BOARD OF SELECTMEN
Natick Town Hall
December 19, 2005
6:00 p.m.
The meeting was called to order by the Chairman Jay H. Ball at 6:00 p.m.
PRESENT: Jay H. Ball, Charles M. Hughes (arrived at 6:05 p.m.), Carol A. Gloff, John Connolly. Absent: John Ciccariello
ALSO PRESENT: Philip E. Lemnios, Town Administrator; Donna Challis, Secretary
EXECUTIVE SESSION
Mr. Connolly, seconded by Ms. Gloff, moved to enter into executive session for the purpose of discussing matters pertaining to compensation of non-union personnel. By roll call vote the motion passed on a 3-0-0 vote (Mr. Hughes had not as yet arrived and did not vote). At 6:01 p.m. the Board entered into executive session after announcing that the meeting would return to open session.
The open session was reconvened at 6:30 p.m.
Following the Pledge of Allegiance and a moment of silence in recognition of the men and women representing the Armed Services in Iraq and Afghanistan, Mr. Ball noted with sorrow the passing of Marshall Lebowitz. Natick lost one of its most beloved and respected citizens. Mr. Lebowitz had served on the Planning Board, School Committee, By-Law Review Committee, had been a long-term trustee of the Library and served in a host of other capacities. The downstairs meeting room of the library had recently been named in his honor and Town Meeting voted that wherever Spring Town Meeting took place hence forth it would be known as the Marshall Lebowitz Hall. The Town and the world was a poorer place without him. Mr. Ball extended condolences to the Lebowitz family.
DPW: SNOW OVERDRAFT
Representing the DPW was Deputy Director Thomas Collins and Highway/Sanitation Supervisor Thomas Hladick.
Mr. Collins stated that the DPW was requesting an additional authorization of $150,000 to be added to the $150,000 snow budget for FY2006. As of December 11, 2005 $155,000 had been expended and it wasn’t even officially winter as of yet.
Mr. Ball assumed that that meant the Board could expect the DPW back for additional requests. Mr. Collins hoped that that would not be the case, but was sure that they would be back.
Mr. Hughes moved to authorize a $150,000 snow overdraft for Fiscal 2006. Seconded by Ms. Gloff and unanimously voted.
Mr. Hughes inquired if the overdraft had been approved by the Finance Committee. Mr. Lemnios advised that it would probably be done at the FinCom’s January 5th meeting.
GSH CY NATICK LLC D/B/A COURTYARD BY MARRIOTT-NATICK: APPLICATION FOR CHANGE IN MANAGER
The proposed new manager Frank Dorsey III stated that he was seeking to be the manager of the Courtyard by Marriott-Natick. He had previously been the general manager of the Holiday Inn in Mansfield, MA for 7 years and before that the general manager of the Holiday Inn in Utica, NY for 8 years. He was TIPS certified and well versed in the liquor laws and he hoped the Board would accept him as the manager in Natick.
Ms. Gloff noted that in one place on his application Mr. Dorsey said he had been the general manager in Utica and in another place it said New Hartford, NY and she wondered if they were the same. Mr. Dorsey explained that it was the same place. New Hartford was a suburb of Utica.
Ms. Gloff inquired if Mr. Dorsey had been functioning as the manager since May. When he advised that he had been, Ms. Gloff asked if seven months was a reasonable time period in which to ask for the official transfer. Mr. Dorsey’s response was, “no”, adding that it was his fault. He thought he could change it when the license renewal came up in November.
Mr. Ball suggested that the Board send a letter to the corporate management advising them that it’s the Board’s requirement that changes in management for alcohol be done before the fact rather than after the fact. He believed it was incumbent on the corporation to recognize its obligation to the ABCC and the Town. Ms. Challis was asked to draft a letter to the corporate office.
Mr. Hughes moved to approve GSH CY Natick’s, LLC d/b/a Courtyard by Marriott-Natick’s petition for a change in manager from Andrew Wardwell to Frank Dorsey, III. Seconded by Ms. Gloff and unanimously voted.
ACCEPTANCE OF EASEMENT: COTTAGE STREET/SUDBURY AQUEDUCT
Conservation Commission Chairman Matthew Gardner came before the Board to request acceptance of two easements - the first an easement given by David W. Pittelli and Amy Stevens of 160 Cottage Street.
Mr. Gardner noted that the easement was at the end of the Sudbury Aqueduct and would provide access. The Planning Board, the Conservation Commission, and the Open Space Committee voted unanimously to support this easement and the Conservation Commission voted unanimously to expend the funds to purchase ($50,000).
In a letter to the Board, Planning Board member Kenneth Soderholm advised that there was still a piece of property that was blocking access. Mr. Hughes inquired if that might be resolved with a decision on a subdivision that was in Superior Court. Mr. Soderholm advised that that was correct.
To Mr. Hughes’ comment that there still wasn’t access along the entire length of the aqueduct, Mr. Soderholm responded that those property owners weren’t stopping anybody from using it. Hopefully the subdivision approval would be approved and the Town would acquire a three acre parcel that would include the aqueduct. Mr. Soderholm thanked Mr. Pittelli who was in the audience for his willingness to enter into this with the Town. It was a remarkable piece of open space and Mr. Soderholm saw Mr. Pittelli as having the key to the door.
Ms. Gloff called attention to the restrictions listed in the easement, one of which was that access was limited to daylight hours, and inquired as to how the public would know. Would it be posted? Mr. Gardner advised that the intent was to post signage at the start of the aqueduct trail. Mr. Hughes pointed out that there were other crossings of the public way where the hours could be posted, but Mr. Soderholm noted that this stretch ended at Memorial School and didn’t start again until the other side of Union Street. He also pointed out that these were the rules for going over this particular piece of private property.
It was also noted that there were other requirements such as no motorized vehicles and that too would be posted.
Mr. Hughes moved to accept the twenty foot wide access easement given by David W. Pittelli and Amy Stevens of 160 Cottage Street for a purchase price of $50,000. Seconded by Ms. Gloff. The motion passed on a 3-0-0 vote. Mr. Ball, Mr. Hughes, Ms. Gloff voted in favor. Mr. Connolly had left the room and didn’t vote.
ACCEPTANCE OF EASEMENT: ELIOT STREET
Before the Board for acceptance was a public access easement from Douglas R. Jenkins and Georgia C. Jenkins, Trustees of Jenkins Realty Trust to the Town of Natick regarding the property at 21 Eliot Street. The public access easement enabled the public to walk along the western boundary of the property located at 21 Eliot Street to the Mary E. & Herbert E. Sherman Nature Preserve. The easement was 15 feet wide and approximately 515 feet in length.
Mr. Hughes inquired if the MWRA would maintain the aqueduct part, and Conservation Commission Chair Matthew Gardner advised that there hadn’t been any formal discussions with respect to the maintenance of the trail, but that would be discussed. The MWRA had an easement along the aqueduct, and they allowed it to be used for walking.
In follow-up Mr. Hughes inquired as to who would maintain the Eliot Street easement and Mr. Gardner responded that it was probably the same answer. The Walking Trails Committee hoped to come up with a solution for how the trails would be taken care of, but it was not part of this easement.
Ms. Gloff pointed out that the easement said the grantor was responsible for maintenance.
Mr. Hughes moved to accept the public access easement given by Douglas R. Jenkins and Georgia C. Jenkins for property at 21 Eliot Street. Seconded by Ms. Gloff. The motion passed on a 3-0-0 vote. Mr. Ball, Mr. Hughes, Ms. Gloff voted in favor of the motion. Mr. Connolly was not in the room and did not vote.
APPLICATION FOR TRANSFER OF COMMON VICTUALER’S LICENSE FROM FRANNY’S PLACE TO MCJ CORP. D/B/A STATION 5 GRILL
The Board was in receipt of an application to transfer the common victualer’s license held by BW Corporation d/b/a Franny’s Place for premises at 17 Watson Place to MCJ Corporation d/b/a Station 5 Grille. Representing Station 5 Grille was the owner, Michael Haigis.
