BOARD OF SELECTMEN
Natick Town Hall
November 17, 2003
5:30 p.m.
The meeting was called to order by the Chairman Jeffrey A. Stern at 5:30 p.m.
PRESENT: Jeffrey A. Stern, John Ciccariello, Jay H. Ball, Charles M. Hughes, Paul R. McKinley
ALSO PRESENT: Philip E. Lemnios, Town Administrator; Donna Challis, Secretary
WARRANTS: Payroll warrants were signed by the Board of Selectmen on November 17, 2003 in the amount of $487,307.66. This figure was included in total warrants signed by the Board of Selectmen of $1,758,628.79.
EXECUTIVE SESSION
Mr. Hughes, seconded by Mr. Stern, moved to enter into executive session for the purpose of considering the discipline or dismissal of, or to hear complaints or charges brought against, a public officer, employee, or individual. A roll call vote was unanimous and the Board so retired at 5:30 p.m. after announcing that the meeting would return to open session.
The open session was called to order at 7:05 p.m.
PAY-AS-YOU-THROW UPDATE
Chairman of the Pay-As-You-Throw Committee Terry Miller updated the Board on how the PAYT program was going. She noted that in comparison of this year to last, the trash tonnage was down 25.6% and in four months time $86,542 had been saved. Recycling was up 22.5% and there was an increase of 34% at the recycling center. The question that keeps arising was where the extra trash has gone. Ms. Miller attributed the difference to some people owning their own business or taking their trash to work. Some people take it to other towns. People used to bring trash to Natick when there was free curbside, but they don’t do that any more. Plus there has been an increase in the bulk pickup and finally she thought that people were buying smarter. Natick now had a lot of environmentalists and a lot
of people have caught on and were very pleased that they were recycling.
Mr. Hughes noted that between June and October, $561,500 had been generated in bag sales and he inquired if there was anyway to project that over a year. Ms. Miller remembered the PAYT committee projecting that out, but couldn’t remember the number. She remembered it being done based on how many bags would be sold if the bags were filled to
capacity, but usually the bags weren’t filled that heavy so more bags will be sold than projected.
Mr. Hughes pointed out that for l/3 of the year, the Town saved about $87,000 in tipping fees, which projected to almost $270,000 over the course of the year. He inquired as to the increased cost to recycle and if the Town had to put on another truck. Ms. Miller thought the recycling contract went up about $150,000, but part of that was an increase that probably would have happened any way. Also after six months BFI will re-evaluate to see if the third truck was needed.
Recalling that the tipping contract carried penalties if the Town didn’t deliver a certain number of tonnage, Mr. Hughes questioned if the Town would approach those penalties as a result of the decrease in tonnage. It was Mr. Lemnios’ understanding that the penalty tonnage number was relatively low in comparison to what the Town was providing to Millbury. Currently the Town was not at any risk of running into that penalty.
From the numbers provided, Mr. Hughes thought it looked like the projection was to have a revenue stream of about $1.5 million over the
PAY-AS-YOU-THROW UPDATE (contd)
year in addition to the increase in recycling. The Town was actually generating two revenue streams – one for the cost of the bags and one from the decrease in tipping fees.
Mr. Lemnios added that the Town was not spending as much to dispose of household garbage at Millbury. An increase for curbside recycling has been experienced, but the difference was such that the Town would still be in a better budget situation than if this program had not been put in place.
Mr. Ball noted that there had been talk about $86,000 in savings, but whose savings were those – were they savings of the homeowners. It was unclear. It had been mentioned that the revenue stream from the bags essentially matched the disposal cost or slightly exceeded, but to what extent did the revenue of the bags exceed the disposal cost.
Mr. Lemnios felt that it should be recognized that in 2003 when the $175 household fee was put in place, it was estimated to raise in excess of $1.5 million. When PAYT was put in place that estimate was lowered to $1.2 million. The cost of disposal at Millbury was lowered in the FY04 budget. The savings being talked about was a cost reduction in the overall cost for delivery of the service for the homeowners and taxpayers. The total budget for disposal was $2.1 million and of that $1.2 million was expected to be raised through bag sales and the balance was subsidized on the tax rate.
Mr. Ball questioned if there was a difference between revenue from bag sales and disposal cost, and Mr. Lemnios responded that what was tracked going to Millbury was the number of tons. The Town was not tracking the number of bags going to Millbury, but at the end of the cycle he could take the gross number of tonnage and divide that by the
number of bags sold and that would give the average weight per bag and tell the differential.
Mr. McKinley found the use of the term revenue producer to be inappropriate. The Town was not making money by selling bags. The Town was offsetting part of the cost, which in turn replaced the fixed trash fee of last year. The $561,000 was not found. It was money allocated directly to the cost of disposing. The real savings was the $86,500. PAYT was giving people an incentive to do more recycling. It has people doing more recycling and reducing the solid waste they are disposing of and the net savings will be about $300,000.
Mr. Stern pointed out that there were some additional items. The regular collection routes were going much more efficiently. Clearly there was a time savings on a daily basis, and he questioned at what point it would be re-evaluated and advantage taken of the efficiencies being generated. Mr. Lemnios advised that there had been a meeting with BFI and it was decided to give it another three-month collection period. Right now the departments were in budget discussions. Drivers were getting through their routes more quickly and a determination had to be made how that works in terms of being able to collapse a route or make adjustments.
Mr. Stern noted that all vendors were currently reimbursing the Town for the bags. Mr. Lemnios recognized Finance Director Robert Palmer who set up the collection procedures.
