ORDER-2022-29 : Authorization of a Bond in the amount of $21,010,000, for the purpose of paying costs of the Melrose Public Library Renovation Project

Transcript (~1 h 9 min @ 50:12)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 50:08 Jeff McNaught: that's 11 yes so the motion passes thank you for being with us tonight miss Bell thank you very much next we have order 2022-29 authorization of a bond and the amount of 21 million ten thousand dollars for the purpose of paying costs of the Melrose public library renovation project and I know that we have mayor Broder

▶ 50:37 Jeff McNaught: believe Mr. DellaRusso and a couple of others coming into the room I'm letting

▶ 50:58 Paul Brodeur: them in as we speak mr. mayor welcome Thank You mr. chairman thank you thank you to the entire membership of the City Council and folks watching at all I assume we are under suspension and I can dive right in correct outstanding second

▶ 51:17 Paul Brodeur: so I want to thank you all for the opportunity for you tonight to present request for a bond authorization to fund the melrose public library renovation project first i want to thank each and every one of you for your hard work in doing your due diligence on this project from posing great questions to the staff making yourselves available for presentations and to the residents you represent and to touring the building you're representing your constituents well now going back to the earliest stages of the project as far back as the 2013 library strategic plan there has been significant input from the public library staff the patrons and the city council then board of aldermen that has brought us to this point and we are excited to present you tonight the culmination of many years of planning joining us tonight as was already mentioned our uh library director linda gardner planning director denise gaffey our cfo patrick delarusso and as well we have charlie hay from tapay associates and our own project uh owner's project manager pat santa available to answer any questions that you may have now as someone who has both who both grew up in melrose and is raising children here uh the melrose public library is an institution that is very close to my heart and i really couldn't be more excited as i said before about the opportunity to give this community the library it deserves for the 21st century our library as you heard from some of our earlier commenters is a vital resource for our public schools and is a center of lifelong learning our library is also very culturally meaningful to all our residents in the walls of our libraries relationships are created and strengthened memories and history are made and memorialized at our public library ideas are exchanged creativity flourishes and imaginations are sparked now our building our library has been there for us for my family for all your families and countless others for over 100 years and now is the time to reinvest in that library this project will preserve this gem for the next generation of library patrons make the building truly accessible to all visitors and expand the type and quality of programming to meet the needs of our community well into the future i know you know this well but it bears repeating there is no better time financially to do this project due to over 10 million dollars in outside funding available 8.2 million in grants from the massachusetts board of library commissioners and two million dollars generously contributed by the library board of trustees and historically low interest rates for municipal bonding the bond authorization before you tonight is the next critical step in this process to bring to fruition to bring this process to fruition and i appreciate the opportunity to make this case for this investment this evening and with that i will turn it over to linda gardner for a brief summary of the need followed by denise cappy for a brief project overview and patrick de la russo to address the financial plan for this and the funding model and of course we encourage and welcome your questions again thank you very much for the opportunity to speak tonight

▶ 54:45 Speaker 9: if i may mr chair i have a slide presentation to go along with what the library director will be

▶ 55:13 Jeff McNaught: saying if i may share my screen i'm sorry miss fleischman i've got two young ones over here who had me at bay for a moment yes you may share your slide presentation thank you

▶ 56:21 Speaker 9: so linda's ready to go miss gardner the floor is yours

▶ 56:33 Speaker 11: thank you there is no question of the library's continued relevance and importance in the melrose community and the data we collect shows what a large and diverse patronage utilizes our library Our circulation numbers continue to hold strong relative to our counterparts in other communities, with Melrose consistently ranking in the top three among the 25 libraries in our network. In fact, during the first half of September, we had the highest circulation in the noble network. We are currently averaging over 15,000 physical checkouts per month.

▶ 57:11 Speaker 11: However, as you're all aware.

▶ 57:16 Speaker 11: the library building is facing many challenges including lack of accessibility outdated systems that are failing including roofs elevator and hvac a challenging layout and space conflicts for meetings and programs that affect our children's area and limit our library services the renovation project will address all these needs planning began in earnest in 2015 with a

▶ 57:50 Speaker 11: space needs study this is followed up by a feasibility study that resulted in a preferred option that formed the basis of the mblc grant submission approved by the city council in 2017

▶ 58:02 Speaker 9: then the board of aldermen since then we have been awaiting the announcement of the grant award

▶ 58:14 Speaker 11: which came this past july the grant that we've been provisionally awarded is only available to libraries that meet state certification requirements and whose projects as submitted have been approved by the mblc these grants are meant to be transformative and help libraries like ours rise to meet the current and future needs of our residents melrose applied for this competitive grant in 2017 and we've been waiting for five years to receive the funding if we do not accept it now there is realistically no chance that we would get it again in the foreseeable future now i'll turn it over to planning director denise gaffey for a project overview thank you

▶ 59:17 Denise Gaffey: there it is i apologize for that i was having trouble with my video there for a few moments Thank you, Linda. So very briefly, I wanted to mention that the project involves the comprehensive renovation of the historic 1904 Carnegie Library building along with the replacement of the 60-year-old addition with a new three-story addition. All systems in the building will be upgraded and the space. Will be completely reconfigured to provide appropriate children's and team space and a large community space that is currently lacking. Finally, the project will make the entire building, including all of our collections, fully accessible to all patrons.