In response to questions posed by the Board, Mr. Haigis stated that he did not intend to change the hours and would operate from 6:00 a.m.-2:00 p.m. Monday-Friday and 7:00 a.m.-noon on Saturday and Sundays. There would be no changes structurally or with the floor plan. He would tweak the menu a little.
Ms. Gloff moved to approve the transfer of the common victualer’s license held by Franny’s Place for premises at 17 Watson Place to MCJ Corporation d/b/a Station 5 Grille. Seconded by Mr. Hughes. The motion passed on a 3-0-0 vote. Mr. Ball, Mr. Hughes, Ms. Gloff voted in favor of the motion. Mr. Connolly was not in the room at the time of the vote and did not vote.
APPLICATION FOR TRANSFER OF CLASS I LICENSE FROM NATICK SUBARU TO METROWEST SUBARU
The Board was in receipt of an application for the transfer of the Class I license held by Natick Subaru to MetroWest Subaru, LLC d/b/a MetroWest Subaru for premises at 948 Worcester Road. Representing MetroWest Subaru was the owner Frank Hanenberger.
Mr. Hughes recalled that the Board hadn’t renewed Natick Subaru’s Class I license for 2006 because of some outstanding taxes and asked if the taxes would be taken care of as a result of the transfer. Ms. Challis informed the Board that notification had been received from the Tax Collector’s Office that the outstanding tax issue had been rectified.
Mr. Hughes moved approval of the transfer of the Class I licenses for premises at 948 Worcester Road from Natick Subaru to MetroWest Subaru, LLC d/b/a MetroWest Subaru. Seconded by Ms. Gloff and unanimously voted.
CITIZENS CONCERNS
a. Underground Utilities
David Wodeyla told the Board that he was looking for support to improve Natick’s roadways by removing utility poles and cable wires along some of the roads. He showed some photographs of the before and after of how some areas of Natick would be improved and noted that without overhead utilities there could be an undertaking of tree planting and sidewalk widening. He acknowledged that it sound like it could be an expensive proposition so he wouldn’t suggest every place but certain key gateways and maybe the Planning Board could be convinced to study the cost. It was his understanding that the utility would share the cost and pass it along to the residents and with the number of projects suggested he didn’t think it would impact the residents too greatly.
Mr. Wodeyla mentioned that they would be at the Planning Board meeting on December 21 and Mr. Ball inquired as who were the ‘they’. Mr. Wodeyla that it would be Joshua Ostroff and himself and they were inviting other residents who may be interested.
A recess was called at 7:00 p.m. The meeting was reconvened at 7:10 p.m.
JOINT MEETING WITH FINANCE COMMITTEE: PRESENTATION OF WATER & SEWER ENTERPRISE FUND AUDIT
With a quorum present, Finance Committee Chair Frank Foss called the Finance Committee to order at 7:10 p.m. Present: Frank Foss, Mr. Everett, Bruce Wright, Richard Jennett, Craig Ross, Mr. Sidney, Mr. Liston, John Culkin, William Idzal, and Kathy Collins.
Mr. Ball opened the meeting by noting that this was a joint meeting at which the Board of Selectmen and Finance Committee were going to receive a presentation of the water & sewer enterprise fund audit. The floor was turned over to John Sullivan, a partner with Melanson Heath & Company to make the presentation. Mr. Sullivan prefaced his power point presentation by noting that a draft of the audit report had been issued and explained that the audit was in draft for a couple of reasons. One was to give the boards an opportunity to look at it and to determine whether or not Melanson Heath had fulfilled the contract and had looked at all the issues the boards wished them to look at. The contract called for an audit of 2005, but that was not done as of yet. The Town has closed its books and has
come closing to finishing its own audit, but the 2005 numbers have not been available to them (Melanson Heath) as of yet. There was also at least one other area in the contract that they (Melanson Heath) felt they probably hadn’t sufficiently addressed and that had to do with the analysis of the budget development process and procedures used to put the budgets together. They anticipated finishing the 2005 audit and finalizing the report in addition to any other areas the boards felt they hadn’t sufficiently addressed.
As to what had been provided, Mr. Sullivan started with the pre-enterprise fund legislations days. The Town adopted the enterprise fund legislation in 2003. Prior to that the Town was operating separate entities for water & sewer. He felt that it was important to understand what the MGL had to say about the separate entities. Chapter 41 section 69B, the water statute, allowed the Town to set rates and bill for water service. It also allowed the Town to carry forward a surplus and that surplus could be spent to pay the cost of operating the system. It could also be spent to reimburse the Town for costs incurred on behalf of the water system and allowed the Town to set aside a reserve for repairs, maintenance and capital articles and any money remaining after that was then to be earmarked to
reduce the rates. The sewer legislation, Chapter 83 section 16, did not contain the same provisions as the water legislation. It did not provide for retaining a surplus and carrying it forward so the whole issue of setting up a special revenue fund and retaining surpluses for specific purposes was not included as part of the legislation; however, in common practice in Massachusetts several municipalities have decided to set up a sewer special revenue fund.
Mr. Sullivan continued that in Massachusetts in the pre-enterprise fund days there were two ways cities and towns accounted for water & sewer operations. Notwithstanding the legislation there were towns that did and continue to this day to include all water & sewer operations in their general fund. They budget water & sewer revenues as part of their local estimated receipts and they include the water & sewer appropriations in the general fund. In those situations it was common for those cities and towns to budget revenue in excess of what was appropriated in operating costs to cover those costs that were paid by other departments on behalf of water & sewer. Those were called indirect costs.
In addition there were cities and towns in Massachusetts that set up special revenue funds for water & sewer and retained within those special revenue funds any surplus that existed after paying maintenance, repairs, and operations of the water & sewer system. Even after the legislation has been out for over ten years, there were cities and towns that have not enacted the legislation and continue to account for water & sewer either in their general fund or as special revenue funds. Mr. Sullivan said he pointed that out because it was important to understand that there were local options and you had to look at the options in the context of them being local option issues or mandated by the statutes.
Mr. Sullivan noted that in going through the various facets of this audit, they found that there were decisions made locally that at times either favored the general fund or favored the enterprise. Mr. Sullivan summarized those issues. In 2001 there was a special article voted at Town Meeting to appropriate out of water & sewer surplus for purposes of tree removal. That was done in conjunction with another article funded by betterments for street curbing and sidewalks. That article benefited the general taxpayers. There have been several special articles that have been put aside over the years – in 2001 and 2002 for the purpose of capital articles within the water & sewer surplus accounts. In 2005 there was an article for liquidating a couple of those capital articles.
Most of the money from those capital articles was reprogrammed to go into the water & sewer reserve accounts but within those articles was 414,016 reprogrammed for DPW snow removal and an additional $50,000 for DPW materials. Those were items paid out of water & sewer that benefited the DPW in general, not water & sewer.
Mr. Sullivan continued that in addition to that there was an error in 2004 and 2005 in calculating the retirement contribution on behalf of the water & sewer department. Prior to that period of time in the indirect cost schedule employee benefits were calculated as a straight 34% of salaries and going forward that same 34% was used in calculating benefits in other departments when calculating indirect costs. In 2004 a change was made to specifically identify the cost of health insurance, life insurance and retirement benefits for the Water & Sewer Department. There was an error in the retirement portion of that in identifying the water & sewer employees as opposed to the DPW employees at large that resulted in charges through the indirect cost allocation plan in excess of what should have been
charged. In 2004 it was $378,536 and in 2005 it was $393,544. Those were specifically identified where money came out of the water & sewer accounts and paid into the general fund that benefited the general fund.