Responding to questions from Mr. Ciccariello, Mr. Sisitsky advised that currently the DPW picked up all of Natick in one week. Mr. Ciccariello raised the possibility of picking up every two weeks rather than weekly to save pickup costs. Mr. Sisitsky felt that that would have to be analyzed and pointed out that the same trash would be picked up. He (Mr. Sisitsky) felt there were other ways to save like going to a four-day work week to eliminate overtime when there was a holiday. He noted that those discussions were beginning with the Town Administrator and those changes would probably be reflected in the FY05 budget. It shouldn’t be done too quickly. You didn’t want to make changes to the
routes until you knew it was the best way to handle it. Some days were lighter than others and perhaps the routes could be adjusted to even
out the tonnage. If the routes were being picked up quicker, Mr. Ciccariello asked if those employees could be used to perform other duties. Mr. Sisitsky's reply was, “yes”.
PAY-AS-YOU-THROW UPDATE (contd)
Mr. Hughes noted that there had been some discussion about expanding the service in terms of the referendum question to condo’s and apartments. He saw the figure of $160,000 in one report and $300,000 in another and asked if there was a sense of what it would add in terms of cost. If condo’s and multi-family apartments were added, Mr. Sisitsky advised that the cost would depend on how it got done. Condos and apartments usually have different types of dumpsters than the Town had equipment for. Another nearby town just recently started picking up, and rather than the Town doing it, they were contracting out to a private contractor rather
than the Town buying new equipment. The Town needs to look if it has to do it, and then what’s the most efficient way to do it. Asked how much it cost in the nearby town Mr. Sisitsky referred to, Mr. Sisitsky replied that it was estimated to be $300,000 for the year but that Town has more units than Natick.
When asked how many condo’s and apartments in Natick didn’t have trash pickup, Mr. Sisitsky advised that it was 2,200-2,300 units.
Mr. Stern recalled that he had suggested at the last meeting that the Board request the Finance Committee to have some hearings in an objective manner on the ramifications of the referendum and look at the consequences so everyone could have some hard facts. He referred to the Natick Town By-Laws under Article 23, Section 4 which empowered the Finance Committee to do that.
Mr. Stern moved to authorize the Finance Committee to immediately begin hearings on this issue. Seconded by Mr. McKinley and unanimously voted.
Speaking to the motion, Mr. Hughes didn’t think the Board could authorize the FinCom to do anything. The Board could request, but couldn’t authorize or demand. The Board could send a letter requesting the FinCom to look into this, and he would endorse doing that.
Mr. Ciccariello thought the hearing was a good idea and noted that the FinCom was heavily involved in discussions when the trash fee was initially talked about and was involved in pay-as-you-throw.
Mr. Ball supported the idea of the Finance Committee holding a hearing or a series of hearings, but pointed out that currently there were two meetings scheduled which would be a forum for the proponents and the opponents – one on December 8 at the Senior Center and one on December 9 at the library. The one in the library would be carried live by Natick Pegasus. However, he (Mr. Ball) would endorse the motion to request and encourage the Finance Committee to hold a similar set of hearings.
Mr. Stern informed the Board that he spoke with Mr. Foss and Mr. Foss was willing to begin the process as fast as he could. Mr. Stern stressed the critical importance that objective information be available to the public and he couldn’t think of a better body to do it.
Mr. McKinley also encouraged the Finance Committee to hold hearings with the goal of completing them by December 5 so the debates would be based on some fact-based information.
Mr. Ciccariello noted that the fact that the Town didn’t pick up trash in 2,200-2,300 units came about as a result of a policy adopted by the Board of Selectmen, but it was also because some developers who came before the Planning Board were granted variances or waivers from
certain Town subdivision by-laws and some of the conditions on those approvals were that developers do their own snow plowing and trash pickup. His concern was how the referendum would influence those
approvals where the Planning Board was the governing authority and granted those approvals with the condition of no Town trash pickup. Mr. Stern suggested having Town Counsel look into it and provide an
opinion. Mr. McKinley proposed that the question be folded into the Finance Committee hearing to be part of their fact-finding and presented in their report.
Noting that someone living in a condo or apartment where trash was not picked up by the Town was paying for trash pickup by a private contractor, Mr. Ball questioned if it was reasonable to assume that if the referendum
PAY-AS-YOU-THROW UPDATE (contd)
were to pass that suddenly the rent or condo fee would go down. Was it a good assumption that the landlord or condo association would pass it onto the renter? Mr. Stern advised that that was not something in the purview of the Board, but Mr. Ball said he just wanted to pass it along that it (free trash pickup) would be a cost to everybody and not a savings to anybody.
In conclusion, Mr. Stern announced that this item would be on the agenda for each and every meeting until the referendum election.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS
a. Report of Oversight Committee
David Baier, chairman of the Golf Oversight Committee, updated the Board on the activities of his committee. He reported that the golf course had substantially improved over its performance of a year ago. Rounds played were up 19% and revenue up 11.8%, and both of those figures were extraordinary considering the state of golf. Golf play throughout New England was down 10% and virtually every course around here had seen a downturn while Sassamon had increased. Some things have happened to account for the increase such as better signage. People who play the course comment that it was in excellent condition and it was customer friendly.
Mr. Baier continued that they were in the second of a 4+ year program to have the course be Audubon certified. It was not easy to get and the key thing was the use of organic herbicides and pesticides.
Mr. Baier told the Board that according to Recreation & Parks Superintendent Richard Cugini, the golf course was the most utilized adult recreation in the Town. It was truly intergenerational and the number of children playing with Mom or Dad was what was envisioned. Fifty participants played in the Natick Fall Classic.