▶ 1:00:12 Denise Gaffey: This slide demonstrates the anticipated project timeline, presuming a positive vote for the bond authorization. The next phase will involve um completing the design and developing construction documents for the project we anticipate bidding the project in the spring um in the um in the late in the late spring early summer of 2022 with the target of beginning construction in the fall of 2022 and then occupying the building again by the very end of 2023 or early 2020 and we asked the architect to

▶ 1:00:46 Denise Gaffey: update the project cost this past july we had original cost estimate submitted with the grant application in 2017 many years have elapsed since that time that we knew we needed to revisit the cost so the cost estimator has updated those figures and provided us with a detailed cost and cost breakdown that is um that's been submitted and it's in your agenda packet it includes an escalation of construction costs beyond the original three years that we were allowed to carry as part of the grant submission and it also takes into consideration the volatility and pricing that we have been experiencing just to clarify you'll see that the slide the total updated project cost is 21.1 million dollars we're we're asking for 21

▶ 1:01:41 Speaker 4: 1,000,010,000, and that's because our final cost today, we're able to back out the cost of the feasibility study. So that's just to clarify that discrepancy in the number.

▶ 1:02:03 Speaker 10: Good evening. Tonight we are putting before you a bond authorization as stipulated by our bond council. The entire amount of the project, which is just over 21Million dollars. HOWEVER, AS YOU HAVE READ IN THE MEMO PREPARED BY THE TREASURER COLLECTOR, AND IT'S DATED SEPTEMBER 13, 2021, THE SOURCES OF FUNDING THAT WILL REDUCE THE BOND ARE AS FOLLOWED. 7.9 MILLION PLUS FROM THE MASSACHUSETTS BOARD OF LIBRARY COMMISSIONERS GRANT, JUST UNDER two hundred thousand from the green incentive grant two million dollar donation from the melrose public library trustees all significant significant sources of funds for the project itself and that leaves 10.8 million dollars that we would be bonding given the possibility of utilizing ARPA funds for certain qualifying elements of the project we consider this to be the maximum amount of debt that we would issue for this project next slide please the next

▶ 1:03:31 Speaker 10: slide talks about projected debt payments this chart shows that our current non-exempt debt payments, 80% will be paid within the next 10 years, the dark pink. Our 30-year debt management model already includes projected debt costs for the library, Memorial Hall, road improvements, fire department ladder truck, and the future projected debt costs associated with the volks school renovation project should it successfully pass these costs are shown in the light pink on top of the existing debt cost and the doc bank at no time at no time in the 30-year model does the debt obligation the community exceed five percent next slide please when we look because the question has come up about well how much additional capacity will we have are we locking ourselves in essentially we approve this project the answer to that is no when we look at how much we could borrow within again the five percent limitation of the city's non-exempt debt cap this chart shows that we have growing capacity to borrow even if we do the library and all those other projects i identified earlier the dark and the light pink bars show our existing and planned debt payments coming down over time and the green bar is the amount we could borrow and still stay within our five percent limitation of course just like you don't want to ever max out your credit cards the city has established financial limitations to prevent that from happening within our 30-year

▶ 1:05:42 Speaker 10: debt management program the next few minutes i'd like to give my personal perspective as the city's chief financial officer and the city auditor i think it plays a significant role here this evening and what i'm hoping will provide confidence for the community that this has been thoroughly invented from myself a certifying bank a bond council and create a sense of confidence within the community that this is the absolutely financially stable and the right thing overall to do for the benefit of the community first and foremost as you are aware in my role i am ultimately responsible to safeguard the assets of the community i am also responsible to manage the operating budget the 30-year debt management program that we're talking about this evening the four enterprise funds and i have to monitor the expenditure of all federal and state grants of the community i have done so for this city for 22 of the 29 years of my career and therefore can speak to this topic with clarity and depth and

▶ 1:07:04 Speaker 10: it does matter this evening i specifically want to talk about the capacity the tech capacity of

▶ 1:07:14 Speaker 10: the city to absorb this cost i would not be here this evening if i hit any reservation whatsoever on the ability of this city to fund this project i don't funding this project has been in the 30 year debt management program of the city for a number of years and in our five-year capital improvement plan and it is not new news to the financial portfolio we have planned for this we work hand in hand with our certifying bank hilltop securities on our debt management program to ensure its integrity should this project be approved first and foremost we will still be under the five percent non-exempt general fund cap of the city which we have established as part of the 30-year debt management program which simply means we do not apply more than five percent of the available budgetary revenues in any given year for debt service cost in our budget we always apply at a minimum 95 percent of all budgetary revenues to support the city and school departments operating budgets we don't overextend ourselves secondly we still maintain the ability to bond under our cap for other capital improvement projects found in the city's capital improvement plan as they come forth third it's important to

▶ 1:08:54 Speaker 10: know that the city of melrose maintains and has done for the last eight years one of the highest bond ratings available a double a plus from standard employees rating agency this is noteworthy A most recent bond review was done on September 15, 2020. Standard & Poor's writes, in part, the city has a strong debt and contingent liability profile. Overall, net debt is low, and just under 80% of the city's direct debt is scheduled to be repaid within 10 years, which are all positive credit factors in their view. but truly really important for us this evening on top of that is as telling as that is at the same at the time of this review the city of morrow's had advised standing in pause of our intention to request funding for the library project as well as the renovation of the bb school the renovation of memorial hall and the acquisition of a new fire department ladder truck after considering all these possible capital purchases they opined we do not expect these issuances to materially alter our view of the city's debt profile i share their qualified opinion on the city's financial ability to accept this obligation i sincerely appreciate the opportunity to address the city council this evening and if any questions i'd be pleased to answer them thank you thank you mr delarusso and um mayor broder do

▶ 1:10:55 Paul Brodeur: we have anyone else who is presenting or subject to your questions uh we do not um that is um Um, you've heard from me, you've heard from the professionals that, you know, do this work and are the, are the guardians of the fiduciary of of both. The finances of the city, but also, um. You know, our civic enterprise, and I continue to believe that this is. A signature opportunity for this city to make an important commitment to all its residents through investing in the library and we are. Happy to answer any questions you may have. Thank you. Mayor broader.