On the other hand there were decisions made from which the enterprise fund benefited. In 2001 and 2002 there were indirect costs that were allocated to water & sewer operations but the way the indirect costs were transferred and moved into the general fund was through the budgetary process whereby revenue was budgeted and expenses incurred and any excess revenue over expenditure represented the indirect costs. Mr. Sullivan noted that later in the presentation he would provide more detail. In 2001 and 2002 the general fund was not reimbursed for all the indirect costs that were incurred. Melanson Heath didn’t go back prior to 2001. As part of the Town’s request they were to look at 2002 going forward; however, because they wanted to make sure the policy and procedures for budgeting
within the general fund and special revenue funds was consistent, they looked at 2001. He felt that going back prior to 2001 the trend would be that the indirect costs were actually reimbursed at even a lesser amount than they were in 2001 and 2002.
With respect to identifying indirect cost corrections, they looked at the development of the budgets as part of this audit and although that part wasn’t complete, they did find that when the indirect cost rates were put together they were based on preliminary budgets. When the final budgets were adopted, they found that in all the years they looked at, 2002-2005, the adopted budgets were higher than the preliminary ones that were used in calculating the indirect cost formula. The actual cost of the departments was higher than what was put together in the indirect analysis. They (Melanson Heath) plugged in the actual budget amounts into those indirect cost schedules and found an additional $312,415.
Continuing, Mr. Sullivan noted that when they looked at the close out of the special revenue funds, they found that the sewer had a cash balance and receivable balance of $2,758,647 and if you back to the legislation the legislation did not allow a sewer fund to exist. It was common practice and Natick like many others set up a fund and the Town transferred over $2.7 million in cash and receivables into the enterprise fund as surplus at the end of 2002. Above that the Town transferred $1,162,394 from the water receivables, but the legislation did allow the Town to set aside a surplus for water.
Regarding the last two numbers (sewer and water receivables), Mr. Hughes asked if the bulk of that was a receivable for the last quarter billing that actually got transferred into the enterprise fund and was not actually a cash transfer. Mr. Sullivan’s reply was, ‘no’. Most of the transfer was cash. He referred to the section of the report entitled ‘2002 Balances’ and pointed out that the sewer fund cash was $1,376,978 and the water fund cash was $610,000 or roughly 50% of the balances were actual cash on deposit.
Mr. Lemnios noted that an assertion had been made that the water ratepayers had been subsidizing the general fund through artificially high rates and asked if Mr. Sullivan had seen any evidence of that. Mr. Sullivan responded that he didn’t see any evidence that the enterprise fund had subsidized the general fund.
Mr. Lemnios commented that as a matter of fact it looked like the opposite, and Mr. Sullivan advised that that was correct. Mr. Sullivan added that he thought there was money that could have been retained within the general fund. He noted that the Department of Revenue when it certified free cash historically and certainly after the introduction of the enterprise fund legislation if the Town had a special revenue fund for sewer, the DOR would actually take the balance and add it to free cash because there was no statutory authority to set that aside even though the DOR permitted it and allowed that to happen and looked at sewer fund revenues as raised through the rates to benefit the ratepayers. There was a recognition that the Town could have closed out the cash and receivables in the sewer fund to the general
fund. He (Mr. Sullivan) thought it would be seen that while the water & sewers funds had raised a substantial amount of profits over the years, those profits were used in capital articles rather than an alternative to borrowing. Profits have been raised through rates, but for the most part that money has been used for capital rather than just artificially subsidizing the general fund.
Mr. Lemnios noted that there was approximately $900,000 flowing from water towards the general fund and about $4.8 million flowing from the general fund to water. If the world had been perfect the rate structure would have had to generate an additional $3.8 million for everything to be zeroed out and both to be whole.
Mr. Sullivan wasn’t sure he would say that an additional $3.8 million would have had to been generated because the cash and receivables had already been generated through the rates and were retained. If the Town had decided to keep that surplus in the general fund, monies raised in rates would have benefited the general fund, but the Town chose not to do that. This was consistent with the models he sees. They (Melanson Heath) had hundreds of municipalities convert to enterprise funds and by far the most common practice was to take the balances in cash and receivables and pass them on to the enterprise fund. He felt the Town’s decision was very consistent with the common practice.
Mr. Hughes referred to Mr. Sullivan’s statement that the general fund had paid a little over $600,000 for indirect costs in 2001 and 2002 and noted that those were indirect costs that the Town sought to capture in the rate structure. Mr. Sullivan responded that he had a schedule that he would walk everyone through a little later in the presentation that would show where that number was coming from. Mr. Hughes continued that in order to do it the way the Board wanted to do it the rates should have been higher to generate and collect those indirect costs it wanted to collect through the rate structure as opposed to having the general fund pay them out of whatever funds the general fund raised.
Mr. Sullivan noted that it would be seen that excess monies were deposited into the special revenue fund. He went to the schedule and pointed out that in 2001 prior to the adoption of the enterprise fund legislation, the Town accounted for water & sewer in both the general fund and special revenue funds. Looking at the first part of the schedule the budgeted amounts were in the general fund. The original budget had $8.5 million budgeted for charges for services and had an additional $2 million budgeted out of the special revenue fund surplus to spend on capital articles. The appropriation for capital articles, even though it went into the general fund, was retained and spent for water & sewer capital articles. In addition there was an appropriation of $191,000 out of special revenue fund
balances to fund the operations. That was a normal and customary procedure. The total revenues budget was $10.7 million. The expenditures showed operating expenses of $6 million. The debt service was not part of the water & sewer department budget. It was budgeted in the general fund in the debt service category. The water & sewer debt was taken into consideration.
Mr. Sullivan pointed out there was a surplus of money between what was expected to be taken in for revenue and what was expected for expenses and consistent with most of the other towns that did this kind of budget in their general fund, the revenue surplus was anticipated to cover the indirect costs. In this particular case based on the budget $1.9 million would have been covered in indirect costs. The final budget wasn’t too different. There were a couple of supplemental articles that were made to the operating budget, but there was no change in the revenue budget so basically the amount calculated as indirect costs was lowered in the final budget.
Applying this to the actual budget, Mr. Sullivan noted that the most significant portion was the $8.5 million that was budgeted for revenue and by practice the Town only brought $8.5 million into the general fund. Everything that was collected above and beyond the $8.5 million went into the special revenue funds. In this case there was a little over $1 million collected in excess of the $8.5 million budgeted and it all went into the special revenue fund so it didn’t benefit the general fund. The other thing that happened was that the actual operating expenses were less than budgeted so there was a surplus in the budget resulting from operations that the general fund did receive the benefit of. The general fund got a credit of $420,000 because those operating articles closed out to general fund
surplus, but on the other hand the actual indirect costs were calculated (based on the actual vs preliminary budget) at $2.8 million. The general fund had a loss of $541,000. In this particular case the general fund did not recover all of the indirect costs because the revenues were limited. The Town could have taken part of that $1.1 million revenue surplus and budgeted it to the general fund to cover that money, but the Town didn’t do that.
In 2002 one thing that changed was that the revenue part of the budget increased by about $1/2 million but the expenses didn’t increase so there was more room in there to cover the indirect costs. Revenue was budgeted at $9.1 million plus the capital articles. The budget process was calculated to cover more of the indirect costs. That was the intention – the Town intentionally raised more revenue in part to cover more of the indirect costs. The revenue came into the general fund in exactly what was budgeted and everything that came in as surplus - $1.3 million more – was put into the special revenue funds. 2002 had more detail in its budget reports so he was able to get more out of it, but again (like in 2001) it was surplus appropriation that closed to the general fund. Based
on the indirect cost schedule the indirect costs were underfunded by $212,000. In 2002 the net the general fund was adversely affected was $68,863.
Mr. Foss inquired if there were any questions from the Finance Committee members. No questions were asked.
Referring back to the schedule up on the screen, Mr. Hughes asked if the excess money went into the fund balance. Mr. Sullivan explained that $1.3 million in revenues were deposited during 2002 into the special revenue funds. $598,000 came out of special revenue funds to fund capital articles. Another $266,000 came out of special revenue funds of which $191,000 supplemented the budget and the difference of $75,000 was the special article for the tree removal. For the year $1.3 million came in and $864,000 went out for a total of $495,000 increase in the special revenue fund balance during 2002.
