathWorks’ approach but would like to see this addressed.

Mr. O’Neill assured the Board that he was happy to enter into good faith discussions to see if they could come up with something that was good for everybody.

Mr. Connolly knew the neighbors weren’t happy about the project, but he would be very happy if MathWorks could be sensitive.

Mr. Ciccariello was aware of several communities, i.e. Boston and Worcester that incorporated home rule petitions regarding labor forces. He recalled there being a discussion many years ago about Natick requiring 10% and the Board of Selectmen didn’t take any action. He encouraged MathWorks to do it.

As to why the Board of Selectmen should support favorable action, Mr. Ostroff thought the most important thing was predictability in the municipal revenue. The short-term benefit was in terms of building permit fees. There was also the mitigation that solves important and overdue traffic issues, the creation of jobs, and millions in tax revenue that was all mixed up in the predictability. It was possible this project would go forward without the TIF but he was sure MathWorks was receiving telephone calls with opportunities from other communities. He was grateful the negotiators structured an agreement that was beneficial to the Town and made it possible to provide benefits to other programs. He didn’t take anything away from the concerns of the neighbors with this project.

Article 16 – Appropriation of MathWorks Mitigation Funds: Reline Route 9 Sewer Main

Ms. White explained that these were funds that were part of the mitigation associated with this expansion and the DPW was anxious to get this work underway to take advantage of the favorable existing relining contract.

To Mr. Ciccariello’s query as to amount of money, Mr. O’Neill responded that it was $118,000.

Mr. Ciccariello questioned if the existing relining contract was on a specific location, and DPW Water & Sewer Supervisor Jack Perodeau advised that the last Town Meeting voted $150,000 for sewer relining in different areas – mostly in easements. The DPW had a three year contract with Insituform for $150,000 a year plus any emergencies.

In follow-up Mr. Ciccariello questioned if this could be tied into a previous three year contract given that it was more than 25% of the contract. Ms. White noted this would be a change order and she understood Insituform would hold the price. Mr. Ciccariello pointed out that under state statute when the change order got to a certain percentage of the contract there was a requirement to go out to bid. Ms. White believed this was within the threshold. Mr. Perodeau believed it said any emergency work, but Mr. Ciccariello didn’t see how this was an emergency.

DPW Director Charles Sisitsky suggested that it be referred to Town Counsel and if Town Counsel said it had to be rebid, the DPW would rebid it.

Ms. Gloff pointed out that this was not money from the water & sewer enterprise fund. It was not paid by the ratepayers.

Mr. Connolly inquired as to why the work had to be done, and Mr. Sisitsky explained there was approximately 15 feet of 16” sewer pipe that ran in front of MathWorks. The sewer pump station in the sunk-a-way pumps ½ of the sewer in Natick and the gravity pipe was in tough shape. There was concern about its condition and if the Town didn’t get the money from MathWorks the money would have to be taken out of the enterprise fund. Last year some work was done in Park Avenue and this section was left open with the hope of getting this money from MathWorks. This was a piece of pipe that needed to be fixed.

A motion was made by Ms. Gloff to support favorable action on Article 16 in the amount of $118,000 with the source of funding from MathWorks mitigation. The motion passed on a 3-1-0 vote. Mr. Ciccariello, Mr. Ostroff, Ms. Gloff voted in favor of the motion. Mr. Connolly was opposed.

A recess was called at 8:45 p.m. The meeting was again called to order at 8:55 p.m.

Article 22 – Assessors: Increase Personal Property Tax Exemption

Director of Assessment Jan Dangelo told the Board this was a recurring article and for 12 years Town Meeting has voted favorably for the increase. The article asked for 32.5% for elderly, disabled and the veterans.

Ms. Gloff noted that the exemption started at some amount and every year increased by 2-1/2%. Ms. Dangelo added that if Town Meeting failed to vote the increase, it would go back to the state mandate and that would be quite a decrease.

Responding to a series of questions from Mr. Connolly, Ms. Dangelo advised there were 360 individuals entitled to the exemptions, for Fiscal 2010 the amount was $60,205, and Town Meeting could vote 35%. Since the number was in the article, Ms. Gloff didn’t think there was that ability (to vote a 35% increase). It would be the Moderator’s ruling but Ms. White agreed with Ms. Gloff that since it was so specific it may not be allowed.

Since the voters approved an override, Mr. Ostroff didn’t think this increase was quite keeping pace. If Town Meeting sought to do so it would be by whatever percentage the override represented above 2-1/2%. He didn’t know if it was a percentage or fixed.