▶ 1:11:43 Jeff McNaught: I'm going to wait for counselors hands to go up. I imagine we have a few questions.

▶ 1:11:51 Cory Thomas: Councilor Thomas. Thank you. Mr. Chairman. I'll go 1st. Why not? Welcome everybody. Thank you for your presentations in a diligence. You've done to this point. I don't know who this goes to. Maybe it goes to me a broader. Maybe it goes to Patrick. So, um. Quite simply, how do we afford the library without a hit to the taxpayers in the city of.

▶ 1:12:13 Speaker 10: If I may a couple of things, that's a great question. 1st, and foremost, this is not a debt exclusion. I'll repeat that this is not a debt exclusion like with the middle school. This is not you're going to raise the original proposition 2 and a half and then on top of that, you're going to raise revenue to support a debt, a debt project. That's not what this is. This will be funded the exact same way we funded the ladder truck. Appears to Memorial Hall and any other, um. Capital project that the city undertakes. Within its prop 2 and a half cap, so nothing, there's no extra cost outside of the regular 2 and a half for anyone.

▶ 1:13:03 Cory Thomas: Thank you Mr. on the books, the funding of the Melrose public library through taxpayers that's that's set to come off the books within the next few years.

▶ 1:13:13 Speaker 10: If I'm not mistaken, yes, it is. In fact, that's a great question. the very last year will be fiscal year 29 in the amount of just over 173 000 fiscal year 28 will be the last full year of a payment which is um just under 2 million so we're definitely closing in on the end of that obligation and then that is a debt exclusion and

▶ 1:13:40 Cory Thomas: once that's paid it's gone permanently and is there an estimate of how much um how much money will come back to the taxpayers or how much will their tax dollars lessen after the school

▶ 1:13:50 Speaker 10: was paid off the middle school another excellent question uh counselor at the time we did the note the average cost per home was 190 dollars um for the debt exclusion all right thank you um

▶ 1:14:04 Cory Thomas: a lot's been brought up that we can afford not only we can afford the library but we can also uh afford to do multiple projects uh at once um and stay within the debt exclusion and and stay below your projections um and stay under that five percent that you've talked about um the the the mellis police department and the mellis fire department uh are in need of of replacement the the telephone company on west foster street it's 100 years old it's it's not an ada accessible building the fire the fire headquarters on main street is in need of a lot of work portions of of that building aren't usable um we had to customize a ladder truck to fit into the the headquarters how can we afford the library as well as affording a new fire department and a new

▶ 1:15:00 Speaker 10: police headquarters i'm not sure if the man wants to respond first but i'd be

▶ 1:15:03 Paul Brodeur: uh i'll respond in in broad brush to be sure um as you all know uh as a preliminary matter we have Begun the, the reconstituting the public safety building committee that will be a bit of a longer. All well, starting starting today. Uh, but folks should understand something that I am. Um, that I think it is important to repeat and that is. Within our capital expenditures estimated in 2019. Very rough estimate for about 37Million dollars. That is something quite candidly. We cannot afford. Under that 5% service debt service, this is speaking up. So part of that process is going to be. Should they should the council be willing to move forward on it would at the time. Would be a debt exclusion to cover the cost of the, of the public safety buildings. Quite frankly, I don't know of any community. that has 40 million bucks available of capacity other than maybe a Boston.

▶ 1:16:20 Cory Thomas: Mayor Proctor, thank you so much. Lastly, for now for me, a lot of talk has been brought up about the accessibility of the library. We toured the building, the racks of the books are very narrow, the ramp in the back is long and steep, And, you know, it's not a fitting way in modern day for people to enter the building. Absolutely. You know, the ADA concerns of the library of there. But there's also ADA concerns throughout the community, throughout our public safety buildings, throughout other public buildings in the community. Is there going to be an accessibility audit by any of the buildings in the coming months or years for the City of Melrose so we can get a better grasp of the ADA issues that face our community?

▶ 1:17:12 Paul Brodeur: Short answer is yes, the commission on disability is in the process. Right now of applying for a substantial grant in order to bring that process. Forward and how awesome would it be to be able to say to those auditors right out of the gate. You can skip the library because we're going to work on that, but we know we have other challenges to face.

▶ 1:17:43 Cory Thomas: In that arena, both big and small. Thank you. Mr. mayor and just let me say my family. So some of my earliest memories. Of my life have been the Melrose public library. I grew up in the in the children's room. My mother took me there in the 70s. I grew up there in the 80s and 90s. This was before many homes had home computers. So, we went for all of our research, we went when I was in elementary school, middle school, high school, we went to the library for those resources. And I'm proud to say that I brought my own children to the children's room when they were that age. And now they're entering high school. It's a great building. It's such a source of civic pride. I'm a huge fan of the library. I use it actively. I know so many familiar faces that work at the library. Ms. Gardner, thank you so much for taking the time this summer. It's a great project. It's a huge source of civic pride for Melrose, and I look forward to supporting this order. Thank you.

▶ 1:18:42 Speaker 8: Thank you, Councilor Thomas. Thank you, Councilor.