In 2001 there was a $1.1 million surplus in revenues that went into the special revenue funds; however, $2.034 million was taken out to fund the capital articles. $191,000 was used to supplement the budget. Looking at 2001 and 2002 there was over $2.5 million of special revenue fund surplus that was applied to capital articles as opposed to funding capital articles through borrowing.
Mr. Lemnios noted that those were water & sewer capital articles. Mr. Sullivan concurred with the exception of the $75,000 for tree removal.
Mr. Sullivan outlined the conclusions determined by Melanson Heath. He began by stating that he thought it was important to know that Natick complied with the MGL. The Town set up a special revenue fund for sewer and even though the statutes didn’t permit it, it was common practice. The Department of Revenue knew it and saw it annually in not only Natick but in many other municipalities.
He also noted that how the Town transferred the money forward into the enterprise fund and the recovery of indirect costs, although not the amount that could have been recovered prior to the enterprise was common practice. Not many cities and towns when they had the total budget in the general fund actually calculated and physically transferred in that specific amount of indirect costs. It was done informally and that was consistent.
Mr. Sullivan continued that the question arose that if the general fund benefited by $900,000 and the enterprise fund by $4.8 million, could the Town go back and change its mind and spend the $4.8 million. That was a very difficult thing to do. A lot of cities and towns when the budget was tight look to enterprise funds as a way of possibly funding the general fund. He had a municipality that he went to the Department of Revenue with over the last two years that had a very substantial surplus, had never taken indirect costs before, found several million in indirect costs and sought the DOR’s permission to transfer money into the general fund. The DOR reluctantly allowed them to do that for the years the enterprise fund was in effect, but did not allow them to do it prior to when the enterprise fund
was in effect. The DOR has since issued a ruling saying they would allow cities and towns to go back two years to recover indirect costs. The same town also made an effort to go back and recover for the general fund items that the general fund had paid for capital projects through taxation. That was a tough battle but because of the hardship case the DOR did allow a small amount of that.
Mr. Sullivan stated that he thought if the Town was to say that it should have closed the special revenue fund out to the general fund to the tune of $2.7 million a couple of years ago, the Town would have a tough battle with the DOR to do that.
Mr. Hughes asked if Mr. Sullivan was saying that forgetting the indirect costs that it would be difficult to convince the DOR that the general fund would be entitled to recover back from the enterprise fund the equivalent money of cash and receivables that came from both sewer and water receivables from the transfer. Mr. Sullivan responded that he thought it would be tough. The DOR’s position was that when a town tried to do that now it was revising legislative decisions that had been made in prior years. However, if that was the Town’s decision he wasn’t saying that it couldn’t be tried. He was just saying that it would be a tough time.
Mr. Foss referred to Mr. Sullivan’s remark that the DOR set a time line of two years to recover indirect costs and inquired if an actual decision had been rendered. Mr. Sullivan advised that there was and added that the particular town he was involved in went back to 2001 the first year they set an enterprise fund and recaptured $4-5 million in total. The DOR was very unhappy with that and has since issued a ruling that a town could only go back two years. The town was Southbridge.
To Mr. Hughes’ inquiry if the two years was two years from 2003 when Natick set the enterprise fund, Mr. Sullivan responded that it was two years from right now. Mr. Sullivan thought the Town was OK for 2004 and 2005 maybe with the exception of the budget error but on the other side was the retirement error. The DOR would probably allow the Town to recapture the retirement error because that was over the last two years if the decision was to repay water & sewer.
Mr. Hughes pointed out that the 2005 error had already been corrected and Mr. Sullivan agreed. It was just the 2004 that hadn’t been addressed and the Town would have a local option whether to address. If the Board wanted to address the 2004 retirement, the DOR would probably support that or if the Town wanted to offset it against other costs missed over the years, the DOR would probably support that too.
Mr. Hughes thought that he was hearing Mr. Sullivan say that the Town would have a tough road to hoe if the Town said to the DOR that the general fund transferred in excess of $3.5 million that should have stayed in the general fund to the enterprise fund and the Town now wanted to pay back in increments that $3.5 million to the general fund. Mr. Sullivan believed the Town would have a tough road, adding that he wasn’t discouraging the Town from doing that but in his experience it would be a tough sell.
Mr. Lemnios noted that local press reported very prominently and widely in July that the ratepayers in Natick had been overcharged for many years to the tune of $13-20 million, but there was nothing in Melanson Heath’s analysis that indicated that that was correct. Mr. Sullivan concurred and agreed with Mr. Lemnios that it could be said that that was false. Based on Melanson Heath’s analysis, Mr. Lemnios asked if it was safe to say that the general fund, which was the taxpayers, had not adequately been reimbursed for the costs associated with the water & sewer enterprise. Mr. Sullivan responded that the general fund benefited from certain decisions that were made and likewise the enterprise fund benefited from certain decisions. He didn’t know if he would say that the surplus
raised through the rates being transferred into the enterprise fund was something that was funded by the taxpayers. Mr. Sullivan acknowledged that the benefits were lopsided and the general fund could have benefited from those surpluses if the Town had chosen to do that.
Mr. Lemnios asked if it was also safe to say that as Melanson Heath reviewed the fiscal management of the water & sewer accounts over time it was found that the managers generally complied with the Mass General Laws and that they were functioning on accepted practices in the Commonwealth and accepted by the Department of Revenue. Mr. Sullivan’s response was, “yes”. Mr. Lemnios noted that that was another item that was reported in the local press that the management team had somehow inappropriately managed the accounts and there was nothing in Melanson Heath’s analysis that indicated that. Mr. Sullivan replied that that was correct.
With regard to the infrastructure that was owned by the Town and now owned by the enterprise fund, Mr. Hughes was of the understanding that there was no recommendation that the transfer of those assets should somehow be paid by the enterprise fund back to the general fund because most of those assets were funded by water & sewer rates in the first place. Mr. Sullivan noted that that was exactly the point. Even receivables and cash were funded by rates and it was absolutely appropriate that the infrastructure was transferred into the enterprise fund. The fixed assets were either purchased by the various capital articles funded by rates or through bond issues and the debt service of which had been primarily funded by rates.
To Mr. Sullivan’s mention that the surplus was used for capital articles, Mr. Hughes asked if the surplus was used to pay capital articles outright or to pay debt service on capital articles. Mr. Sullivan advised that the money appropriated out of surplus to pay capital articles was to pay capital articles outright and above and beyond the rates have paid the debt service attributed to water & sewer.
Mr. Connolly inquired as to how much money was in the water & sewer enterprise fund right now and was told by Mr. Sullivan that as of June 30, 2004 – they hadn’t audited 2005 - cash in short-term investments was $8.9 million and in addition there were user fees receivables of $3 million. In follow-up Mr. Connolly asked if that was how much there should be and Mr. Sullivan responded, “yes”.
Mr. Connolly recalled that Mr. Sullivan had said that the profit in the water & sewer enterprise fund had been raised through rates. Mr. Sullivan indicated that that was correct and added that in 2001 there was more appropriated in capital articles than raised in rates and surplus money was used to do that. In 2002 there was about a $1/2 million surplus, 2003 showed a profit of $475,000, and in 2004 there were profits of $2.8 million.
It seemed funny to Mr. Connolly that an enterprise fund could have profits. He questioned if it was possible that the ratepayer paid more into it than necessary and asked how the $8.9 was arrived at. Mr. Sullivan explained that that was a local decision. The Town could purchase its capital assets in one of two ways. It could borrow the money and pay it over a period of years or look to fund it out of current revenues. Natick throughout this whole period (of their audit) raised a substantial amount of money that was invested in capital assets outside of borrowing. That was a local decision and it was not for him (Mr. Sullivan) to say if that was right or wrong. It was not raising excessive money if the purpose of raising the money was to set it aside for capital projects.
