urn:schemas-microsoft-com:office:smarttags013fBOARD OF SELECTMEN
placePlaceNameNatick PlaceTypeTown Hall
dateYear2006Day16Month10October 16, 2006
timeMinute0Hour197:00 p.m.
The meeting was called to order by the Chairman Charles M. Hughes at timeMinute0Hour197:00 p.m.
PRESENT: Charles M. Hughes, John Ciccariello, Carol A. Gloff, John PersonNameConnolly, PersonNameJoshua Ostroff.
ALSO PRESENT: Philip E. Lemnios, Town Administrator; Donna Challis, Secretary
WARRANTS: Payroll warrants were signed by the Board of Selectmen on dateYear2006Day16Month10October 16, 2006 in the amount of $1,561,480.00. This figure was included in total warrants signed by the Board of Selectmen of $2,839,784.92.
Following the pledge of allegiance, a moment of silence was observed in honor of the men and women serving our country. Everyone was asked to include State Representative Deborah Blumer and former firefighter Paul Brown in their thoughts during the moment of silence.
ANNOUNCEMENTS
Mr. Hughes announced that the veterans’ request to place a plaque on addressStreetCottage Street in honor of Sergeant Thomas O. Mallery was not on the agenda for that evening. A public hearing would be scheduled for October 23.
placeCityNatick 360 submitted some proposed dates for upcoming work sessions with the Board. Mr. Hughes asked the Board members to look at the dates and let him know by the next meeting if the dates were OK. The first was scheduled for November 13, but that probably wouldn’t work because the Selectmen were meeting that night.
JOINT MEETING WITH THE FINANCE COMMITTEE: FINAL REPORT OF WATER & SEWER placeCityENTERPRISE FUND AUDIT – MELANSON HEATH
Co-Chairing this portion of the meeting was Finance Committee Chair Bruce Wright. Mr. Wright called the meeting of the Finance Committee to order at timeMinute5Hour197:05 p.m. Present: Richard Sidney, James Everett, Catherine Collins, Idzal Wilson, John Culkin, Peter Robbins, Robert Severance, Christine Weithman, Richard Jennett, Bruce Wright.
Mr. Hughes prefaced the discussion by noting that several months back a draft water & sewer audit was received from Melanson Heath. There were several questions on things that had not as yet been completed. A final report had now been submitted and John Sullivan of Melanson Heath was here to answer any questions.
Finance Committee member John Culkin noted that the cover letter made mention of an error being detected in the water & sewer enterprise fund in FY05 & FY06 in retirement costs. There was a reference on page 9 with a similar problem with retirement costs for FY04. Not mentioned in the report and he didn’t recall, if anything was done about FY04 and he was curious how it was going to be dealt with in ’04. There was a problem in FY04, FY05, and FY06, but the FY06 was corrected. For FY05 some adjustments were made with releasing appropriations and that made FY05 whole, but there was still FY04 and FY04 wasn’t addressed in the report.
Mr. Sullivan explained there was a rate reduction in FY05 that was to cover the first year of the problem. One of the purposes of doing this analysis was to look at both sides of the ledger and there were times when the general fund benefited from calculations and times when the water & sewer enterprise fund benefited from the calculations. In FY01 & FY02 the way the budget was structured the general fund wasn’t reimbursed for all indirect costs. The question was, was it beneficial to go back and try to make any one fund whole and if so how far back would you go to do that.
Mr. Culkin questioned if the Town had decided not to do anything with FY04 because it was too far back. Mr. Lemnios thought the FY04 piece had been addressed and he would get a copy of the memo for Mr. Culkin.
With respect to the correction of the FY05 number, Mr. Culkin noted that the Town did a release of appropriations for the sewer force main on addressStreetWorcester Street and the release for addressStreetBacon Street home purchase with an amount of $414,000 transferred to the Water & Sewer fund to compensate for the overcharging for retirement. Looking through the Melanson Heath report mention was made on page 6 & 7 about capital articles that were funded by water & sewer surplus appropriations that remain in the general fund. On page 7 the sewer force main appropriations of $394,000 and the addressStreetBacon Street home appropriations of $150,000 were released and the money was given back to the enterprise fund, but the book said the projects were funded from water & sewer so water & sewer hasn’t
been made better. The money was just given back. The enterprise fund got its own money back. He didn’t understand how that worked.