▶ 1:18:45 Jeff McNaught: Councilor Garipay.

▶ 1:18:51 Mark Garipay: Thank you, Mr. Chairman. Thank you all for being here. I'd like to thank Mr. DellaRusso for, I probably had spent multiple hours over the last few weeks on the phone with him, Again today, and I want to thank him for his availability. On that, and I really appreciate it. You're probably not surprised that I do have a number of questions. Uh, so I will, uh, I'll just, uh, I'll just get started. Um. You know, and I think this one's for Ms. Gaffey if if this project was not to move forward. What is the minimum investment we, we need to put into the library. In order to get it up to fix some of the, the roof and some of the other things, what's the minimum investment we would need to put into it.

▶ 1:19:42 Denise Gaffey: So, I did ask the, um, the architect and our owners project manager to, to, um. To help me with an answer to that question, because I know that's on a lot of people's mind. And, um, we believe that if we were, we would need to invest somewhere in the range of. 7 to 9Million dollars to update all of the obsolete systems in the building. Address all the building code violations and the accessibility. Accessibility limitations in the building, and also remove all the hazardous materials.

▶ 1:20:14 Speaker 4: So, even without without the benefit of the grant project, and all the, um, the benefits to the building in the patient.

▶ 1:20:24 Denise Gaffey: It would still be the city would still be on the hook for quite a bit of money and it's important to point out that actually. If we took that approach, we would have less usable space in the building because. Because of the accessibility challenges today, we have stats that are insufficient in size. And we have bathrooms that aren't code compliant. So, in order to to fix those problems, we would also have to expand the space for those needs and we would lose. Linda would lose even more programming space than she has today.

▶ 1:21:02 Mark Garipay: Thank you. Also, you presented a timeline for this project and it looks like two years, roughly. That seems pretty aggressive. Is that a realistic timeline? Based on some of the experiences on some of the other projects that we've had, we've approved.

▶ 1:21:30 Denise Gaffey: Yeah, so we feel like it's, it's realistic, especially if we were to get the funding approved sooner rather than later. Um, and, um, you know, a lot of thinking has already gone into the design of the building. We can't really modify. The design too much, because it's, um, it's been approved by the grant funding agencies. So some, you know, there'll be a lot of, um, there'll be some refinement occurring. But it's not going to be a lot that won't be a long drawn out process. So. Based on, you know, our, our architectural team and our project manager, we work with them on other projects in the past. They have. Decades of experience, and they feel very comfortable with this timeline.

▶ 1:22:11 Mark Garipay: Okay, thank you with with regards to the number of projects that we have. That are in the city community has out there that are in need 1 is, um, we can talk about it's, um. The BB school, so I guess my question is to Mr. what is the dollar amount that you have allotted. In your debt model to. To get the BB school up and running, um, if they so choose to use it.

▶ 1:22:42 Speaker 10: Excellent question, Mark. Yes, we have 2.9Million dollars in the debt model right as of today.

▶ 1:22:51 Mark Garipay: And has that dollar amount been communicated to the school department? Um, what what's been. What's been allocated within where we're at, we're being asked to make a financial decision on on a number of projects. Really? I know we're talking about the library, but. really takes into consideration everything um so they is the school department aware of what the

▶ 1:23:23 Mark Garipay: dollar amount is that's in your model yes um and if if by chance it goes above that and um could

▶ 1:23:29 Mark Garipay: the city absorb additional costs uh if it does go above the 2.8 or 9 million along with additional

▶ 1:23:40 Speaker 10: staffer um uh to the cheer two two two separate independent items in that sense first of all let's we'll address the debt um obviously depending on the scope and the um extent of the uh cost over the 2.9 if you're talking several hundred thousand dollars versus several million that does change the dynamic um clearly and that would have to be ascertained at that time um obviously as far as operating costs whatever is found if that is if it's decided that the um baby will be occupied under a certain scenario um determinations will have to be made um on staff existing staff that will transfer over any new staff that would need to support the environment at that point we have clarity we're not there yet at least i personally don't believe that we're even close to that right now given the fact that the dynamics have changed from the original determination of the 2.9 where there was enrollment data that was utilized to formulate that item and obviously enrollment has changed since then and we have to gear the decisions toward what we know to be now the current enrollment which has changed since the

▶ 1:25:09 Mark Garipay: override was passed okay thank you and uh what what's the what's the plan this may be for uh the mayor what's the plan for other capital projects that may be coming down the road um if the library was to be voted uh voted favorably um what's the next item that you have

▶ 1:25:28 Paul Brodeur: your plan for capital projects so in the i mean we continue almost constantly to refer to the cip that you all know was done in 2019 i'm happy to report that with your uh with your partnership and your approval we have taken a lot of the of the top 10 off the list it's really um be a little bit oversimplified but it's really down to this and the public safety buildings we've talked a little bit about um the public safety buildings and those needs and how we can uh how we can meet come through the for the rest of the projects it's really the same process we get a um we identify the needs and we're gonna reconvene or i shouldn't say reconvene a bit oh yeah hope the next meeting of the of the cip committee in the uh in the in the fall because those needs sometimes change and and we recognize that and as things come off new things come on we'll take that same approach we know we can't do everything at all times so we look for you know value and opportunity by that i mean we need a good price if we're going to move forward we have to have some certainty about what something's going to cost and then we look at all our financial options one of the reasons that why this is before you right now is because of the unique opportunity we have To tap the mass border library commission response. The same is true of any other project when we start to think about it, meaning out there, you know, are there state or federal resources. That we can put to good use to either absorb the entire cost or or shave that down. That's the way we will continue to approach these things and I. uh continue to welcome certainly the input of you all and most importantly our cfo because