Mr. Connolly inquired if there was an account set up for sewer maintenance not touching the enterprise fund. Mr. Lemnios responded that at the end of each fiscal year there was an accounting produced of the enterprise fund that showed retained earnings and typically the retained earnings were used to pay cash for capital improvements thereby saving the ratepayer interest that would have been associated with borrowing. The Town could pay three times the amount for a project if it wanted to pay it over 20 years or pay cash up front and not incur that debt. That was the trend.
Mr. Connolly questioned if the ratepayer who wrote the check knew that they weren’t just paying water and sewer that they were also paying for the maintenance. Mr. Lemnios assumed that the ratepayer knew. There was a discussion with the Board of Selectmen about capital projects when the rates were set and he thought everybody paying water rates most likely understood there was infrastructure to get the water into their homes.
Mr. Connolly read from a section of the audit report: ‘There was never a requirement that indirect costs be raised and covered as part of the rates nor was there a requirement that water & sewer debt be covered by sewer fees. The decision to establish special revenue funds to account for surplus revenue from the water & sewer operation was a local political decision. However, by statute any surplus in water & sewer was to first reimburse the general fund for costs incurred on behalf of the water department, set aside for capital extra ordinary maintenance or repairs, or to reduce the rates in the future’. He wondered if a day would be seen when the water rates were reduced.
Mr. Lemnios reminded Mr. Connolly that the Board reduced the rates by 5% last January, but Mr. Connolly countered that that was because of an accounting error and it was only to give back what was due. He felt that that should be clarified.
Mr. Lemnios stated that he didn’t know if there would be a day when there would be a reduction in the rates. One of the considerations would be the escalating cost over the next 5-6 years of the MWRA portion. The MWRA was talking about going up 40-50% and that would affect the ratepayer.
He also thought that in looking at the operating structure and capital requirement a water & sewer system was a capital intensive system. It required constant maintenance and care because there was a demand on it 24 hours a day and there was an expectation that it be completely reliable, the water safe to drink, and the toilet flushes away what it should. Unless there was some kind of long-term change in the economies of Massachusetts meaning that everybody got paid a lot less, the cost of the pipes in the ground went down dramatically, the MWRA decided not to charge the 40-50% rate increase over the next 5-6 years, he thought it was unrealistic to expect the rates to go down.
Mr. Lemnios continued that it had been his observation that the Board of Selectmen’s policy was to try to do two things simultaneously that were very difficult things to do. One was to try to pay cash as often as possible for capital projects thereby saving the ratepayer the cost of the interest over time and the second was to have a stable rate. Every year retained earns have been applied to stabilize the rate so if there were rate increases, they were very gentle as opposed to big bumps. Hopefully the Board can continue to do that but there was not a guaranteed lock that it can be done forever.
Mr. Connolly wanted to clarify Mr. Lemnios’ comment on lowering the rates by 5% last January. While that was true, there was a reason the rates were lowered that 5%. There was an accounting error. Mr. Lemnios acknowledged that that was correct and that he had probably misspoke, but pointed out that on the other hand it was pretty evident that based on what was heard tonight the general fund was owed a far greater amount of money than the enterprise fund. The general fund has supported the water & sewer enterprise fund to the tune of about $4.8 million. The enterprise fund has sent money the other way to the tune of about $900,000. The flow of money has clearly gone against the general fund towards the ratepayer and the ratepayer has enjoyed that $3.9 million largesse that the general
taxpayer has given to the enterprise fund over time. That was very contrary to what was reported in the local press over the summer and a lot of time had been spent over the summer validating that and this audit validated it (contrary to what had been reported).
Mr. Conley reiterated that the 5% reduction was because of an accounting error. There was $8.9 million in the enterprise fund that people have paid into for the last couple of years and someone who died tomorrow may have paid into it for years. Mr. Connolly was of the opinion that consideration should be given to lowering the rate.
Mr. Lemnios responded that the current retained earnings that were reported to the Board about a month ago were approximately $6 million. He offered to have Treasurer/Collector Robert Palmer could walk through how that figure was arrived at and noted there would be a presentation on water & sewer rate setting later in January.
To Mr. Connolly’s point about someone paying who was not here, Mr. Lemnios noted that he didn’t think there was any way in which that issue could be equitably addressed. That was part of being a water & sewer ratepayer. There were people who helped build the system many years ago that were no longer here and should they or their heirs get a piece of the retained earnings. There was no doubt that water & sewer was a labor and capital intensive process.
Mr. Lemnios continued that there had been two very different looks over this system. The Finance Committee spent the entire summer looking at this system and now an independent audit who the Town commissioned at the expense of $50,000 looked at this system and both of those examinations have come back and reported to the Board of Selectmen and the community at large that the financial management of the system was sound and was within the confines of the Mass General Laws. He noted that there was a lot of press about allocations that there was something wrong and it was his (Mr. Lemnios’) hope that the “MetroWest Daily News” would give it the same amount of press now that it had been demonstrated that there nothing fundamentally wrong with the management of the system. He hoped the Board of
Selectmen would urge the “MetroWest Daily News” to do that.
Mr. Connolly commented that he would urge the newspaper to tell the truth every time.
Finance Committee member Craig Ross stated that it was his understanding that part of the reason for the surplus being as high as it was in the water & sewer enterprise fund was because the general fund was being overcharged for indirect costs at least in one year to the tune of $540,000. Mr. Sullivan advised that that was correct, and Mr. Ross noted that if the Town had been truly charging all the costs that had been accrued to the benefit of the water & sewer enterprise fund those numbers would have been lower. Again Mr. Sullivan confirmed that that was correct.
Mr. Ross then asked about the $312,415 shown on the power point slide in indirect cost allocation noting that he didn’t remember seeing that in the report. Mr. Sullivan explained that he had indicated there were a couple of things Melanson Heath had not finalized as of yet. One was the 2005 audit and the other was the review of the budget. That work has been started and this issue ($312,415) was something they found as part of that work. They found that the indirect cost rate was based on preliminary budget figures for the various general fund departments and when they traced those figures through the final adopted budget they found that the adopted budget for every single year was higher than the preliminary analysis. The result was that there were more costs to be allocated through
indirect costs than had been transferred. That was not in the initial report.
Mr. Ross thought that he was hearing Mr. Sullivan say that another $312,000 in indirect costs could be added to the costs in FY01 and FY02 that were not charged to the water & sewer enterprise fund that would have reduced those so-called profits. Mr. Sullivan advised that that was correct.
Mr. Ross recalled that Mr. Sullivan had made note of the $75,000 appropriation for tree removal plus some DPW snow removal and materials and asked Mr. Sullivan to comment if those were charged by Town Meeting vote against the sewer surplus funds and if Mr. Sullivan felt that was incorrect was there some sort of adjustment he would recommend.
Mr. Sullivan responded that all three of those articles were specific articles voted by Town Meeting. Under the premise that part of this money came out of sewer surplus that by statute shouldn’t even exist, normal procedure would be to close sewer surplus out to the general fund and that meant that the Town had the right to vote those kinds of transfers. It went through the public process and was voted at Town Meeting with full disclosure and they (Melanson Heath) found that it complied with the statutes. Mr. Ross interpreted Mr. Sullivan’s response as saying that it may not be necessary to take corrective action because Town Meeting appropriated those funds which was in compliance, but if the Town decided to fix that the logical thing would be to take the money out of the general fund and put it
into the water & sewer enterprise fund increasing the fund balance to the detriment of the general fund. To the degree that the water & sewer enterprise fund already had all of these surpluses, that would probably not be practical.
Mr. Sullivan noted that it was local decision and the Town could do that or could not do it.