The Committee’s view for next year was to essentially maintain the quality of the course and they were working on plans to increase both tournament and league play. The plan was to have regular weekend tournaments. He thought a better job could be done of marketing the course to area businesses. It was the Committee’s view that this was a wonderful recreational asset for the Town and the potential for growth
was there. People can play the course in two hours, which suits the person who wants to play golf and still have family time. The course
was family friendly, and the Committee felt that the pricing made it attractive as well.
With the number of rounds at 23,000, Mr. Stern inquired as to how that compared to the LaPoint study. Mr. Baier responded that everyone on the Committee understood the question and was not defensive about it. The LaPoint study was done at the very end of a marketing bubble for golf. This (23,000) was maybe 10,000-13,000 rounds less than projected.
Mr. Lemnios felt that a lot of time had been spent talking about what had not gone right at the golf course, but the great story for this particular year was that the course experienced a 20% increase in play. If you talked to most people in the industry, golf has been flat or declining. The course was beginning to find its nitch. Sometimes the concentration on the negative was too much and he hoped that it didn’t get lost that the course experienced a 20% increase. That meant that the marketing activity and additional signage and hard work by the committee and staff paid off in making it a better situation. There was no doubt that it was off the projections from Mr. LaPoint, but those studies were done and conducted at a peak in play. There were a lot of courses built in the 1990’s some of
which didn’t survive while
this course experienced a 20% increase and an 11-12% increase in revenue in an economy not as robust as when the study was done.
Mr. Lemnios stated that he didn’t think the rounds would get to the LaPoint projections any time soon. If the Board determined to go forward and continue operating the course, the goal would be to seek creative ways to make this course a success. Very often you get dealt a tough set of cards and those who prosper turn those cards around. He
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
believed Natick was resilient with an incredible amount of talent and the course could be successful.
Mr. Ball inquired as to plans to utilize the course in the winter with things such as skiing. Mr. Baier explained that because of the landfill, technical reasons made it difficult to do that at this point. They (Committee) looked at it last year and would do so again this year, but they had to be careful of the course itself.
Mr. Hughes inquired as to the revenue numbers and was told by Mr. Baier that as of Friday it was $409,221. If rounds were up 19%, Mr. Hughes questioned why revenue was only up 11%. Mr. Baier explained that it was how the course was marketed. With the coupons one played free. Plus a good number of passes were sold and while he was told that there were 10 people who bought the pass and didn’t use it more than 10 times, others used it a lot.
When asked about the fee structure, Mr. Baier advised that there were resident fees and non-resident fees. If you lived in Natick and played Monday-Thursday, the cost was $18.00. If you didn’t live in Natick it
was $20.00. Weekends were an additional $2.00. Seniors play for $16.00 and $2.00 more on the weekends.
Mr. Ciccariello inquired as to how the Sassamon Trace fees compared to other courses, and Mr. Baier responded that he believed that for nine hole courses Natick’s rates were at the high end. The Committee would review the rates again for next year.
Based on his experience, Mr. McKinley asked what Mr. Baier would forecast for next year’s rounds and revenue. Mr. Baier felt that with good weather there could be an increase of both revenue and play by 15% over this year’s number. He reminded the Board that it had been a very tough spring and the course really didn’t get started with substantial play until May, and August was overcast and cloudy. The potential was there, but there had to be aggressive marketing.
Noting that last year’s revenue for the course closed out at about $465,000, Mr. McKinley questioned to what extent Sassamon Trace was handicapped by the fact that there was no clubhouse or pro shop. Mr. Baier responded that it had been a disappointment since day one and it was a handicap. Getting the course to the next level would anticipate having a usable clubhouse and it could be as simple as a doublewide trailer with 2-3 tables so someone could get a hot dog or coke and buy a t-shirt. Depending on what option was chosen, protection for the equipment to maintain the course would also have to be looked at.
In follow-up Mr. McKinley asked if the Committee was considering different business scenarios showing if this much was invested in an additional facility, the play and revenue would go up by this much. Mr. Baier responded that that analysis hadn’t been done, but it needed to be discussed. They had discussed with Mr. Lemnios different business plans on how to proceed.
Mr. Ciccariello inquired as to how much Sterling brought in concessions, and Mr. Cugini responded that for this calendar year Sterling collected $55,000 from pro shop, food, beverages, and instruction. The cost of the goods was about $31,500.
Mr. Ciccariello then inquired as to some insight on how the Oversight Committee felt about Sterling’s management performance in terms of their contract. Mr. Baier replied that the committee was unanimous and strong in their opinion that Sterling had performed very well in terms
of their contract. The conditions of the course were superb and Sterling met all conditions in terms of what they used for organic chemicals. The members of the committee were very confident in the way Sterling had performed.
Mr. Hughes asked if there had been any discussions about what changes would have to be made after December 31, and Mr. Baier responded that at the last meeting the Committee discussed with Mr. Lemnios the plan of leasing the course which he now understood was not possible because of bonding. He (Mr. Baier) noted that he had a conversation with Mr.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
Lemnios and Mr. Cugini about the potential to hire somebody to maintain the course and have Town employees manage the operation of the course.
Mr. Lemnios advised that that issue would be discussed in the second portion of the presentation.