▶ 1:27:32 Speaker 7: he is the person that um i guess i'll say i don't need to be flipped turns dreams into reality

▶ 1:27:42 Mark Garipay: by making sure we're not fighting off more than we can chew thank you um if this order was to get approved um and the estimates right now we have estimates revised estimates of 21 million and it was to come in um things could happen if it comes in considerably higher um and that dollar amount is higher than what was in the debt model would we have the opportunity to not move forward with

▶ 1:28:07 Denise Gaffey: this project or how would that work um i'm happy to address that question um so um first off the cost estimate that has been submitted is um is a pretty conservative cost estimate so um we feel pretty confident it was also just recently updated as i mentioned earlier so it is reflective of today's conditions so we feel good about the cost estimate but as the as the design develops at every stage of design we actually send the documents to the estimator um for an update so we have a very clear understanding by the time we did the project what the what the number should come in as and I've worked on a lot of projects and I've been in situations where you know the budget's tight and what we typically do is we might carve out some um some some elements of the project and bid them as alternates and that gives us a lot of flexibility when we bid the project if the number does come in you know right on our budget or if it comes in below our budget we can grab those alternates and um and we can build it back into the project so it's one way to hedge against um against you know the estimates or numbers coming in higher than we we might be able to fund um we so because of all of this and because of our very conservative nature to to addressing to working on these projects we wouldn't expect the number to be astronomically higher if something like that were to happen obviously we would have to go back to the drawing board we'd have to go look at whether there's some some things we might be able to value engineer out of the project um you know maybe some material choices that might save the project some money but again you know we would hope we would be making those decisions in that final phase during the construction document phase because at that point we would be getting a really um solid lumber

▶ 1:30:06 Mark Garipay: um mr de la mr delarusso on on your debt schedule um in years 24 25 and 26 seems like it's where we're creeping closer to the to the five percent um if i think we have a little under a million dollars that would be available based on that uh is that enough money to uh to handle and give us enough enough room to weather any unexpected capital expenditures um if we needed to need to need to make an investment in public safety

▶ 1:30:38 Speaker 10: Do you feel comfortable with that number? Yes, to the City Council, yes. We have tremendous capacity each and every year to address any additional capital needs that may surface outside of what we already have on the books. And I'm actually very glad you asked that question again, Council, because if you look at the debt model itself, it's based on a 30-year model, the 5%, 5% as the bond percentage, and 3.25% as the temporary interest, so the BN percentage. Why is that important? Because why is it important that Standard & Poor's, we have a rating of AA plus? Well, just today, so all the charts that you see and all the information, the illustrations we provide are based on an extremely high conservative figure and we we basically ensure that we're not going to ever find ourselves in that position counselor we have right now just just today i got a correspondence from our director at hilltop securities and i and we asked candidly for an outlook on what some communities around us are getting for interest rates on permanent debt again we're using five percent for the library five percent for the ladder truck five percent for memorial hall right now for example the town of rockland they just issued a 30 year bond over 26 million dollars they're paying 1.722 percent permanent debt permanent 1.722

▶ 1:32:35 Speaker 10: town of danvers 13 million dollar note again a bond 1.864 percent city of lowell 39 million

▶ 1:32:50 Speaker 10: dollar bond 2.028 percent the town of midfield a 30-year bond 39.39 million 265 000 at guess what 2.028 i'm sorry i'm sorry 1.463 it's town of stoneham 2 million 2.7 million less than one

▶ 1:33:14 Speaker 10: percent very permanent note town of wakefield 20-year bond just over 3.4 million 1.133 percent So I would match those against our 5% bond interest assumption, and I can tell you clearly the temporary interest, the 3.25% we're using right now today in our model, is under 1% across the board.

▶ 1:33:40 Speaker 10: And so we are extremely conservative. We're looking out exactly as you indicated, Councillor, for those times when we may need to secure additional debt. We always, always leave ourselves with enough revenue each and every year under the 5% cap to take on additional debt service. And I'm a significant debt service. So I have, again, full confidence that this is simply part of the program. And again, it works to our favor in all ways. So ultimately, if this is approved, this library note, we would expect the cost to be significantly less each year than was actually presented to the city council. However, I wanna qualify that. We do that intentionally. The model has always used the higher percentages. We never want to mislead anyone. We never want to try to squeeze in other projects by lowering the interest rate we can afford more projects at this time that's not what we do here the most important important element of our uh responsibility is to safeguard the assets of the community i'll say it over and over again to safeguard the assets of the community that's our number one obligation not to overextend ourselves period and we don't we never have thank you i just got one one last

▶ 1:35:04 Mark Garipay: question um for now um based on your experience over the years i mean we've had this conversation back and forth and it's not it's not necessarily a debt capacity that i worry about it's how how does it correlate into the budget and what what can we afford if we're to take on these projects the library uh the b the bb school any additional costs with memorial hall uh as things stand stand now are you confident that we can absorb absorb these within within our budget with no interruption in any city services as everything stands right now yes and i'll tell you why because