Noting that Mr. Sullivan had said at least three times that the sewer surplus shouldn’t even exist by statute, Mr. Ball inquired if it (sewer surplus) was prohibited by statute or not enabled by statute. Mr. Sullivan replied that it was not enabled by statute and added that all Mass municipal law was based on enabling legislation. A municipality could not do any municipal service unless the statutes told them they could do it. In follow-up Mr. Ball pointed out that Mr. Sullivan had also said that it was common practice for municipal entities to have such sewer surplus accounts. To respond Mr. Sullivan used the example of the City of Lowell. Lowell had a water & sewer revenue fund and when the DOR certified their free cash at the end of the year, they (DOR) took the general fund free cash
balance and sewer fund free cash and put it together and certified it as one number. They had $3 million in the sewer fund and $2 million in free cash and the DOR certified it as $5 million in free cash but wrote a letter saying they were certifying $5 million free cash but not to forget that $3 million of that was raised through sewer rates and to be careful how it was spent. The DOR had no basis to tell the city they couldn’t just take the whole $5 million and apply it against the tax rate.
Mr. Foss inquired as to when Melanson Heath would be completing the 2005 audit and the review of the budget development process. Mr. Sullivan advised that they (Melanson Heath) would finish the budget process when they did the 2005 audit. He thought that was nearly ready for them and within the next few weeks they would be out here. Asked about the final report, Mr. Sullivan responded that it would probably be by the end of January and ready for the Board’s first meeting in February. He noted that there was another issue that needed to be talked about tonight. There was a problem in the accounting for special articles in the general fund that affects the 2005 audit. He didn’t know if it had been addressed and the Board would be asked tonight to decide whether to go back to 2003 and
2004 and make the corrections in 2003 and 2004 or whether to make the corrections through the 2005 financial statements.
Continuing with his presentation, Mr. Sullivan covered the set up of the enterprise. He noted that the cash and receivables were transferred and also the cash balance and the activity of the capital projects. When the transfers were made there were two projects totaling about $150,000 that did not get transferred in which he believed to be an oversight. In addition there were capital articles. Those articles stayed in the general fund. The money was spent on water & sewer capital projects with the exception of the two that were spent on the DPW. For the most part the capital articles got spent on capital projects but for the most part those capital articles were never transferred and reported in the enterprise fund. There was at least $1.5 million worth of capital that had gone through
those accounts that has never gone through the enterprise fund and that needs to be done. They (capital articles) will increase the investment and fixed assets, but it won’t increase the unrestricted retained earnings.
Mr. Sullivan reported that the fixed assets were transferred in. The Town hired a professional firm to come in and do the fixed assets. Melanson Heath felt very comfortable with the work that company did and they set up the right accounts with the exception of missing the capital articles that were over in the general fund. The fixed assets were capitalized in accordance with the proper standards as was the debt.
Regarding the indirect costs, Mr. Sullivan noted that there was no formal process prior to the enterprise fund. It was an informal process which was common practice. In looking at the indirect costs the only problem they (Melanson Heath) found was the budget issue – the preliminary budget was used but the adopted budget was higher and that wasn’t factored into the indirect costs. Other than that the kind of indirect costs the Town was recapturing were very consistent with other towns. The percentage was consistent and the costs were supportable and defendable.
Continuing Mr. Sullivan noted that the theory behind payment-in-lieu of taxes was one of two things. One was if there was substantial property in your town that normally would be taxed, i.e. a university or college that occupied a large space or a non-profit that bought up a number of buildings previously on the tax roles typically those properties were on a payment-in-lieu of taxes. The other was if an entity was benefiting from municipal serves that it was not paying for and the Town was paying for all the indirect costs, but in this case (water & sewer enterprise fund) Natick’s indirect cost plan was very comprehensive and he didn’t think there was any justification for a payment-in-lieu of taxes (from the water & sewer enterprise fund). Over and beyond that the Town’s departments do
not pay for water & sewer usage which was common practice. Most of their (Melanson Heath) municipal clients do not pay. Some do because they want to get the costs into the net school spending and if you plug it in for the schools you have to plug it in for all the other departments. That was an advantage the enterprise fund was giving to the Town which makes it difficult to justify charging the water & sewer for payment-in-lieu of taxes.
On the financial reporting aspect, Mr. Sullivan explained that the water & sewer enterprise funds were very difficult to analyze and understand because the records were maintained on a budgetary basis. A budget was set up for the payment of principal on debt and a budget was set up for the payment of capital purchases made out of the surplus, but the enterprise fund financial statements don’t show an expense for principal paid on debt and don’t show an expense for capital purchases because they all got capitalized like a business not a municipal entity. What happens was that the Town maintained its books on a budgetary basis to ensure that the budgetary restrictions were being complied with and through the audit the financial statements were converted into proprietary funds. With the exception of
maybe one or two municipalities that keep their books on a proprietary basis, that was what everybody did. It was consistent with the practice of other municipalities. The Board got reports as often as it wanted showing what’s been budgeted and spent to date, but the actual proprietary fund statements were only seen once a year when the audit report was looked at.
With respect to internal controls, Mr. Sullivan noted that the Board had been told about the problems with the cash reconciliations and receivables. That was important and it was necessary to resolve those issues. It affected the enterprise fund the same way it affected the other funds in Town.
Mr. Foss suggested to the FinCom that this matter be put on the agenda of the January 5 Budget Planning Subcommittee for further review rather than taking a position tonight.
Reminded that he had wished to ask the Board to make a decision tonight on one issue, Mr. Sullivan noted that of the $1.5 million in capital articles that went through the general fund and was never transferred to the water & sewer enterprise fund, $1.3 million was spent in FY03 and some spent in FY04 and FY05. What Melanson Heath did was to prepare their statements to match the audited financial statements and didn’t want them to differ. If Melanson Heath issued an opinion on those financial statements, they would have to put a paragraph in the opinion that assets purchased through the capital items had not been capitalized in the enterprise funds meaning the statements were understated by “x” dollars. The Town could have the auditors as part of the Fiscal 2005 audit make the correction and
that could be reflected in their FY05 opinion. The other alternative was to go back and correct FY03 and FY04.
Mr. Lemnios inquired if this was just an accounting mechanism or if it had an impact. Mr. Sullivan advised that basically the change in the enterprise fund would increase the fixed assets and increase the equity account called investment in fixed assets. It would not increase the unrestricted net assets and would not affect free cash. Mr. Lemnios remarked that it did not have an impact on the rates and Mr. Sullivan concurred.
To Mr. Hughes’ inquiry if there was a common practice on which way it should be done, Mr. Sullivan responded that it didn’t matter. Mr. Hughes thought the correction should be in FY05, noting that it made more sense to do it in one year rather than having to go back through several years.
Mr. Foss questioned if that would be beyond the scope of what Melanson Heath had been requested to do, and Mr. Sullivan responded that they (Melanson Heath) had been asked to audit FY03 and FY04. His concern was that there would be two sets of financial statements – those from Melanson Heath and those from the Town’s auditors and they would contradict each other. If it was corrected in FY05 both audits would be the same and the FY03 and FY04 audits would have a paragraph.
Mr. Ross asked if these were depreciable assets and Mr. Sullivan advised that they were. Mr. Ross then pointed out that there would be some impact on the P&L of the enterprise fund but not a huge amount. Mr. Sullivan agreed.
Mr. Hughes moved to ask the Town’s auditors to make the correction of the capital articles in the FY05 audit. Seconded by Ms. Gloff and unanimously voted.
PUBLIC HEARING: RENEWAL OF CHAPTER 336 OF THE ACTS OF 2004 CLUB PERMITS
On a motion by Mr. Hughes, seconded by Mr. Connolly, the Board unanimously voted to open the public hearing.
Mr. Hughes stated that he was a member of the Sons of Italy and would be voting.
Mr. Ball stated that he was a social member and he too would be voting.