Ms. Dangelo advised that the exemption was a fixed amount and the Town has always increased it by 2-1/2%. The guidelines for the exemptions have also been increased a great deal. Natick has pretty much been leading the way in the amount given to the seniors.

Mr. Ostroff asked about the possibility of the Assessors considering indexing this to the actual tax increase. Ms. Dangelo advised that it could be looked into, but it might be out of the scope. Ms. Gloff suggested that Ms. Dangelo first speak with the Moderator and if the Moderator said yes, it might be worth looking at now. Ms. Dangelo thought there may be a larger issue in looking at more money and what might be available in the overlay account.

On a motion by Mr. Ostroff, seconded by Ms. Gloff, the Board unanimously voted to support favorable action on Article 22.

In discussion of the motion, Mr. Connolly preferred favorable action at 36% commensurate with the override, but Mr. Ciccariello pointed out that if the Moderator said he would allow it, the Board of Assessors would have to vote on it and then come back to the Board. He preferred the Board to take action on this and then if the Assessors decide they want to come back it could be reconsidered.

Ms. Dangelo proposed putting this article before Town Meeting and if the wish was to look at an additional increase, it could probably be done at Fall Town Meeting. That would give time to identify the impact and identify a number people were comfortable with.

EXPENSE CONTROL TASK FORCE UPDATE

Speaking on behalf of the Expense Control Task Force was member Patrick Hayes.

Mr. Hayes updated the Board on the activities of the Expense Control Task Force. He noted that the Task Force’s objective was to identify opportunities for expense control through short and long-term efficiencies. They looked at operating costs and opportunities to reduce whether by eliminating services or outsourcing and regionalism. They came to the realization that they had to focus on how to manage costs over the long term and looked at ways to understand how the job was done or could be done differently. The Task Force didn’t pursue revenue opportunities and didn’t pursue a discussion on capital and didn’t develop the financial level of analysis on the recommendations. That needs to be done.

Mr. Hayes noted that given the time they had with an effort to put the recommendations to the Board and the School Committee well in advance of the budget process, they ran out of time to do a detailed financial analysis. Given their experience and given what the task force has done, there was a general consensus of the four major recommendations in October. A number of towns have embarked on similar types of studies, i.e. Newton, Wellesley, Brookline and the task force looked at those.

In October the ECTF submitted an interim report and they have come away with the perspective that for long-term cost control opportunities lie in structure change in how the town conducts business and offers services. They decided to look long term because that was where the money would be. Their analysis was based on a lot of activity. Interviews were conducted with department heads and they looked at a lot of studies done. 45 or so documents were pulled together from the Commonwealth. They had 21 meetings at an average of 2-1/2 hours.

Mr. Hayes continued that the Task Force started out brainstorming and identified 45 areas of potential savings cut across all different departments in general government and the school. The process was very analytical and they whittled the recommendation down to 9 or so opportunities for mid and long-term. The bi-weekly payroll was something that was being looked at. The goal was to determine what was being done more effectively or efficiently and if a cost benefit couldn’t be received, then consider doing something else. The challenge was finding ways to manage the delivery of services at the level citizens expect but Natick can’t afford. That lead to transformational recommendations for the town to achieve a balanced budget over time without overrides and to do that the structure had to be changed. Four transformation recommendations were developed and a series of short-term recommendations. The long-term recommendations were:

Shared service with the schools for facilities management
Shared service with the schools for Information Services
Shared service with the schools for Human Resources
Shared service with the schools for procurement and purchasing

Mr. Hayes identified some other short-term and mid-term areas to be looked at they included scheduling of employees, whether to regionalize ambulance service. In December and January the ECFT turned their attention to opportunities around collective bargaining agreements and potential savings and the Sassamon Golf Course. The Board approved the course staying open and agreed to do an interim look in June to see how it was going. The ECTF felt strongly that kind of analysis deserved constant attention and would recommend that it be done every month.

Over the past 3-5 meetings the ECTF spent considerable time on union contracts. It wasn’t their place to negotiate but it was in their purview to understand the long-term impacts of the costs to the town. They looked at the contracts and identified 4-5 areas they believed they could recommend to the bargaining management:

Get the general government and school contracts in the same fiscal year and he believed he heard that might be happening
Get all benefit programs in language to allow the Town the lowest cost
Cap health care contributions on general government
Make sure in every analysis done all the costs of the contract were known. Not all the analysis went to the level of detail for a long-term level of understanding

Mr. Hayes assured the Board that the task force was highly committed people and they were chomping to dive in and do more. They would like to go to the detail analysis in the areas already recommending including the contracts to understand the direct and indirect costs. Before they worked with the department heads, Town Administrator, and School Superintendent and relied on the information they were willing to bring to the table. This next step was a bit of a change and would allow the Task Force to go into the electronic budgets and documents so they could do a detailed analysis. They would be happy to work with the Town Administrator, Deputy Town Administrator and School Superintendent so they could put in dollar amounts. The ECTF was here to serve at the Board’s pleasure and was looking for direction. They were asking the Board to tell them what it wanted them to do, but without more direction they would continue going down the path just described.