▶ 1:35:35 Speaker 10: those the the percentages that we use for debt have never varied it's never exceeded five percent in the entire time that i've been here which is again on my 30th year we don't deviate the percentage to fit the need of the city that or the administration we don't do that So, by maintaining that 5% level consistently, it absolutely pays dividends long-term, regardless of which administration candidly is in office. It always affords them the opportunity to take on new capital improvement, to continue investing in this beautiful, beautiful community. And you always have that capacity, that balanced capacity. And as you know, Council, it's not always debt. We do a lot with free cash. we do a lot with capital stabilization fund we really try to mirror the expense with the best funding source that's going to be the least expensive if i had my way i do everything pays you go but that's not reality however i try to work close to them to avoid the interest costs across the board as low as low as they can be i just i still try to avoid them

▶ 1:36:49 Mark Garipay: thank you um you know i just want to say one other thing uh regarding regarding this order um i've gone back and forth over the last few weeks and i think it's our responsibility to ask these questions and the questions that i'm asking are not necessarily an indication that i'm not supporting a library i'm actually um i'm actually gonna um in favor of it tonight and i'm gonna vote to move this along but uh i think these are the questions that need to be answered a number of them and i think i think they needed to be asked and heard in the public domain so i appreciate your candor and uh answering all the questions thank you thank you council thank you council

▶ 1:37:35 Jack Eccles: Garipay vice chair eccles thank you mr chairman um thank you to all the members of the administration for being here tonight um i just have one question off the top of my head and that is um for mr delarusso you'd mentioned and this was i think maybe my first time hearing of it using um american rescue plan act dollars for part of this project and i'd like to just have a little detail as to what that would entail how much if you're able to quantify it at all that'd be helpful for me

▶ 1:38:03 Speaker 10: thank you excellent excellent question again i i i have brought that up before and i'm going to continue to be to beat that drum because as you know we got 8.4 million dollars um in opera funds american rescue plan act within that um act there's provisions specifically for hvac and ventilation units which are resident in milano center and every school building it's in city hall building and across the whole city the objective here would be we would carve out that cost because we are remodeling and renovating and and seek to use the opera funds to to pay that cost which would ultimately reduce the bond so if the bond is 10.8 million and we can capture um 800 000 to other funds which is the federal government the upper funds that reduces the bond down right strictly dollar for dollar to 10 million that's that's an enormous advantage of having those funds and candidly at the time they came i said it couldn't be better timing wherever you have a chance to peel away cost on a project like the library this is the time to do it and i also extend that to the bb and any any other building again that would fall into that category we have an opportunity to use the federal money in my opinion again particularly

▶ 1:39:32 Jack Eccles: here to reduce bond costs i would go for it thank you so do you see that as likely part of the project or is this kind are you in the beginning stages of finding out whether or not we'll be able

▶ 1:39:40 Speaker 10: to um candidly a little bit more than the beginning we have a consultant here in new york and we've already approached her with that and she seems more yes at this point towards that affirmative again once the project is if it's approved by the city council and we will go the next step and handle that keep the board really informed on those types of things because they really have value and it's exciting it's exciting it's perfect timing that'd be awesome thank you

▶ 1:40:09 Jack Eccles: Thank you, that was the only question I had after having had the opportunity to speak with members of the administration and take, um, take a tour of the library. I'm a frequent library user myself. And I agree with counselor Thomas that the library is an extreme source of civic pride, but I also feel that if we're not meeting the needs of all of our residents in the library, that that's not something that we can be exactly prideful of. So I'm really excited at the opportunity. understand that 10 million dollars can be a significant sum of money and like every city we're looking at competing capital projects right now we seem to only have one that's shovel ready with matching funds ready to go so i think it's the responsible decision for this urgent and important project i look forward to supporting the order tonight and i thank the mayor and both councillor thomas and councillor mcnaught for kicking off the the conversation around the the public which will be a helpful discussion look towards the next significant capital projects

▶ 1:41:12 Jeff McNaught: thank you thank you thank you vice chair Eccles councillor McMaster and I have councillor Stewart are there any other counselors who would like to be in queue okay

▶ 1:41:23 Jeff McNaught: council McMaster and just a note um we may want to stop here and gavel into um council actually we have until 8 15. is that correct all right council mcmaster why don't we proceed we'll go

▶ 1:41:41 Shawn M. MacMaster: to the council a little bit thank you mr chairman please bear with me uh this evening my horses my throat is a little hoarse so i'm having some uh in trouble i'm trying to drink some some water throughout this um thank you all uh for being here appreciate uh all the work that you've done and putting this together certainly appreciate the time uh uh in terms of meeting with us um providing a tour uh and again submitting all this this information which i think is uh very helpful uh you know i realized that as council Garipay said that this is the only capital project before us this evening but i do think it's important uh as he said to really try to look at this within the context of other uh capital expenditures that are on the horizon uh or maybe on the horizon in terms of some of the needs that we've identified and similar to what council Garipay said uh we really do have a responsibility to scrutinize uh spending requests that come before us uh as the city's uh fiduciary responsibility whether that um fiduciary body whether that's for a library which everybody wants and i think we can agree uh we we need a library there's a lot that that needs to to be done um a lot of problems with it and the community certainly deserves it but even for things that you know maybe aren't as exciting like the uh salt shed or other things that have come before us so as council Garipay said we we ask these questions because it's important for us as the city's fiduciary body as i said uh to really dive in uh and uh i know that the administration understands that i think it's important for the public to understand that uh as well we really can't look at the library without considering everything else uh on the fiscal horizon so most of my questions tonight are really uh to that end throughout uh this project there's been a lot said publicly uh including tonight about our our favorable bond rating and that is in large part uh because of your fiscal stewardship uh mr de la rusa none of us uh deny that you know you've been here for a long time and we are uh where we are in terms of that bond rating because of your hard work um and all of the work that you and your team have done so so please also thank your staff uh for us i do think though that it's important for us to differentiate between our bond rating and our ability to afford accumulated debt over time so you know in other words it's one thing to borrow money it's another thing to be able to afford the cost of it with the context of our city budget and i think you you mentioned this uh mayor broder about uh or maybe it was used to de la rusa about a credit card it really is no different than that you may have somebody who has a strong credit rating who still has to ensure that um you know they can afford a mortgage they can afford a car loan or a personal lane uh or you know when accounting for their income their household expenses and within the context of their larger household budget so my questions tonight really relate to affordability i appreciate the bar graph that was put up there and i want to dive into what some of that that gray is so the the first set of questions that i have really relate to uh revenue and i i guess i would defer to either uh miss armada or um mr delarusso on these So, and this is just so the public understands, our primary source of revenue in the city is our real estate tax base, correct?