Mr. Ball noticed that the applicants seemed to report different things and since when this legislation was approved Mr. Hughes was the member who specified what he felt should be reported, he asked Mr. Hughes to refresh their memories. Mr. Hughes thought that all the applicants would be reporting on the same things – the receipts, the expenses, the charities and the amounts. He recalled that initially the ABCC didn’t want to allow the clubs to take out the expenses, but after some discussion the ABCC agreed that the expenses could be taken out.
a. VFW
Included in the VFW’s expenses was the donation of the hall for the Senior Bridge Club, but Mr. Ball did not believe that that was an expense associated with the functions for which the hall was rented. Veterans of Foreign Wars Manager James Graham responded the hall was donated to the Senior Bridge Club every Monday. This was for the seniors of the Town and Mr. Graham saw this as a charitable contribution so that they could have their tournament. He didn’t know the exact number of people, but thought there were probably 75-80 people involved. He also noted that not listed were the donations to the families of the veterans in Iraq. Not everything was put down, but the VFW did a lot for the veterans of Natick.
Mr. Ball noted that the net revenue was listed s $7,860 while the charitable contribution exceeded $8,809 so the VFW was donating more than it was taking in. Mr. Graham confirmed that to be correct.
Mr. Hughes moved to renew the VFW’s permit under Chapter 336 of the Acts of 2004. Seconded by Mr. Connolly and unanimously voted.
b. Sons of Italy
Representing the Sons of Italy was Dick Burke.
Noting that this was the first time through the renewal process so everyone was feeling their way, Mr. Ball commented on the financial recaps submitted and the lack of a common format. Mr. Burke told the Board that the Sons of Italy didn’t have a CPA. The only person they had was the treasurer.
Mr. Ball explained that the reason he raised the common format for reporting was the concern that profits from these operations would go to charity. What was not clear to him was whether related expenses, i.e. building insurance was related to the rental activity. It struck him that what was listed on the Sons’ of Italy recap was probably the total annual building insurance bill. Mr. Burke responded that they had to have insurance.
Ms. Gloff noted that the Sons of Italy had listed $7,000-8,000 for charities.
The revenues were listed at $12,400 net, but Mr. Hughes pointed out that the revenues were just supposed to include alcohol. Mr. Burke responded that the Sons of Italy never divided it out into just alcohol so he would have to do some digging.
Mr. Hughes, seconded by Mr. Connolly, moved to table. After further discussion a subsequent motion was passed and no vote was taken on this motion.
Mr. Ball proposed the formation of a subcommittee of one to come up with a form people could use in the future.
Ms. Gloff asked about pasta night which was scheduled for January 4, and Ms. Challis noted that the current permit expires on December 31, 2005. Ms. Gloff agreed that a form was needed, but noted that all the income from pasta night was all the income the Sons of Italy had and in looking at the numbers was the Board really concerned that they weren’t spending at least the vast majority of the proceeds from alcohol on charity.
Mr. Hughes pointed out that the Sons of Italy didn’t serve alcohol at Natick Days or with the cookbook or on the Mohegan Suns trip. He moved to renew the Sons of Italy’s special permit under Chapter 336 of the Acts of 2004 subject to the Board receiving a revised report. Seconded by Mr. Connolly and unanimously voted.
c. American Legion
Representing the American Legion was the manager Edwin Hasgill.
Mr. Ball noted that there was no statement of what the individual contributions were or where they were from. Mr. Hasgill advised that all of the $2,114 in proceeds was donated mostly in scholarships and aid for Hurricane Katrina.
On a motion by Mr. Hughes, seconded by Mr. Connolly, the Board unanimously voted to approval the renew of the special permit under Chapter 336 of the Acts of 2004 for the American Legion.
d. Natick Elks
Representing the Natick Elks was the manager Paul Carew.
Mr. Carew advised that the Elks’ charitable contributions were more than was raised by the special permit. In addition to what was on the list submitted to the Board, they had also given to individuals.
Mr. Hughes moved approval of renewing the special permit under Chapter 336 of the Acts of 2004 for the Natick Elks. Seconded by Ms. Gloff and unanimously voted.
Ms. Gloff nominated Mr. Hughes to be the subcommittee to develop the form. Mr. Hughes accepted and the other members of the Board agreed.
The public hearing was closed on a motion by Mr. Hughes, seconded by Ms. Gloff, and unanimously voted.
With the close of the public hearing Mr. Hughes moved to reaffirm all the votes. Seconded by Ms. Gloff and unanimously voted.
APPLICATION FOR TRANSFER OF COMMON VICTUALER’S LICENSE FROM HENG TONG, INC. D/B/A ORIENTAL PEARL RESTAURANT TO LCC GROUP, INC. D/B/A BEIJING KITCHEN
Before the Board was an application for the transfer of the common victualer’s license held by Oriental Pearl Restaurant to LCC Group, Inc. d/b/a Beijing Kitchen for premises at 195 West Central Street.
Representing Beijing Kitchen were Attorney Peter Lim, and owners Wai Man Chiu and Eric Kam Leong.
Mr. Hughes inquired if the landlord had signed off on the transfer and Mr. Lim advised that the landlord had.
Mr. Connolly moved approval of the transfer of the common victualer’s license from oriental Pearl Restaurant to LCC Group, Inc. d/b/a Beijing Kitchen for premises at 195 West Central Street. Seconded by Mr. Hughes and unanimously voted.
PUBLIC HEARING FOR TRANSFER OF ALL ALCOHOL COMMON VICTUALER’S LICENSE FROM HENG TONG, INC. D/B/A ORIENTAL PEARL RESTAURANT TO LCC GROUP, INC. D/B/A BEIJING KITCHEN
On a motion by Mr. Hughes, seconded by Ms. Gloff, the Board unanimously voted to open the public hearing.
Mr. Ball inquired as to Wai Man Chiu’s, the manager of record, training and was told by Mr. Lim that Mr. Chiu had been certified for TIPS.
Asked if he was in possession of a copy of Natick’s alcohol regulations, Mr. Chiu replied that he was. In follow-up Mr. Ball inquired if the wait staff was currently certified or would be going through training. Mr. Chiu advised that the staff would be going through training. Mr. Ball inquired as to the timeframe and Ms. Challis explained that the rules & regs stipulate that all staff involved in the selling or serving of alcohol would have to be trained within 30 days of the license being issued and the license wouldn’t be issued until it was approved by both the Board of Selectmen and the ABCC.
Mr. Hughes moved to close the public hearing. Seconded by Ms. Gloff and unanimously voted.
Mr. Hughes moved approval of the transfer of the all alcohol common victualer’s license held by Oriental Pearl Restaurant to LCC Group, Inc. d/b/a Beijing Kitchen for premises at 195 West Central Street. Seconded by Ms. Gloff and unanimously voted.
NICHOLAS’: PETITION TO CHANGE LOCATION OF LOUNGE/BAR STOOLS
Appearing before the Board to request a change in the location of the lounge/bar stools at Nicholas’ restaurant at 85 East Central Street were the owners John & Sharon Stournaras.
Mr. Stournaras told the Board that when they built the building the bar stools were built last minute because the regulations changed at that time and the bar stools were put in the back by the kitchen. This creates a traffic jam for the flow of the restaurant. It was a bad location and they would like to move the bar stools/lounge to the front of the restaurant. There would be the same number of seats and the same set up and almost the same measurements.
Mr. Hughes inquired if the relocation of the bar stools would change the number of seats in the restaurant. Mr. Stournaras’ reply was, “no”. When asked if there would be the same number of seats for dining, Mr. Stournaras responded that it would be exact.
If the function of the bar was for customers waiting for a table, Mr. Hughes questioned what difference it made if the stools were in the front or the back. Mr. Stournaras explained that it was also a service bar and it created a traffic jam. The customers have to walk through a dining room if they want to wait in the lounge plus there could be 6-7 wait staff waiting for drinks.
Mr. Hughes noted that the diagram of the proposed new location showed the removal of six seats. Mr. Stournaras advised that those seats would go back where the bar was now.
To Mr. Ball’s inquiry as to the current number of seats, Mr. Stournaras responded that there were 118 seats.