Ms. Gloff inquired if there was anything in writing relating to the new information. Mr. Hayes noted that the Task Force minutes were somewhat detailed. There wasn’t a separate document but there could quickly be a document put together that could be the next interim report. Ms. Gloff felt that would be helpful.

Looking at the October report and the four topics mentioned – IT, Facilities, HR, Procurement , Ms. Gloff noted that the four would be merging those functions between School and Town side of the operation and she wondered if there had been any reaction from the School Department on any of these.

Mr. Hayes responded that following the October presentation there was a meeting with the Town Administrator, School Superintendent, Chair of the School Committee, the ECTF Chairperson, and a Task Force member to go over the recommendations and to have a conversation with general government and schools. He wasn’t at the meeting. The feeling of the Task Force was that there was an interest but not a high degree of energy at this point from the School Committee or the School Department.

Having attended the meeting, Mr. Ciccariello confirmed that it didn’t get far.

Mr. Hayes said that in subsequent conversations with Superintendent Sanchioni, he (Superintendent) spent some time with the Task Force and gave them considerable time and input and the Task Force felt he was interested in pursuing each of the four to determine whether they would work or not. As much as anything else it was a matter of time and attention to drive that forward.

Mr. Ostroff wondered if the Task Force had quantified the savings in the four areas suggested. Mr. Hayes responded that they had not gone to the next level of detailed analysis.

Mr. Ciccariello noted that the Task Force wanted to know whether or not they should move to the next step, how they were going to do it, and how much participation would be involved from the Town administration. Either they were going to be actively involved or would the administration provide all the financial recommendations to them and allow them to move forward. It seemed to Mr. Ciccariello that participation was needed by all concerns to make this work. When the Board realized budgets were getting tight, the decision was made to create the Expense Control and Revenue Enhancement Task Forces. To have both committees do all that work and then ignore them was an insult to each member that has put in all this time and effort. From his perspective (Mr. Ciccariello) the Board of Selectmen should be pushing to get deeper involved and look into these things to see if savings can be achieved. Now was the most opportune time to make changes and the Board should be supporting both task forces to move ahead.

If the Board failed to follow through on something, Mr. Ostroff said he would want to know about it, but he got a sense in October that it was a progress report as opposed to a call to action.

Mr. Hayes responded that he thought it was both. They gave the Board an interim status report and thought it was appropriate to give the Board some time. It may have been subtle but it was a call to action. The Board was given four areas and if any of them were a start they would do the analysis. He wasn’t saying the Board hadn’t done its job but as a member of the task force, himself and others were ready to go. Just tell them which ones the Board wished to go to with – just guide them. The Task Force was at a point where if they don’t hear from the Board, they would do the analysis and tell the Board what they found. In about two weeks they were going on their own.

Mr. Ostroff stated that he would love to see more specifics. He had some concerns he would love to share with the Task Force on the Information Systems piece. Unofficially the Advisory Board didn’t look at it as a cost savings as much as a performance enhancement and he was interested to see if that reaction was borne out by analysis. With respect to procurement, he (Mr. Ostroff) didn’t know how much economies of scale could be achieved. He then asked if the Task Force had explored what the legislative impact adds to the cost burden. There had been discussion about the unfunded mandate and was that a path the Task Force would consider going down.

Mr. Hayes advised there was an issue with IT, but that went to the long-term. On the unfunded mandate, they looked at it to a degree and didn’t have a complete understanding or handle on it. It was the worms in the garden. You didn’t realize how much the State was driving any departments until you start looking.

With regard to the four recommend areas, Mr. Ciccariello felt there needed to be another meeting with the Superintendent and the two Chairs to have some of those discussions.

That seemed reasonable to Ms. Gloff. All four areas seemed interesting and she saw advantages to digging into each in depth, but if there wasn’t agreement on both sides, a lot of time could be spent and it wouldn’t go anywhere.