▶ 1:45:23 Speaker 10: Yes, correct.

▶ 1:45:24 Shawn M. MacMaster: Okay. And that tax base accounts for about 96% of all of the property tax revenue that we generate. The rest of the property tax is commercial. Is that right?

▶ 1:45:40 Speaker 10: Again, the majority 95% plus is residential and again, correct about 5% plus or minus is residential slash commercial.

▶ 1:45:51 Shawn M. MacMaster: Okay, so, in other words, residential homeowners are carrying the, the majority of our tax obligation in the city and because of propositions, you're going to have with limited in our ability to generate. New revenue above and beyond our property tax base. Is that fair to say.

▶ 1:46:10 Speaker 10: Yeah, correct outside of any new growth that we do receive. Um.

▶ 1:46:18 Shawn M. MacMaster: That's what limited by the 2 and a half. Absolutely correct. Okay. And we, I know when we met, um, I'd ask you about new growth. I, I appreciate the information that you submitted over the last 5 years. When looking at that in terms of new growth, that amounts roughly to about 600,000 dollars a year.

▶ 1:46:32 Speaker 10: Correct.

▶ 1:46:33 Shawn M. MacMaster: Okay. The public understands new growth is new development, improvements on homes, really anything like that that it raises the levy limit because homes or new property, we're basing that on the assessment of that property.

▶ 1:46:52 Speaker 10: Yes. In fact, in 2021, just so everyone knows, we had certified new growth of 623,925 as a counselor indicated.

▶ 1:47:06 Shawn M. MacMaster: thank you and on top of property taxes and new growth we bring in some additional revenue a modest amount in terms of local option and excise uh taxes and i think miss armada had submitted some of this uh to me um fair to say that meals tax and occupancy tax revenue have been down since

▶ 1:47:30 Speaker 10: the pandemic i'm sorry go ahead i was just gonna say could you repeat that is it is it fair to say

▶ 1:47:35 Shawn M. MacMaster: that mills tax and the occupancy tax from the hotel over on the Newburyport Turnpike that that's that's been down when compared to prior years so we're bringing in less local option taxes right

▶ 1:47:54 Speaker 10: now tax revenue I don't have that off the top of my head but I can get back to you okay and do you

▶ 1:47:57 Shawn M. MacMaster: have Mr. Marta than just the number in aggregate for local option and excess taxes so for the marijuana, excise tax, meals tax, occupancy tax, and motor vehicle excise tax over the last year. Do you have that or a general sense of what we brought in for revenue? I could get it for you

▶ 1:48:22 Shawn M. MacMaster: very quickly. If you could look into it and I'll just move on. I believe based on a question that was posed by Councilor Thomas, I think I heard that the middle school is scheduled to be paid

▶ 1:48:38 Speaker 10: off in uh 2029 yes that's the last year about 173 000 for that year okay so when we we pay that off

▶ 1:48:43 Shawn M. MacMaster: we'll actually be losing a current revenue source because the levy limit from the debt exclusion

▶ 1:48:54 Speaker 10: ends with the life of that particular debt correct um no the the difference is that this stands completely outside of two and a half you'll have no impact on the two and a half it stands outside on its own it's a separate funding stream and it's dedicated specifically to um pay this obligation once it's gone it's gone we don't we don't get to raise it again and spend it on something else unless again we have another debt exclusion correct but the money that's that's been raised

▶ 1:49:19 Shawn M. MacMaster: that the obligation from tax the taxpayer is over and done with at the at the end of the life of

▶ 1:49:26 Speaker 10: that absolutely correct absolutely correct okay in mr dillard you mentioned some of the other

▶ 1:49:29 Shawn M. MacMaster: outstanding debt you mentioned the uh the ladder truck you mentioned the envelope of memorial hall um can you discuss some of the other debts that that we currently have um whether it's for uh road work or anything else just so the public has a sense of what else is outstanding the aptitude

▶ 1:49:48 Speaker 10: again um the bb school we talked about that about 2.9 million the library that we're here for this evening which is in the debt model these items are all in the debt model currently as we're speaking Um, the ladder truck that we talked about that's in the debt model, memorial hall renovation and the roof. The road improvements, I believe that we just saw that recently at 1.5Million. And those items are already in the debt model. Along with the existing yet that's already been bonded. So, right now, that's what we have. In on the model and being held.

▶ 1:50:36 Speaker 10: And pending any other changes. Okay. Thank you. Thank you for that. So, in terms of school again, I'd be remiss if I didn't indicate that we put the bulk school obligation in there. Also, even though it's not debt that we technically go out and obtain, we would be responsible if it does pass for that obligation each year. So that's also in there. And that's also part of the 5%.