When asked by Mr. Ciccariello about the number of Natick residents playing the course this year, Mr. Baier replied that of the 22,000 rounds over 10,000 were Natick residents although that was a little bit of an estimate. That didn’t account for Natick residents who bought the pass and seniors weren’t asked if they were Natick residents.
b. Options
Mr. Lemnios presented the Board with a series of handouts that went to the issue of what would be the next logical step for the golf course. He referred to an opinion from bond counsel Palmer & Dodge which was requested when the discussion began about the leasing option. He explained that a copy of the RFP was forwarded to Palmer & Dodge, and they came back with some concerns. A conference call was held with the Palmer & Dodge attorney, Unibank, the Comptroller, and the Finance Director. The opinion stated that the Town could not lease the course to an entity because it would place the federal tax exempt status of the bonds in jeopardy and people who bought the bonds did so with the understanding they would be tax exempt. The opinion listed four alternatives available to the Town in order to
preserve the tax exemptions of interest on the bonds.
*Sale of the Golf course to a private party although this alternative was only available if the sale proceeds were entirely cash. Mr. Lemnios felt that it was unlikely to find a buyer particularly since the Town didn’t own five of the nine holes in the course.
*Taxable refunding. The Town could issue taxable refunding bonds and escrow the proceeds for redemption of the outstanding tax exempt bonds that financed the golf course. Since the state law permitted such a refunding only in the case where the Town would realize present value savings from the transaction, legislation would be needed to authorize a refunding without this requirement.
*Amended RFP. The RFP for the golf course management services could be revised to eliminate the lease proposal and substitute a management contract along the lines of the present arrangement, which had no adverse effect on the tax exempt status of the bonds.
*Cash defeasance. The Town could defease the outstanding bonds by depositing cash in an escrow to redeem the bonds on their first call date.
Mr. Lemnios continued that discussion started with three preliminary options:
1) Examine the cost if the course was closed
2) Examine the cost if the course was leased and an operator found to return a flat rate
3) Continue the same route or a hybrid
The options were now down to two – either close the course or operate it under a management contract or a variation.
Mr. Hughes inquired if there had been any response to the RFP and was told by Mr. Lemnios that two had been received – One from Sterling Golf and one from Johnson Golf Management.
Mr. Lemnios reviewed a summary of the close option and apologized for not having it available for the packets. Debt payment was shown as $3.5 million and Mr. Lemnios reminded the Board that the most recent audit had found that although the authorization for the golf course was $2.975 million, the true cost was $3.5 million. Using the $3.5 million, the debt payment in FY04 would be $278,715. The Dowse lease was estimated at $46,625 plus a $22,140 obligation for golf carts that still had to be paid even if the course was closed and $15,000 for miscellaneous expenses. Maybe 1-2 holes would be kept open for the high school team or residents. In FY04 the carrying cost would be $362,480.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
Mr. Hughes recalled having signed a three-year contract for environmental monitoring. Mr. Lemnios advised that the contract went up through December 2003, but the Town would have to seek relief from the order of conditions (if the course were closed).
Noting that 4% was used as the assumption on the lease, Mr. Ciccariello inquired as to what it had been. Mr. Lemnios explained that it could be no less than 3% and no more than 7% based upon the Boston CPI. He thought 4% was relatively safe.
Mr. Ball pointed out that the analysis only went out to the end of the bond, but the lease was for 50 years. Mr. Lemnios advised that if the Town chose to terminate prematurely, the Town would be compelled to still pay the full value of the lease over 50 years.
Under the open option, Mr. Lemnios noted that to the course debt of $2.975 million, the $576,000 deficit had to be added plus he added an additional $448,000 debt for a total of $4 million. The additional debt was added because there were three elements that need to be completed: l) The maintenance building was required as part of the order of conditions for the course and clearly to continue the course it would need to be built; 2) Moving from using treated water to a well source and that would realize a savings each year; 3) A clubhouse facility. $448,000 was set aside for those three items to be accomplished bringing the total bond to $4 million. That would require Town Meeting action. In Fiscal 2005 the debt would be $348,340 and in FY07 it popped up because it would be moving from bond anticipation notes
to permanent borrowing.
Mr. Lemnios then handed out a five year pro forma.
Mr. Hughes questioned if adding $1 million to the bond ($576,000 to cover the deficit and $448,000 for the 3 capital items) would affect the interest rate. Finance Director Robert Palmer referred to the
handout entitled ‘Open Scenario Debt Service’ which showed an analysis of the $576,000 assuming the debt was taken on and retired at the same
schedule as the landfill capping. It would end a couple of years earlier than the golf course. Any new debt ($448,000) would be a new borrowing and at the prevailing rate of when it was borrowed.
If the Town was going to borrow $448,000, Mr. Hughes questioned why borrow over 20 years as opposed to 5-10 years. Mr. Lemnios explained that the asset would be available for that period. The shorter the term, the higher the debt obligation and it would have an impact on the operational cost.
Mr. McKinley noted that the close option included the total debt payment as amended plus the obligation for the lease in Sherborn and that was $6.6 million. According to Mr. Baier’s presentation, as of last Friday the golf course generated $410,000. Over 19 years that worked out to $7.8 million, which was $1 million more than the total debt obligation. That meant that over 20 years there was about $1 million to make it run, otherwise the revenue the golf course was generating was enough to satisfy the debt cost.
Mr. Lemnios pointed out that there was a cost to generate the revenue.
Referring back to the operating pro forma, Mr. Lemnios explained that the pro forma contemplated the Town bringing on board a course manager along with several part-time employees. FY05 was the first year and
$290,000 was budgeted for personnel and a maintenance contract. Adding in utilities, employee benefits, and other expenses the operating cost for FY05 was budgeted at $507,000. With debt and interest and land lease fees, the total annual budget for FY05 was $904,807. There was a slight decline in FY06 and a bump back up in FY07.