Article 36 – Citizen Petition – Home Rule Petition – Open Space Funds

Article 37 – Citizen Petition – Appropriation of Open Space Funds

The article sponsor William Proia explained that Article 37 was a generic appropriation article and that it was the petitioners’ point of view that it wasn’t a proper appropriation of general fund money. The money has to come into the general fund and get appropriated out. That was leaving aside the question of whether the money was available for other things. None of that was present in the way it was structured. The intent of this article was to comply with the appropriation statute and draft it as a general appropriation. He wasn’t presuming anything more than that. It wasn’t known what the Open Space was, what were the standards, what it could be spent on and what it couldn’t be spent on. It said the money could be used to buy land but he thought the money was being used for other things.

Mr. Ostroff stated that he was glad this was brought forward, but he was trying to understand how the article meshed with what Mr. Proia just said. The article said transfer.

Mr. Proia advised that this was just a generic form. He didn’t want to presume how open space money should be spent. He thought it was an opportunity to discuss what the money should be used for because he didn’t think there was a lot of agreement on it.

Ms. White distributed an opinion from Town Counsel.

Mr. Ciccariello noted that Town Counsel was suggesting that the use of the terminology open space was incorrect and it was really the Conservation Fund.

Mr. Proia responded that in his opinion that was wrong. The fund was never created. It was written in a Zoning By-Law but that was not how you create a fund. He questioned if anyone thought a Zoning By-Law was an appropriation of funds.

Ms. White summarized Town Counsel’s opinion in which he indicated that the FAR money was spelled out in the Zoning By-Law and the contribution was to be made to the Town’s Conservation Open Space Fund which means the Natick Conservation Fund. Town Meeting did not have the legal ability to appropriate or transfer money from the Conservation Fund with one exception – a 2/3 vote required for expenditure when the Town was taking land by eminent domain and any damages for which the Town may be liable by reason of any taking of land by eminent domain. Town Meeting didn’t have the authority to appropriate from the Conservation Fund except as previously mentioned. Only the Conservation Commission had that authority.

Mr. Proia felt that Town Counsel was making the assumption that he (Mr. Proia) had challenged the money for a Conservation fund and that it can go directly to the Conservation Fund and a Zoning By-Law makes an appropriation. This article was a way to get the money into the Conservation Fund. Unless there was an appropriation of the money, it shouldn’t be spent.

Ms. Gloff thought Mr. Proia had just said that Article 37 would be a way to get money into a Conservation Fund. Mr. Proia clarified that it was a way to bring the topic up for discussion to figure out if the money was in the general fund or the Conservation Fund. He thought it was still in the general fund and never legally appropriated out.

Ms. Gloff didn’t think Mr. Proia’s explanation matched up with what the article said. The article said transfer to various departments which was talking about taking money out.

Mr. Proia responded that an Open Space Fund had to be defined. The money collected under the Zoning By-Law was in various accounts. Mr. Ciccariello noted that it was only one account, but Mr. Proia countered that there was no account. The point was the money was still in the general fund. A Conservation Fund was never created and the money was not appropriated and that couldn’t be done.

Ms. White responded that the administration would respectfully disagree. Town Counsel had a different opinion than Mr. Proia and her experience and reading of the law agreed with Mr. Flynn’s interpretation. She was comfortable with the way the money was put into the fund and expended.

Noting that this has been hanging out there for a long time, Mr. Ostroff inquired as to how it worked if a member wanted to get a third opinion. Ms. White advised that one method would be a special counsel.

Environmental Compliance Officer Robert Bois pointed out that all of this had been approved by the Attorney General’s Office which was the independent third party.

Mr. Proia noted that the Attorney General looks at the Zoning By-Law to see if it was a valid Zoning By-Law and it was valid. The Attorney General wasn’t asked if that was a valid appropriation of the money into the Conservation Fund. He recommended that it just be referred as a package to the DOR. That would be a good impartial body to look at it.

Mr. Ciccariello commented that what he was reading and hearing were two different things. He was hearing the Zoning By-Law allowed the Planning Board to collect money for FAR payments. Once the money was paid there was nothing in the by-law to dictate where the funds went vs Mr. Proia’s article which talked about raising or transferring money. He thought if the goal was to have an article that said Natick Zoning by-law allowed for the collection of funds, there needs to be something else that said that money had to go to the Conservation Fund vs general fund.

Mr. Proia reiterated that he disagreed with Mr. Flynn and noted that he (Mr. Proia) was saying there had to be the creation of a Conservation Fund. The money right now was not appropriated. It came into the general fund like all municipal funds and sits there until it gets appropriated. The by-law did not appropriate money.