Mr. Hughes moved approval of the relocation of the seven bar stools from the back to the front of the restaurant in accordance with the plan submitted. Seconded by Mr. Ball and unanimously voted.
INTERIM FIRE CHIEF
On a motion by Mr. Hughes, seconded by Mr. Connolly, the Board unanimously voted to table discussion of this matter to January 9, 2006.
RCN: CABLE LICENSE AMENDMENT
Mr. Lemnios recalled that approximately 1-1/2 months ago Cable Attorney Peter Epstein came before the Board relative to an amendment on the RCN license. RCN was required to provide underground cabling to reach certain areas, but reported that they were unable to reach those homes because of the cost. There was an agreement reached by the Board and RCN and the agreement now before the Board was voted, advertised and was now ready to be signed. As a result of this agreement RCN would pay the Town $175,000.
Mr. Connolly inquired as to where the $175,000 would go and Mr. Lemnios advised that it came into the general fund. Mr. Ball noted that $160,000 was the relief portion and $15,000 was for the gazebo and Mr. Lemnios added that a Town Meeting appropriation would be required for the gazebo site and the additional funds the Board may want to set aside for document archiving.
Mr. Ball noted that the intent of the $15,000 was to providing funding for the line of sight and would provide equipment that would go to Pegasus. Mr. Hughes thought the money could be spent under the direction of the Board of Selectmen and Town Administrator to make the gazebo part of the I-net. Asked who would own the equipment, Mr. Lemnios thought it would be the Town.
Mr. Hughes moved approval of the Amendment to the RCN cable television license as written. Seconded by Mr. Connolly and unanimously voted.
LIAISON REPORT: PUBLIC SAFETY DEPARTMENTS
As Mr. Ciccariello, the Board’s liaison to the Public Safety Departments was not present the Board unanimously voted to table the matter. The vote was taken on a motion by Mr. Hughes, seconded by Ms. Gloff.
NAMING OF PUBLIC SAFETY TRAINING CENTER
The Board was in receipt of a letter from Police Chief Dennis Mannix proposing that the public safety training room be named the Frederick C. Conley Public Safety Training Room (the Conley Center) in honor of the past Town Administrator Frederick Conley.
Mr. Hughes suggested that the Board follow the accepted process, contact the relevant boards, and schedule a hearing for January 23, 2006.
TOWN ADMINISTRATOR’S INTENTION TO MAKE APPOINTMENT TO THE GOLF OVERSIGHT COMMITTEE
Mr. Lemnios informed the Board of his intention to reappoint David Baier to the Golf Course Oversight Committee.
Mr. Hughes moved to waive the 15 days waiting period and accept the appointment. Seconded by Ms. Gloff and unanimously voted.
2006 LICENSE RENEWAL
Having been informed by the Tax Collector’s Office that all overdue taxes, fees were current, Mr. Hughes moved to renew the common victualer’s license for Pizza Pedler, 27 West Central Street for 2006. Seconded by Ms. Gloff and unanimously voted.
Mr. Hughes then moved to renew the Class II wholesale only license for Wholesale Auto Services, N.E., 17 Wilson Street. Seconded by Ms. Gloff and unanimously voted.
SPRING TOWN MEETING
It was announced that Spring Town Meeting would be held on Tuesday, April 11, 2006 with the warrant closing as of February 10, 2006.
MINUTES
With corrections as noted, Mr. Hughes moved approval of the minutes of the September 26, 2005 meeting. Seconded by Ms. Gloff and unanimously voted.
CHABAD CENTER: REQUEST TO USE COMMON: MENORAH
The Board unanimously voted to approve the Chabad Center’s request to have the menorah on the Natick Common from December 21,2005 through January 3, 2006. The vote was taken on a motion by Mr. Hughes, seconded by Ms. Gloff.
ACCEPTANCE OF DONATION TO FIRE DEPARTMENT: SAM’S CLUB
Mr. Hughes moved to accept Sam’s Club’s donation of $1,000 for the Natick Fire Department to be used for the purchase of carbon monoxide detectors. Seconded by Ms. Gloff and unanimously voted.
Mr. Ball inquired as to what the Fire Department would do with the carbon monoxide detectors and was told by Mr. Lemnios that the detectors would be distributed to homes and individuals. Mr. Ball requested a report back on how the detectors would be distributed.
ACCEPTANCE OF DONATION TO POLICE DEPARTMENT: SAM’S CLUB
Mr. Hughes moved to accept Sam’s Club’s donation of $1,000 to the Natick Police Department for the benefit of the Community Policing Program. Seconded by Ms. Gloff and unanimously voted.
In response to how funds like these were expended, Mr. Lemnios advised that 4-5 weeks ago there was a neighborhood meeting held at the Recreation Center with refreshments. Generally these funds would provide for refreshments and setup of neighborhood meetings.
ACCEPTANCE OF RESIGNATION: COUNCIL ON AGING – GISELE WOODWARD
The Board unanimously voted to accept the resignation of Gisele Woodward from the Council on Aging with thanks and to post the vacancy. The vote was taken on a motion by Mr. Hughes, seconded by Ms. Gloff.
SELECTMEN’S CONCERNS
a. Snow Conditions
Mr. Hughes requested that a copy of the correspondence received from the resident of Clearview regarding the snow conditions on December 9th be forwarded to the School Superintendent.
b. Back Flow Prevention Survey
Mr. Hughes requested a progress report on the cross connection survey being done by Weston & Sampson.
c. McAuliffe School Fund Raising
Mr. Hughes expressed concern with the notice received from the McAuliffe Charter School and asked Mr. Lemnios to look into whether this was fund raising.
d. South Natick Hills
Mr. Hughes asked about the Environmental Notification Form received for South Natick Hills and Mr. Lemnios explained Pulte was required to start the environmental notification process and they were doing it.
e. MWRA Rates
Mr. Hughes called attention to notification that the MWRA service was recognized as one of the highest retail rates in the country and the MWRA was indicating a 44% increase over the next 4-5 years.
f. Application for Lodging House License – Roland Kelson
Being in receipt of a memo from Captain Sal Arena on the Pond Street lodging house, Ms. Gloff requested an update on the status of the license at the next meeting.
g. LIFT
Ms. Gloff read a public service announcement from the LIFT announcing free rides on the 21st.
h. Streetlights - Beetleback
Mr. Connolly reminded the Board that a month ago he had mentioned the streetlights in the beetleback area on Route 9 and asked if any call had been made to the State regarding those lights. Mr. Lemnios believed there had been, but he would check in the morning.
Ms. Gloff noted that there was something in the “Boston Globe” with people asking about streetlights that were out and the response given in that particular town that Brite Lite maintained was the recommendation that people call the DPW. They also gave a phone number to call Brite Lite directly.
For tracking purposes Mr. Lemnios thought it was probably better to call the DPW.
i. Freedom on Information Request
Mr. Connolly noted receipt of a Freedom of Information Request from “MetroWest Daily News” reporter Claudia Torrens requesting copies of all executive session minutes for 2004.
Mr. Lemnios advised that Town Counsel was preparing a response.
j. Nomination Papers
Mr. Ball reminded everyone that there were a number of elected offices in Natick and nomination papers were available in the Town Clerk’s office.
k. Glen Ridge Residents Trust
Mr. Hughes inquired if the letter from the Glen Ridge Residents Trust was correct that the Town was supposed to install the equipment mentioned (pressure booster pump) and was it installed. Mr. Lemnios replied that he would have to look at the Elm Bank agreements.
l. Elimination of State Gas Tax
The Board was in receipt of a letter from the Mansfield Board of Selectmen seeking support of a pending bill that would eliminate the State gas tax for municipal vehicles. Mr. Ball felt that that seemed like something worthy of the Board’s support and asked the Board members to give consideration and discuss at the next meeting.
ADJOURNMENT
The meeting was adjourned at 9:45 p.m.
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Carol A. Gloff, Clerk
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