Mr. Ciccariello asked about revenues for FY05, and Mr. Lemnios responded that he was booking $475,000. He pointed out that in this model, the Town would be operating the concession stand and golf shop and would receive all the revenues. That was about a $20,000 swing. The deficit for FY05 was about $429,000.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
Mr. Lemnios added that in his projections he increased the revenues by 2% per year beginning in Fiscal 2005. He did a five year cut since one of the lessons learned was not to try to get so far ahead in revenue projections on a business that did not have a long-term history.
Mr. Hughes inquired as to the basis for the personnel cost, and Mr. Lemnios provided the following breakdown:
$47,200 for the full-time manager who would act as the golf pro
$14,400 for the assistant manager
$24,235 for 3 club house attendants
$10,080 for 2 rangers/starters
$4,536 for 1 cart attendant
In view of past GRA estimates, Mr. Hughes inquired as to the reality of the numbers. Mr. Lemnios responded that he was very confident with these numbers.
With the golf pro being full-time, Mr. Hughes questioned what that person would do in January and February. Mr. Lemnios noted that during the heavy period the pro put in a lot more than 40 hours and during the downtime there was still some prep work to be done. The salary was based on what other area courses were paying.
Mr. Ciccariello questioned the rates for some of the other part-time staff, but Mr. Lemnios responded that he was comfortable with the rates. Recreation & Parks Superintendent Richard Cugini added that these were the rates currently being paid to everybody at the course except the golf pro. The part-timers were working other jobs and this was a second job.
On the open vs. close summary handout, the Fiscal 2005 closed option showed a deficit of $445,000 while the open showed a deficit of $429,000. Mr. Lemnios noted that in that particular year it was more cost effective to keep it open.
Mr. Hughes inquired as to why the golf cart lease repairs doubled in FY06, and Mr. Lemnios explained that it had been put in the wrong column, but there was a balloon payment in the last year of the lease. There may be two years of lease free activity, although he had booked an annual expense to be conservative. It was known that the carts have six batteries and at the end of the five-year cycle, some work needed to be done on the carts.
Mr. Ciccariello inquired if all the projected budgets and numbers reflected the building maintenance and clubhouse. Mr. Lemnios advised that the debt piece reflected the maintenance building, clubhouse, and well. The trailer being used now was serviceable, but you could go to GE or Williams Scotsman and tell them what kind of trailer you would like and they can provide it. Trailer options could be used without having to get into the footer system where the real cost was involved, and the trailers could provide a suitable environment for the pro shop, office space, and a place for people to come and sit. The quality GE trailer was about $35,000 to acquire. Either leasing or assuming the cost of purchasing would be significantly less than actually constructing a clubhouse at this point. $18,500 was the
cost for leasing the GE trailer plus portable storage boxes used for storage of equipment. There was enough in the bond payment to acquire those
things. Mr. Lemnios noted that he tried to be as conservative as possible.
Mr. Stern noted that $4,014 had been spent in FY03 for sand, soil, fill, fertilizer, but nothing forward. Mr. Lemnios replied that that was in the contract agreement.
Noting that the pro forma made the assumption of a significant reduction in the cost of the maintenance contract, Mr. McKinley asked if the waters had been tested and if this was a credible number. Mr. Lemnios gave assurance that it was a credible number, adding that about $20,000 per hole was the kind of contract being looked at. Mr.
McKinley questioned if the Town could get a quality contractor to maintain the course the way the Town wanted for around $200,000 per year. Mr. Lemnios’ response was, “yes”.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
With regard to Mr. Lemnios’ statement that these were conservative estimates, Mr. Ball commented that everyone had seen the results of conservative estimates. If the Board undertook the keep it open course of action and it turned out that the rounds of play along with the economy went into the tank, Mr. Ball noted that there was nothing in this decision to preclude the Board from saying things were worse than thought and let’s shut it down.
Mr. Lemnios confirmed that as being correct, and noted that the Board was not committing to a permanent clubhouse. There would be a permanent maintenance building, but even if the course was not operating, he was sure the DPW could use it for storage in the winter or other Town activities. Even if the course was determined not to be viable, the Town would have use of the building. That was the only item adding infrastructure. The balance of items were annual operational costs. It was a relatively close decision point between keeping it open and closing, but if the Board let it operate for another five year period and at any point in that cycle the numbers weren’t going where the Board wanted them to go, the operation of the facility could cease. The open vs. close figures were relatively close and
his recommendation would be to keep it operating and see where it takes us.
Mr. McKinley agreed with Mr. Lemnios although he felt there were a couple of assumptions to confirm Mr. Ball’s concern with the use of the word conservative. He felt that some assumptions in the pro forma needed to be looked at with a critical eye, but there were some assumptions in the open option that may not be right and one was the 2% increase in revenue. The Town could close it and lose about $2 million over five years or keep it open and lose $2 million over five years, and to him the better option was to keep it open and monitor it closely. He always thought the idea of closing the course wasn’t good in the long run because the Town would be throwing the investment away.
Mr. Hughes inquired as to how long the contract would be let out for maintenance, and was told by Mr. Lemnios that it was a three-year period. A termination clause would be put in the contract.
Mr. Hughes then asked if the Board decided to go forward with keeping it open, if there would be enough time to do this for the next golf season. Mr. Lemnios responded that there would. The Golf Oversight Committee worked closely with the current contractor and knew the close down procedures. The course was ready to be buttoned up and would lay
dormant for January and February. An RFP could be constructed and put back out.