Ms. White explained that the Conservation Fund was a part of the general fund and only the Conservation Commission can make an appropriation from that. With regard to a third opinion, Ms. White referenced an e-mail from Irene DelBono indicating that in speaking with one of the leading experts and a huge proponent of Home Rule and the right of municipalities to control their own affairs, when she mentioned there was a pending Town Meeting article which proposed that under the Home Rule Amendment monies could be shifted from the Conservation Commission to the general fund, his reaction was immediate and his answer was absolutely not. He felt strongly that the monies were exacted for a specific purpose and were put under the ConCom to be spent for conservation purposes as mitigation for damage, intensity, or other things that result from developments. If the funds were taken from developers and, through the Conservation Commission, passed through to be used as general municipal funds, it was an illegal tax.

Knowing Ms. DelBono, Mr. Proia acknowledged that she was very knowledgeable about conservation restrictions, but he thought the DOR would be the place to seek another opinion.

Since Mr. Proia sponsored the article, Mr. Ciccariello thought it would be appropriate for Mr. Proia to go to the appropriate state agency and get a determination, but Mr. Proia didn’t think they would respond because he was not an official of the Town.

Given the confusion, Mr. Ciccariello questioned how Mr. Proia would expect the Board of Selectmen to support something for which they didn’t have a lot of information. He (Mr. Proia) suggests that Town Counsel was incorrect and Town Counsel suggests that Mr. Proia was incorrect.

Mr. Proia noted that the DOR or Attorney General’s Office was set up specifically to help communities with these questions and he didn’t see why the Town wouldn’t use them.

Mr. Ciccariello agreed the Board could request the Town Administrator to write to the Attorney General and ask for an opinion and whoever wanted to offer questions should get them to her. Ms. White suggested the letter go to the DOR.

Mr. Ciccariello recalled that when he was on the Planning Board the then Chair tried to get some information regarding these payments and who had the opportunity to use them and was told this was the way it was. The Planning Board was trying to find out because they were collecting the funds and felt they should be making the determination of where the funds should go.

Former Planning Board member George Richards suggested that before going to the Attorney General the Planning Board decision be looked at. It was a condition of the Planning Board and with that the zoning article went to Town Meeting.

Mr. Ostroff noted that this would be before the Planning board on Wednesday night and before the Board started giving direction, Mr. Ostroff thought it would be helpful for one of the Selectmen to attend the hearing or empower the Town Administrator to be in contract to try to coordinate with the Planning Board. He thought it would be worthwhile to get some resolution on this issue.

Jeffrey Silverstein, a member of the Expense Control Task Force but speaking as a private citizen, noted that he had looked at the budget information on the web site and didn’t know where to find the money in the Conservation Fund. He was looking for some guidance on where it appeared and how much was in the fund.

Ms. White advised that the fund was not part of the operating budget but was reported in the annual report. The Finance Director had the amount in there.

Mr. Silverstein understood it to be millions and it seemed to him this fund needed to be a lot more visible to the public. Ms. White reiterated that it was not part of the budget and couldn’t be. Under MGL it was not part of the operating budget and couldn’t be presented as such.

A motion was made by Mr. Ostroff, seconded by Ms. Gloff, and unanimously voted to support referral of Article 37 to the Planning Board.

Mr. Ostroff commented on the need of more visibility of the fund, noting that he thought it would be very beneficial for people to understand where the money came from and where it went. He felt the Planning Board was the vehicle and if it had gone astray let’s resolve it.

Mr. Connolly stated that he would like to know the answer. It was very frustrating to have a $4.5 million deficit if the fund could be used for something.

Mr. Proia noted that Article 36 was the home rule petition that addressed what Mr. Connolly was asking. The assumption was the Town cannot spend the money for anything but open space and he (Mr. Proia) thought that was correct. Assuming that was correct this was about what the Town could do if it wanted to try to start a discussion of what it could be used for. The home rule petition would allow the Town to spend the money pursuant to the by-law for any purpose.

Mr. Ciccariello asked if Mr. Proia was looking to create a home rule petition that would allow Natick, through the administration and Town Meeting, to determine where the funds would be spent. Mr. Proia reiterated his point that this was general fund money and you start from zero and go through the normal appropriation process.

Mr. Ciccariello recalled that a previous Town Administrator made a presentation to the Finance Committee that money collected through FAR payments be subdivided into three categories: 1) Conservation Fund; 2) General fund; 3) Capital improvement – and he almost got thrown out the door. Now Mr. Proia was coming back to submit a home rule petition to get the legislature to act on it. If this were approved probably every community would start applying for a home rule.

Mr. Proia noted that he had been in touch with a couple of the delegation members and thought there was an amendment to one of the budget bills that would provide this statewide. He could report back to the Board.

Mr. Ostroff suggested that the Town Administrator be directed to contact the delegation on that issue and the Board agreed.