▶ 1:50:59 Shawn M. MacMaster: okay so in terms of we look at the library is 10.8 million you added the vulcan which is 10 million if that passes uh the the bb school in terms of getting that back online short of any overhead and any other associated cost uh nine million uh the inside of memorial hall probably on the low side of 1.2 million uh the salt shed at a price tag that might be more palatable to the council if we say 5 000 i know when it came before us it was 1.7 million but let's just say 500 000 for the sake of doing so if we add in the playing fields at the west knoll another three million and consulate thomas that asked about the public safety buildings and i know the mayor said 38 million i think in today's dollars probably be closer to 50 million so if we look at that and that takes us to 84 million seven hundred thousand dollars and i understand that that that we're not going to be able to bond all that um if we if we approve the 10 million dollar bond for the library are we jeopardizing our ability to pay for any of these other needed projects short of another debt exclusion or an override considering our inability to generate new revenue based on the questions i asked earlier

▶ 1:52:20 Speaker 10: That's an excellent question. Again, if we go back to the original public safety building, number one, let's peel that off. That would never be in the debt model itself because, first of all, it would exceed the 5% threshold. Secondly, it would crowd out any and all projects for anyone else, school or city, for the next who knows how many years down the road. We never even entertain that secondly the projects that you've talked about um all again extremely worthy projects what's interesting about the deadline i'm so glad we're talking about that tonight is that we have the ability through short term and long-term borrowing to actually um how can i say this we can design the um time that we take the debt on for a time that fits the model for the so that it's a best fit for the obligation so that we don't corrupt either the five percent and we don't corrupt the general fund so we know the general fund at that point this can sustain that so when you talk about projects different projects what people sometimes forget is that what is the duration of the obligation some projects are five years some projects are 10 years some projects particularly equipment like the ladder truck may be a 10-year note other projects like a field may be 20 years or longer the library 30 years 28 years temp a permanent two years temporary so you take that mosaic and you draw it down and say based on this mosaic that we believe for fiscal 23 this is what we would do to take on these i'll say three or four projects counselor and this is how we would design the obligation down the road so that we have the opportunity in 24 to continue to consider debt in 25 to continue to consider debt because each and every year you're taking on debt in our particular case in particular your debt is rolling off at the same time that's the that's the sometimes factor that gets um overlooked and you are taking on debt you're also losing debt that's why just about 80 percent of debt is gone paid off within 10 years that's that's phenomenal because we recognize that by taking the approach which i did take 75 to 80 percent of debt is always my target if possible over 10 year period and historically it's materialized that that benefits everyone short term long term you won't find yourself painted in a corner because you haven't allowed yourself to get there you've always always taken provision so that would never happen so the concern for you and i particularly with the budgets because as you just pointed out so eloquently a debt obligation means less for the operating budget if you don't plan it properly if you don't do your homework and study it right you will be pulling funds that you may need public safety education public works so that's why we recognize that the importance of over extending and we use credit card i know for the purposes of um sometimes uh you know comparisons but it is true in its own way regardless of the um models percentage or non-percentage we don't we always want to find enough cash to pay our cities so that we have a flushing a flourishing city budgets that can actually expand with the community and provide services that year after year after year and avoid the spikes we don't have spikes in debt we don't want spikes in the operating budget that's how you get into trouble every single time thank you for that great questions great questions so if we put let's

▶ 1:56:13 Shawn M. MacMaster: just say we put the if for the sake of saying 50 million dollars aside um and we looked at those other projects uh that i mentioned um and that gets us to 35 million dollars so that's without the public safety buildings do you think based on um you know revenue projections your your experience as a CFO for a long time. Do you think we can pay for those other costs in a way that keeps us within that 5 percent? Understanding that the life of those loans are going to be different, like you said. Some may be longer, some may be shorter. I guess put another way, do you think we can get all of that done um by bonding it in a way that keeps us under the five percent and allows us to do those other important projects which are all uh priorities i think we

▶ 1:57:17 Speaker 10: can all agree if i may again um to the chair i think that historically we proven we can historically it's been proven that we don't exceed the five percent if you take a look at the long-term models for the 30 years where we're going to be in 30 years from now the percentage gets down to less than two almost you know one something percent so we have done that um i think the concern and it's such a valid concern is that we want to continue that and again i can't stress enough the way you do that is to ensure ensure that you don't exceed the five percent number for debt in any given year because again counselor right to your point you won't be able to afford those other capital projects if again you start to now there's trade-offs and what will be traded off you don't want to get to that point if you do vote a project you want to know right up front that that product does not exclude the ability to do additional capital planning and it may be candidly you may have to push your project off for a year that's not the worst thing in the world if it If it makes the model better and allows you to take two other projects on, that may be tremendously advantageous. Those kind of decisions too can be made. So, again, right to your point, yes, we can, we can afford additional debt service to the extent. I can't tell you this evening exactly because it's not my, I don't have a crystal ball. If I did, I would. But I feel confident that by maintaining the integrity of the policies that you, through this council, the mayor's offices, this mayor, past mayors have put in place, we're here. That's why we're here tonight. The only reason we're here tonight is because we did the right thing all these years. We have the capacity to absorb this wonderful project, in my opinion, and it's not going to corrupt any other capital projects in the city, period, in my opinion.

▶ 1:59:09 Jeff McNaught: gentlemen uh we're gonna take a break at that moment and if there's no objection i'm gonna move by unanimous consent to recess uh the appropriations meeting and hand this over to president sanella to open up the city council seeing no objection we are in recess