When asked about finding employees, Mr. Lemnios stated that he felt that schedule could be met. He noted that he would have to work with
the Finance Committee on this program and explained that when the Fiscal 2004 budget was formulated, approximately 40% of the budget was put in the Finance Committee reserve fund. He would need to lay out the options and communicate the Board of Selectmen’s desire and seek to get release of those funds.
As part of the wind down for the end of the season, Mr. Stern stated that he wanted to make sure a full audit was done, inventory taken, a termination audit, and anything else that was properly the Town’s to do for the existing contract.
Mr. Ball noted that Mr. Baier made mention of the superb condition of the course. If a contract was being signed with an organization to maintain the course, Mr. Ball inquired as to how the Town would monitor the condition of the course and how well they were doing their maintenance job. Mr. Lemnios advised that the performance measures in any RFP or contract for turf maintenance was similar to the current contract. Hiring the right manager who had the ability to oversee the course conditions was essential. It was very similar to the safeguards currently in place. Some courses from time-to-time will hire an independent consultant to come in and walk the course and report back to the owners what they observe with regard to the maintenance.
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
Mr. Ciccariello noted that in the projected budget the cost of water dropped substantially in FY06. There had been some consideration of doing a well, but it ran into some environmental issues. Was that still a consideration and if so, where was the cost of putting in the well? Mr. Lemnios explained that it was embedded in the additional $448,000 debt. In follow-up Mr. Ciccariello questioned what had changed to lead Mr. Lemnios to believe that the Town could do a well. Mr. Lemnios responded that he and Environmental Compliance Officer Robert Bois, Recreation & Parks Supervisor Richard Cugini, DPW Director Charles Sisitsky, and DPW Business Manager John Craig met with the permitting agencies and they identified locales for 3-4 test wells. The next phase was to commission a series of one or two day test
wells and model the impact of running a well. The well site was offsite and fairly distant from the golf course. Treated water was pumped from the Town into an onsite irrigation pond and the irrigation system drew from that pond. 2003 was a dry year and probably the peak for water use. Going to a well would save money and be more consistent with an environmentally treated course.
Mr. Ciccariello then inquired as to the drop-dead date for the Board to make a decision on keeping it open. Mr. Lemnios thought the Board would have as late as mid-January. If the Board was actively considering keeping it open, he would want to put the turf management out to bid and have that information by that time. He would also hope
to communicate to the marketplace that the Town intended to keep the course open.
Mr. Ciccariello commented that whether the course was closed or kept open, the Board would have to go back to Town Meeting to ask for a
transfer of funds from the landfill to the golf course. Mr. Lemnios confirmed that under either scenario that needed to happen. Mr. Ciccariello pointed out that additional funds would have to be sought to build the maintenance building, and Mr. Lemnios responded that there was a redesign of the building that brought the cost estimate down to about $120,000.
The floor was opened to public comment, and Dr. Edward Salamoff, former chairman of the Oversight Committee, spoke to the importance of a clubhouse and leagues. He told the Board that he had been playing in a league for 30 years and played in a league that would like to come back to Natick but there was no place to sit. That was something that was needed if the course was going to attract people. A clubhouse allowed the luxury of serving food. Now hot dogs, chips, ice cream was served, but with a clubhouse sandwiches, etc. could be served. The clubhouse could be as simple as a double trailer.
Mr. Stern commended Mr. Lemnios and the staff for the extraordinary amount of hours spent in putting together the options. Mr. Lemnios recognized Mr. Cugini, Ms. Cashman, and Mr. Palmer for their assistance.
Mr. Stern noted that this was being done in Brookline now so there were some hard assumptions to follow. He further noted that the Board was
dealing now in 2003 with a problem that was essentially created in 1996. In essence the Town had been flying blind based on assumptions in a report that was relied on at the time. The Board had to deal with the situation and develop some hard and useful information on which intelligent decisions could be made.
Mr. Hughes moved to issue the RFP for the turf maintenance contract. Seconded by Mr. Ball and unanimously voted.
Speaking to the motion, Mr. Ball was of the opinion that the motion implied the desire to keep the course open. He thought the fundamental thing was whether to keep the course open or close and the Board should start with that point.
Mr. Hughes replied that he had no problem discussing it, but whether or not the numbers were real made a difference as to whether the Board voted to keep the course open. It looked like for around $429,000 the Town had the amenity of a golf course, but if the maintenance contract
GOLF COURSE REVIEW OF OPERATIONS & FUTURE ACTIONS (contd)
wasn’t $190,000, then it wasn’t $429,000 to keep the course open. Based on this analysis it seemed that keeping it open was a reasonable way to go, but he would like to know if it was correct that the maintenance contract was $190,000.
Mr. Stern saw this (RFP) as an opportunity to test a major assumption.
Mr. McKinley agreed with Mr. Hughes that earlier rather than later one of the major components should be tested. It was his assumption that neither the Golf Course Oversight Committee nor the Finance Committee
had reviewed these numbers and perhaps as Mr. Lemnios was getting the bids ready to go, these two groups should review this information to make sure there weren’t any assumptions they (Oversight Committee or Finance Committee) disagreed with.
Mr. Hughes was of the opinion that these materials should go out now to Town Meeting. Town Meeting had to be convinced that this was the right thing to do and Town Meeting should know sooner rather than later that this was the direction the Board was looking at now. Mr. Stern liked the idea and asked Mr. Lemnios to draft an executive summary to go along with the backup.