Ms. White commented that a home rule petition authorized and approved by the legislature would change the playing field in Natick significantly. She distributed an e-mail received that evening from John Wadsworth indicating his objections to this as he felt the Mall had a major implication on West Natick and commitments were made to residents of West Natick. He was concerned this may take present funds away from the intent.

Mr. Proia inquired if the money as it exists was earmarked specifically for that neighborhood. When told no, Mr. Proia pointed out that the money may not necessarily be spent there. If there was a more specific appropriation of that money, maybe it would be designated to the area of impact. Ms. Gloff noted that in his e-mail Mr. Wadsworth acknowledged there were no guarantees.

Mr. Ostroff didn’t see this going anywhere in the legislature so it had to be resolved here.

Mr. Ciccariello wanted to hold off until Ms. White spoke to the legislative delegation.

George Richards was of the opinion that the nexus between FAR and open space had to be taken into consideration. The Mall payments were to provide open space and maybe more discussion was needed on where the money should be spent. The hope was to provide open space in areas other than South Natick to help mitigate the density of development.

Mr. Ostroff felt that open space was an economically sound investment for the town. If you looked at what could be developed and the impact on the Town’s budget, there was an economic case to be made for open space.

WATER & SEWER ENTERPRISE FUND

Ms. White prefaced the discussion by highlighting the areas of discussion. She noted that the budgeting for the water & sewer enterprise fund was approached with several philosophies all geared around taking a long-term view, looking at the investment and making sure the infrastructure was protected and delivered safe clean water. They looked at rate stabilization. That was achieved for FY10 and very nominal increases can be recommended almost entirely driven by outside forces.

Also presented was the water & sewer policy for the Board’s review and at some point to address. All of the policy was geared toward sound financial management.

Mr. Ciccariello commented that the Board may not take any action given that a lot of information was received today.

Deputy Town Administrator Michael Walters Young advised that the presentation was broken into two distinct parts: a) a summary of findings by the Water & Sewer Rate Subcommittee of the Board of Selectmen; b) Information concerning the FY 2010 budget; proposed capital for FY 2010, proposed operating budget for FY 2010, and the preliminary impact and options concerning rates for FY 2010.

Concerned ratepayers have been notified of this review.

Water & Sewer Subcommittee Report

Mr. Walters Young reported that the Water/Sewer Rate Subcommittee met on January 9, 2009 to review, analyze and evaluate the Water & Sewer Enterprise Fund, the rate plan approved by the Board for FY 2009, and to review the citizen concerns raised subsequent to the rate-setting process.

The findings of the subcommittee were that as far as the rates themselves went, through eight months, the rate structure appeared to be working. Based on revenues and expenses to date, a year-end balance of just over $648,000 was projected. A positive year-end balance was consistent with recommended policy.

The average of water & sewer bills for condominiums was also working. Staff has dedicated considerable more time to averaging than billing in the past because all averaging must be done manually at this time. Staff has been in contact with the software provider on the subject of automation, that solution has not been developed as of yet.

Mr. Walters Young reported that the subcommittee recommended that the following work products be produced by staff. For the short-term:

1) an explanation from the Comptroller as to the difference in retained earnings from what was certified by the Department of Revenue to what was the actual amount – that was provided as attachment B;

2) A year-to-date budget update through February 28, 2009 – provided as attachment C

3) Creation of a list of frequently asked questions concerning water & sewer rates to post on the website - provided as attachment D

4) A letter to multi-unit properties and condominiums addressing issues regarding averaging including the basis for and explanation of the decisions that have been made, including (a) to which properties the averaging method was and was not being applied, (b) the basis for applying the $5 administrative charge, and (c) the determination to not apply the averaging method for irrigation water usage – that was in progress

5) An updated list of recently completed water/sewer capital projects and their status or timetable – that was in progress

6) An updated list of ongoing and pending water/sewer capital projects and their status or timetable – that was in progress.

For long-term and ongoing, the subcommittee recommended:

7) Creation of a longer term maintenance plan for water & sewer assets similar to pavement management program

8) Annual estimates of the impact of operating and capital budgets on water/sewer rates.

Recommendations: Mr. Walters Young told the Board that at this point in time, staff recommends no changes to the rates or rate structure as adopted by the Board of Selectmen in June 2008. When rate setting for FY 2010 begins next month, staff will recommend a few changes to the rates themselves and re-engage the Board in the formal adoption of financial management policies for the Water/Sewer Enterprise Fund.