Mr. Sullivan responded that the release of appropriations was funded from Water & Sewer surplus and went back to the Water & Sewer account. It was not his understanding that the release of the appropriation was ever for the purpose of covering a retirement calculation or correcting an error – just that those monies weren’t going to be used and they were back in the water & sewer fund where they would be available to be appropriated.
Mr. Culkin pointed out a typo on page 7 where it said funds when it was only one fund. There had been a discussion about two separate funds and he wanted to be sure only one fund was being talked about in this report.
Mr. Culkin referenced page 9, the second to last paragraph. A comment was made that the high investment in water & sewer programs in the years reviewed support the high allocation of the Engineering budget. Engineering was charging off 75% of its costs as indirect costs and because of the high investment in water & sewer capital projects that made sense. It was Mr. Culkin’s recollection that there was a pile of money associated with engineering on sewer projects and he got the sense the engineering was done by outside resources. To say the Town was doing a lot of projects and there was a big charge off in engineering costs sounded dubious.
Mr. Sullivan responded that he never meant to imply that the Engineering Department provided all the engineering services to those projects. The Town contracts engineers; however, given the magnitude of the activities there was still a lot of liaison between the Engineering Department, the contractor and the engineers. That was the DPW’s best estimate of the amount of time spent on water & sewer. That number appears high because there was so much capital construction related to water & sewer.
Mr. Wright pointed out that in later years that amount had gone down in percentage in recognition that the distribution of the work was different. Mr. Sullivan acknowledged that that may be true, but Melanson Heath thought the years they looked at were reasonable based on the amount of time Engineering was spending on these projects.
Mr. Culkin then referenced page 17 and the mention made of additional borrowings of $350,000. The report didn’t see the purpose of that borrowing as the project costs did not exceed the original borrowing. Although it may not have been necessary, Mr. Culkin noted that the Town was paying the cost of the borrowing and the ratepayers were paying.
Mr. Culkin then referred to page 13 and the adjustments to the general ledger to bring it back to agree to the Collector’s balance and questioned how the general ledger got so out of whack. Mr. Sullivan responded that he found the general ledger and the detail were not being reconciled timely on an ongoing basis. One of the risks of not doing that process was having them go out of balance in what they (Melanson Heath) considered a material amount of money.
In follow-up Mr. Culkin noted the comment on page 18 indicating information was not provided to the auditors. To him that seemed a little odd. Mr. Sullivan explained that the comment was that they were not provided with estimates to the amounts voted and he thought that happened because there wasn’t a connection between the estimates and the original amounts voted in some cases. As he indicated here a lot more detail needs to be done as it relates to the estimates and the estimates need to be tied back to what was voted and that didn’t happen in this case.
Mr. Culkin called attention to typos on page 21 and the need for brackets on some of the negative numbers, but Mr. Sullivan advised that the format used was a standard format for a financial statement. Expenditures were a negative and it wasn’t common to put brackets on an expenditure. In that case a negative expenditure would actually be a plus.
Mr. Culkin moved onto page 27 – the Indirect Costs for Fiscal 2002 and noted that when he tried to reconcile the allocated debt number looking at the Town Report he noticed in FY01 the DPW debt went to zero. It looked like the DPW facility debt was included in FY02 when it was finished in FY01. Mr. Sullivan couldn’t recall off the top of his head although knew it went down in FY03. Mr. Culkin questioned if the FY02 indirect costs were overstated, but Mr. Sullivan responded that he would have to go back.
Continuing, Mr. Culkin noted that on page 25 – the Indirect Costs for Fiscal 2001- it almost looked like the number appearing there was higher than 35% of the DPW debt. It looked as though it was almost all the DPW. Mr. Hughes responded that it was not just the DPW facility, but 5% for the municipal complex as well. Mr. Culkin concurred, but noted the municipal complex was around $90,000. $90,000 from $462,000 left a big chunk of money.
Mr. Culkin called attention to page 33 – FY05 Indirect Costs - which showed utility billing collector. He thought the utility billing had been rolled in with the enterprise fund so it was a direct cost. He wasn’t sure why it was showing as an indirect cost. Mr. Palmer advised it could have been a misprint. The utility billing collection was rolled into direct costs in FY03. It may be that this line should not have been displayed. He would want to check that. Mr. Culkin pointed out that it appeared in FY03 and FY04 as well.