Mr. Ciccariello stated that he was not personally ready to raise his hand on whether to close or keep it open. If the course were closed, the Town still had to pay the debt, but he was more concerned that after paying the debt, there was still 25 years of lease payments. He would like to have a sense from the Town Administrator if he (Mr. Lemnios) felt there was a way to get out of the lease if the course were closed. On the open option he agreed with Mr. Hughes. His (Mr. Ciccariello) preference was to have an RFP go out now in order to know the cost of the maintenance contract. Mr. Ciccariello also wanted to know what it would cost to lease a modular clubhouse for 3-5 years and what it would cost to do the permitting process for a well and how much it would cost to put the well in. If the Town couldn’t get a well, the water bill was a $38,000 swing and it didn’t take a lot of numbers to change this pro forma. Some answers were still needed, but if the Board was going to move
forward, there needed to be specific dollar amounts. He wanted some hard numbers rather than saying we have been conservative and have hard numbers.
Mr. Lemnios suggested that the Board may want to authorize an RFP for the trailer and maintenance building, and Mr. Hughes so moved. Seconded by Mr. McKinley and unanimously voted.
REVIEW OF GOLF COURSE AUDIT
Mr. Hughes expressed some concern with the report saying that some contracts were signed only by the Town Administrator and didn’t come before the Board of Selectmen. The Town By-laws exempt professional services from three bids and there seemed to be some question whether the former Town Administrator viewed those contracts as professional services. If they were viewed as professional services, they wouldn’t have had to come before the Board. If they were professional service
contracts, the Comptroller would not have done anything in violation of her duties and the Comptroller wouldn’t have necessarily been aware that they weren’t professional service contracts.
A member of the audience Susan Shea requested a copy of the report.
FINANCIAL OPERATIONS PROCEDURES
Mr. Stern recalled that at the last meeting discussion of this matter was tabled pending Mr. Lemnios being present.
Mr. Stern explained that his intent in forming the Financial Operations Committee was that it not be a standing committee, but to have them do their work and dissolve.
When asked if the intent was to invite members of Town Meeting to apply and the same with regard to the Finance Committee representatives, Mr. Stern responded that that was his intent for Town Meeting, but for the Finance Committee, he thought it should be discussed with the Chairman Frank Foss.
FINANCIAL OPERATIONS PROCEDURES (contd)
As far as the two Town Meeting members, Mr. Ciccariello thought the Board should interview anyone interested in serving, but he thought the Finance Committee could decide on their own which two members they wanted to appoint.
Number 3 of the proposed charge was listed as: To define budget presentation models for the public, policy makers and town staff, and Mr. Ball asked that that be defined. Mr. Stern replied that he would like to see a standardized presentation from department heads so everything was done in the same format utilizing the same assumptions. The goal was to standardize both the revenues and expenditures in order to tighten up the way we do things. There were gaps that were not tolerable.
Mr. Hughes moved to establish the Financial Operations Committee as proposed by Mr. Stern. Seconded by Mr. McKinley and after some discussion unanimously voted.
With regard to the policy proposals submitted by Mr. Ball, Mr. McKinley saw them as being separate from the Financial Operations Committee. In his opinion Mr. Ball addressed how to make things better going forward. There was some ambiguity as to what did and didn’t go wrong going back and what the Town should be doing about that relative to the existing policies and procedures. At some point he (Mr. McKinley) would be prepared to make a motion to ask the auditing firm to look specifically at the policy and procedures in place surrounding the award and responsibility of contracts and make some recommendations.
Mr. Stern suggested that the budget be reviewed to see if some dollars could be scared up to hire some consulting work. He (Mr. Stern) added that he would like to see this group (Financial Operations Committee) up and running. He thought the group would be looking at some of the actions in the past to apply them to the future.
Mr. McKinley believed the Finance Committee had a resolution from Town Meeting to bring on board a consultant that overlapped this. His suggestion was to work as collaboratively as possible.
Mr. Lemnios agreed that everybody had to be on the same page, but felt that it was beneficial to have one operation committee.
A motion was made by Mr. Hughes, seconded by Mr. Ball, and unanimously voted to post the vacancy for two Town Meeting members.
Going back to Mr. Hughes’ mention of Town Meeting getting a copy of the documents, Mr. Ciccariello suggested including a copy of the Financial Operations Committee notice in that mailing. Mr. Lemnios didn’t know if the Board wanted to wait that long and proposed doing a postcard mailing. Mr. Hughes pointed out that the Board wouldn’t want to wait as this committee was to report to April Town Meeting.
Mr. Ball stated that it was not his wish to take anything away from the committee, but he had four suggestions that he would prefer to see implemented sooner rather than later. From Mr. Ciccariello’s committee’s report, it became apparent that there were a number of things that the Board was blissfully unaware was going on and he proposed the following three policies that might help avoid similar problems in the future.
1. At least once a year, the Town Administrator shall instruct all department heads on the laws relating to the issuance and oversight of municipal contracts as contained in Ch. 30B and other applicable sections of the Mass. General Laws, and in the Town By-Laws and Charter. The Town Administrator’s instructions shall include discussion of RFP’s, multiple bids, separate handling of technical and price proposals, the maintenance of a single complete and comprehensive file of documents for each contract, and the requirements for review, approval and signature by the Town Administrator, Town Counsel and the Board of Selectmen.