The letter from the Comptroller had a date of January 9, 2008 and Mr. Connolly asked if that was correct. Mr. Walters Young advised that it should be 2009. Asked to elaborate on the letter, Mr. Walters Young read the letter into the record:

On November 13, 2008 the Department of Revenue certified the Water and Sewer Enterprise Fund Retained Earnings to be $1,331,440. However, after further review that amount erroneously includes $675,000 in reserves for expenditures. Since retained earnings is comprised of unreserved/undesignated funds the $675,000 mentioned above should not be included. Hence, the correct retained earnings at the end of FY 2008 is $656,440 which is equal to the total unreserved/undesignated fund balance.

This also occurred in FY 2007 when the original certification for Water and Sewer retained earnings dated October 16, 2007 was $3,310,50 which was revised by DOR on December 7, 2007 to $682,304. This was a result of including $2,628,205 of funds reserved for encumbrances and expenditures in the unreserved/undesignated fund balance.

Fred Witte, Comptroller

Given the time and the complexity, Ms. Gloff suggested that the Board complete item 5a (Water & Sewer Subcommittee Report), but table 5b (Water & Sewer Capital Budget; 5c (Water & Sewer Operating Budget); 5d (Potential Impacts on Water & Sewer Rates).

Mr. Connolly referenced the first page of 5d that showed that rates for Fiscal 2010 would go up approximately 4.9%. An increase of $11.74 per quarter or $46.95 annually stuck out at him. The rates went up twice over the past year, the citizens were hit with increased bag fees, a $5.00 service fee for producing the invoice and he thought enough was enough and would recommend the Board send it back to the administration for them to tweak.

Ms. White pointed out that it had been tweaked and later in the memo there was a recommendation for something different. Originally Mr. Walters Young had planned to go through the whole presentation.

Attorney George Richards asked to address the Board on behalf of a client retained by the owner of Kendall Crossing on the averaging of condos vs apartments. The Board had voted to average condos but not apartments. North Andover and Newton average water bills and they do both condos and apartments. From an equity and fairness standpoint, there were more condo units than apartment units. The condos will factor the cost into setting their budget and pass it along. Apartments can’t pass those costs along. State law did not allow water charges to be passed on and that had to be factored into the rents, but they can only charge fair market value.

Mr. Richards continued that his client reviewed the water bills and for February 2008 it was $54,000. This past February it was almost $78,000. That was an incredibly large increase at a time the economy was struggling. It would be his request to have the Board re-examine that. The staff’s rationale in recommending the condos was a manpower issue, but Mr. Richards didn’t believe the Board should have voted to average the condos until the staff could do everything and not discriminate. Most renters were low water units like condos and the owner of the building paid the taxes. On a fairness and equity standpoint, he and his client were asking the Board to reconsider that for the FY 09 rates and at least take it into consideration when setting the FY 10 rates.

Mr. Ostroff commented that he read an analysis done by Mr. Connolly and former Selectman Jay Ball that showed that averaging would shift some of the higher costs onto single meters. Mr. Richards responded that he understood it didn’t come from nowhere. When the tenant use was averaged, it wasn’t above normal, but they were paying an exorbitantly high rate which seems an unfair shift to the apartment owners.

Mr. Richards had previously mentioned that a lot of the condo units were owned by only 2-3 owners and Mr. Ciccariello inquired as to where he got that information. Mr. Richards advised that his client had provided that information. Mr. Ciccariello asked the staff to confirm that there was one owner of 200 units. If that was the case to him it became a question of fairness. They were supposed to be condos but in reality they were renting. Mr. Walters Young responded that staff would examine the Natick Village situation.

John Mannix of the Glen Ridge Residential Trust reminded the Board that last year both Glen Ridge and Meadowbrook Trust were advocating fairness in multi-unit billing and were still looking to get equity.

Ms. White noted that the Finance Director, the Deputy Town Administrator and herself met with the Dover Town Administrator and he was going back to his community. She asked if Mr. Mannix had met with Mr. Ramsey. Mr. Mannix stated that Mr. Ramsey had not communicated with them and he didn’t know why Mr. Ramsey would be involved. The Trusts were on the Natick water system and always dealt with Natick directly. It was Ms. White’s understanding that Mr. Ramsey wanted his Board of Selectmen involved and she would follow up with him.

Mr. Connolly inquired if Mr. Mannix was satisfied and he (Mr. Mannix) responded that he was for the time being adding that he had been at it for several years and was hopeful to achieve some positive results.

Town Meeting member John Magee stated he was a condo owner of a single unit and thanked the Board for implementing the averaging system. It had made a big difference to unit owners like himself. At the annual condo association meeting people were very happy to hear about the change and that they were finally getting some equity. Water bills were billed to the association and then assessed to individual units. Most of Precinct 1 was apartments or condos and he thought this got people involved.