Mr. Culkin recalled that at the meeting at the library, he asked about substantiating the statement that placeCityNatick’s indirect costs were comparable to other towns and asked for some documentation of what it was compared to. Mr. Sullivan said he would provide that, but he (Mr. Culkin) didn’t see that as part of the final report. Mr. Sullivan advised that it had been discussed and the decision was made not to put the information from other towns in the report. He provided Mr. Lemnios with the indirect costs and budget format and recommended that the full budget including indirect costs be voted and appropriated at Town Meeting. Three examples were provided – placeCityWatertown, placeCityLexington, placeCityFramingham.
In response to an inquiry from FinCom member Cathy Collins regarding the DOR’s calculation of pre-enterprise free cash, Mr. Sullivan responded that the DOR didn’t put receivables in the free cash calculation. The DOR takes the surplus balance and subtracts out receivables so the actual amount certified was primarily the cash.
Ms. Collins referred to page 3 and the mention of $114,016 in released capital articles used for DPW snow removal and $15,000 for DPW material and inquired if Mr. Sullivan was indicating that was due from the general fund to the enterprise fund. Mr. Sullivan noted that throughout the report there were cases where the general fund benefited from water & sewer resources and conversely where the water & sewer enterprise fund benefits from the general fund. It went both ways. In this case it benefited the general fund.
If the Town chose not to try to recover any funds from the transfer at the establishment of the enterprise fund, Ms. Collins asked if Mr. Sullivan would say it was good practice to true up this number. Mr. Sullivan responded that he couldn’t answer from a good practice standpoint. He discussed practices of other municipalities and discussed what placeCityNatick has done going through the records, but pointed out some of this was subject to debate and vote. He hoped if he got nothing else out of this study it would be the inclusion of a comprehensive enterprise und budget with the indirect costs and the setting of the water & sewer rates as part of that process. It puts more of the argument out on the floor for everyone to vote because it was much easier to then look back after the fact and see there
was an open discussion and a vote. He didn’t think this was a good practice issue. Anyone who would speak to either side of this issue would have a case.
Ms. Collins called attention to page 13 where it spoke to the difference between the balances in Collector’s detail and the general ledger. Over two years there was a difference of $600,000. Did Mr. Sullivan find any evidence that research was done on those differences or was it just that there was a difference so the general ledger was trued up to the Collector’s balance. Mr. Sullivan thought the Comptroller’s Office could answer that better than he could what procedures they went through. When Melanson Heath came in those differences had been identified and they were not provided with a reason.
Mr. Ciccariello inquired if Mr. Sullivan knew if as of today it had been reconciled. Mr. Sullivan replied that this entry had put them back in balance. Whether that has held going into FY06, he couldn’t answer. He couldn’t answer whether the reconciliation continued beyond the date of their (Melanson Heath’s) audit.
Finance Committee member Richard Sidney felt it was clear from the discussion that some specific recommendations were made to the Town and he asked if the members could get a full copy of all those recommendations. Mr. Sullivan said he gave the Town Administrator some recommendations of procedures for approving budgets, and he (Mr. Sidney) would like to see a copy of those full recommendations.
Mr. Hughes noted that the report made those recommendations. Mr. Sullivan added that the recommendations hadn’t changed from what Melanson Heath provided Mr. Lemnios, but in the process they had been asked for examples. There were three examples from summary approach to detail approach. Mr. Sidney requested a copy of the examples and Mr. Lemnios agreed to provide a copy.
Mr. Sidney then noted that the report highlighted a number of issues between the various offices in terms of account reconciliation and asked if the administration was addressing those issues and if improvements were being made. Mr. Lemnios responded that the administration would be addressing. There had been some staff turnover and those issues will be addressed. A high priority for whoever was made Comptroller would be timeliness of reconciliations.
Mr. PersonNameConnolly inquired if there were things in the report that Melanson Heath decided not to put in the final report. Mr. Sullivan advised that the final report expanded the previous draft. He didn’t recall losing anything. There had been a request from a Finance Committee member to include copies of the indirect costs that were evaluated. Melanson Heath evaluated and decided not to put other towns’ indirect cost numbers in the final number. Without explanation and evaluation they would be misunderstood and wouldn’t be valuable. He had volunteered to sit down with anyone who wanted to go through and discuss them. Asked who made that decision, Mr. Sullivan responded that he decided what to put in their (Melanson Heath) report.