FINANCIAL OPERATIONS PROCEDURES (contd)
2. Quarterly, the Town Administrator shall require from each department head a written report on the status of each contract valued at $25,000 or more currently being executed under the department’s direction. The report must contain a description of each project, its progress, and its financial status. The Town Administrator shall provide copies of all such quarterly reports to the Board of Selectmen.
3. The Comptroller shall, on a concurrent quarterly basis, report in person to the Board of Selectmen regarding the financial status of each outstanding Town contract valued at $25,000 or more.
Mr. Ball then noted that the design of the golf course and engineering contracts were allowed to be let without the Board of Selectmen’s knowledge and he recommended the following:
1) Before issuing any contract for professional services with an expected value of $25,000 or more, the Town Administrator, Deputy Town Administrator and all department heads shall:
a) Solicit bids either through an RFP published in accordance
with normal practice, i.e., in the Central Register and local
newspapers
b) directly invite bids from a minimum of three qualified bidders
2) The Board of Selectmen shall be advised prior to the award.
He suggested that the Board file an article for the Spring Town Meeting warrant amending the Town Charter to make this process a Charter requirement, rather than just a policy.
Mr. Ciccariello wholeheartedly agreed with Mr. Ball’s policy and a consideration of a change to the Charter. He pointed out that the Comptroller should be added to #1 because the Comptroller ensured funds were available for the project and she was the one who paid the bills. In #2 he suggested adding ‘and any change orders effective to date which might increase or decrease the executed amount’.
With respect to the Charter change, Mr. Ciccariello noted that under 30B you were allowed to make three telephone calls and write down who was called. He suggested doing that from $0-10,000, from $10,000-25,000 he agreed that three vendors should be solicited, and over $25,000 an RFP.
Mr. Lemnios pointed out that in #1 it would either be the Town Administrator or the Board of Selectmen. On #2 and #3, it struck him that the Board could have a quarterly report and the Comptroller could sign off on the bottom saying she reviewed the report and attested to compliance. His recommendation was to consolidate 2&3 and clarify #1.
Mr. Hughes noted that this was not a Charter change. Article 41 was a by-law. He also noted that he wasn’t clear on what was being done on bids between $10,000-25,000. If they were to be advertised, it would delay things. Mr. Lemnios explained that $0-10,000 was best business
practices and from $10,000-25,000 solicit three quotes and anything over $25,000 would be a formal RFP.
Mr. Stern agreed with Mr. Ciccariello on adding change orders, but he wasn’t sure he agreed with the Comptroller being a signatory on the contract. He agreed with the Comptroller signing on the availability of funds, but not as a signatory of the contract. Mr. Ciccariello that the Town Counsel would sign as to form and the Comptroller as to the availability of funds.
Mr. McKinley noted that #1 didn’t attempt to define who did what nor was there any discussion about what documents the Comptroller should or shouldn’t sign. The only thing the Board would be approving was that Mr. Lemnios get together with the department heads each year. To Mr. Stern that was within the scope of the Financial Operations Committee, and he thought it should be made part of the committee’s charge and have the committee make recommendations so everything done was standard. Mr. McKinley concurred.
FINANCIAL OPERATIONS PROCEDURES (contd)
Noting that #2 & #3 had a threshold of $25,000, Mr. McKinley wondered if that was too low to be burdening department heads with quarterly
reports. Mr. Lemnios didn’t think it was too low and added that he was working on trying to pull together a meaningful quarterly financial report. The Town mostly had either small contracts or large contracts and not a lot in between and he suggested trying it and seeing how it
worked. To Mr. Stern’s point of handing it off to the Financial Operations Committee to take under advisement and come back with recommendations, perhaps the committee could find out how many $25,000 contracts there were and how many $200,000. He didn’t want to add a lot of overhead to the department heads without getting value. For instance, he didn’t think the Board would want reporting on contracts for electricity.
If a change were made to Article 41 of the by-laws, Mr. McKinley inquired if the School Department would be subject to the change. Mr. Lemnios advised that the Schools were subject to 30B on certain things. It was Mr. McKinley’s recommendation to get the Schools involved in the discussion of changing the by-law; otherwise, he was generally supportive of it.
Mr. Ball stated that he understood Mr. Stern’s point and in part concurred with handing it off to the committee just formed, but if he recalled correctly the committee was not due to report to the Board of Selectmen until April. If that meant that the Board of Selectmen would be in the dark the way it was with the golf course for another 4-5 months, he urged letting the committee work on these things but vote them now and if they were found to be burdensome or should be changed, so be it. He noted that he came to the meetings, read the briefing books and didn’t feel comfortable that he knew what was going on and didn’t feel comfortable spending another 4-5 months not knowing what’s going on.
Mr. Stern requested that Mr. Lemnios put together for the Board’s next meeting a set of requirements that could be used in the interim. Mr. Ball indicated that he found that to be acceptable.
Mr. Hughes commented that he couldn’t believe after getting the report from the golf course committee that these things weren’t going to be done whether the Board voted them or not. Mr. Lemnios responded that the signature requirement in #1 was already being done. He added that he understood the sense of urgency and gave assurance that the administration would work as hard as it could to get the information to the Board. He didn’t think that in the immediate past there was any lack in the flow of information to the Board or any lack of access or ability to get information.
Mr. Stern continued discussion to December 8.
On a motion by Mr. Hughes, seconded by Mr. Ball, the Board unanimously voted to appoint Mr. McKinley & Mr. Hughes as the Board’s representatives to the Financial Operations Committee.
ADJOURNMENT
The meeting was adjourned at 10:00 p.m.
______________________________
Jay H. Ball, Clerk
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