Mr. Magee continued that one thing that happened was the back and forth with how the $5.00 charge was being assessed. When he looked at the minutes, he was unhappy that it was pretty ambiguous because he thought it was pretty clear what would happen with the $5.00 charge. One member asked if there would be a charge per dwelling unit or per billing and the answer was to charge per bill. Only one bill got prepared and went out so it didn’t make sense the $5.00 would get multiplied back in.

Mr. Ciccariello noted that he asked that question and the end result was the administration would charge $5.00 per dwelling unit and that was what they were doing.

Mr. Magee told the Board that he believed the apartments were an equity thing. It was the same situation as the condos. Since 2005 landlords can bill for water under certain cases. There were six different requirements and he doubted there were any in Natick that could do it, but as more apartments got retrofitted there would be more apartment dwellers that got charged for water and they would be stuck with these high water bills.

Mr. Magee commented that he was glad to see something being done with the Dover people. He wouldn’t advocate overcharging them just because you can. He felt the Town should be fair to them.

Mr. Ostroff believed the amount of staff time being put into the averaging justified the $5.00 per charge.

Mr. Walters Young suggested that the matter be a take away for the staff. Averaging was labor intensive in the summer but not as much now.

Asked if it was still being done manually, Mr. Walters Young understood it was now automated but it was still being tweaked.

Mr. Ostroff noted that he wanted to get a sense of how easy it was to evaluate different options for FY 10. Was the data in the form that was easier to explore different options than a year ago? Mr. Walters Young advised it was easier than last year but 5d was to give the Board a preliminary snap shot. It was not a final recommendation for rates. The key driver was the expenses which the Board reviews and Town Meeting approves. Any policy changes the Board decides to make, i.e. expansion or retraction of averaging, will have an impact on the rates.

Mr. Ostroff was interested to know if the MWRA increase was driving the recommendation to adjust rates for the last fiscal year. Mr. Walters Young’s response was, “yes”.

Chris Day of 7 Fairway Circle noted that she had been notified that the Board would be talking about the irrigation issue. She sat here from 7:00 p.m. and this was it. While she supported equity in terms of the apartments and condos, there was a slight misstatement that condos could pass the fees on. You can’t sell a condo if the fees go up and up. If the condo association had to keep raising water fees, then something else didn’t get done. Though she was thankful for the averaging, there was an almost 35% increase on irrigation and individual units would be getting the benefit so she didn’t see why they were being discriminated against (by the averaging not applying to the irrigation).

Ms. Day continued that she didn’t understand why irrigation wasn’t treated the same for averaging when it was on one master meter. The Board members got information put out by the subcommittee, but she still didn’t know anything more than when she came in here at 7:00 p.m.

Mr. Walters Young advised that the documentation was published on line on three different links by about 3:00 p.m. Friday afternoon. Whether irrigation could be averaged, the staff believes it should not be available for two reasons. The rate structured was designed to foster water conservation and that (averaging or irrigation) would be counter to that goal and since it was a use of resources it was higher. Averaging irrigation would change the practice and shift the burden to those who primarily use it for health and substance purposes.

Ms. Day countered that that presumed they were all wasting water and not conserving and she disagreed. When a lot of the property was open space, it wouldn’t just be ignored because property value would continue to go down.

Mr. Richards clarified that he was not advocating that the Board not average condos. He was advocating that apartments be averaged as well.

Mr. Ciccariello recalled that last year when the administration made a presentation at first it was impossible to average the condos and then two weeks later a solution was arrived at. He questioned how long it would take to look at the rentals. Ms. White responded that it was more of a matter of when. Budget wise there was so much going on that he believed it would be a minimum of three weeks or so before this could be looked at.

Mr. Ciccariello asked if the Board would have a response before it began to look at water rates. Ms. White wasn’t sure it would be available on night one, noting there was a piece of that discussion that if there was to be a different approach to averaging it would affect rates either up or down.

On a motion by Ms. Gloff, seconded by Mr. Ostroff, the Board unanimously voted to table discussion of sections 5b, 5c, 5d to March 23.

Ms. Gloff apologized to the DPW and stressed that this was not planned. She didn’t get a chance to read through it and it would be excruciatingly painful to go through it tonight.

Ms. White distributed a list of articles yet to be voted by the Board along with a list of the budgets to be voted. She raised the possibility of the Board adding a meeting for Saturday morning. Not all of the members were available and the Board agreed to schedule a meeting for Friday, March 20, at 3:30 p.m.

ADJOURNMENT

The meeting was adjourned at 10:45 p.m.

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Kristine Van Amsterdam, Clerk