Mr. PersonNameConnolly then inquired as to when the audit started and was told by Mr. Sullivan that it was 1-1/2 years ago. When asked if that was normal, Mr. Sullivan replied that there was no normal. When Melanson Heath first came, 2005 hadn’t been closed out. They came to the Board with FY03 and FY04 and then waited for FY05 to be closed out and the Town’s auditors in. A second draft for FY05 was given and update of their (Melanson Heath’s) report. There were various meetings and they went through a process of expanding and going out and getting additional information. They looked at records at the DPW and the legal question of whether a vote was required to transfer the assets in. This has been a long process to try to provide all the information requested.
Mr. PersonNameConnolly called attention to page 9. There was mention that the same error in calculation had occurred in FY05 as in FY04 and Mr. PersonNameConnolly questioned if that had been reconciled. Mr. Sullivan believed it had. Mr. Lemnios noted that during the budget process for FY05 there was a Finance Committee member who felt there was a miscalculation in the allocation for the retirement fund charge. FY03, FY04, FY05 were looked at and all were discovered at the same time. A forward adjustment was made for FY06 and an adjustment was made in FY05 by lowering the rates in January. He didn’t recollect how FY03 & FY04 were rectified, but there was a memo to the Board of Selectmen outlining options.
Mr. PersonNameConnolly referenced page 13 and commented on what appeared to be the inconsistencies in the general ledger. Mr. Sullivan agreed and stressed that it was important that a monthly reconciliation process be performed and errors caught timely.
Mr. PersonNameConnolly asked to have some light shed on that (reconciliation) from the Collector’s Office. Mr. Hughes pointed out that one of the people who would reconcile the general ledger wasn’t here. Mr. PersonNameConnolly questioned why and proposed tabling further discussion until all the people were here. Mr. Hughes suggested that all the questions get asked and that way the Board would know who needed to be here. Mr. PersonNameConnolly preferred to have the people here before asking the question and presumed that at minimum the Comptroller, Mr. Palmer, and Mr. Sullivan would need to be in attendance.
Mr. Sullivan noted this adjustment put the general ledger and Collector’s back in balance, but that didn’t answer the question of why they were out of balance. He added that the Town had these numbers well over a year ago. This was not new information and I answered the same questions then as now. They (Melanson Heath) were pointing this information out and doing what the Town asked and making recommendations so this kind of thing didn’t happen again.
If Mr. Sullivan’s assignment was to point out the issues, Mr. PersonNameConnolly thought whoever did the adjustments should have an answer. He (Mr. PersonNameConnolly) was personally frustrated that there weren’t any answers now, particularly if this was brought up over a year ago.
In response to Mr. PersonNameConnolly’s request for the FinCom’s comments, Mr. Wright felt that issues were being pointed out and concrete recommendations were being made. Mr. Sullivan was saying that reconciling the cash and receivables would prevent that. He (Mr. Wright) wasn’t sure he could answer why it occurred, but following these recommendations could prevent this from happening in the future.
Mr. PersonNameConnolly believed the Town should know why it happened, and Mr. Wright responded that it was his understanding that there weren’t reconciliations on a frequent basis and that was why these issues occurred. If more detail could be provided that would be great, but he wasn’t sure what would be done with that information.
Mr. PersonNameConnolly commented that the Board had been seeing the same recommendation for timely reconciliation for 4-5 years and it didn’t happen. Mr. Hughes thought everyone concerned was glad Mr. Sullivan did this audit so the Town could move forward in terms of it not happening again. Accounts weren’t being reconciled on a timely basis and the Board was trying to get that done. If Mr. PersonNameConnolly wanted to have someone come in and say why it wasn’t being done, that could happen. The Board could ask Mr. Palmer and Ms. Cashman to come in and say it wasn’t being done.
Mr. PersonNameConnolly responded that he would like to know why and he would like to see what the differences were mathematically. It was like detective work and he thought it was important to know the differences in the number. Mr. PersonNameConnolly moved to get more information to find out the adjustments to the actual ledger. Seconded by Mr. Ciccariello and unanimously voted.
Mr. Ciccariello noted that from FY01-FY03 there seemed to be charges for emergency management. Although minimal there were charges and those charges were dropped in FY04 and FY05 and he wondered why. Mr. Sullivan replied that he didn’t look at the $22 charge and didn’t know why.
Mr. Ciccariello asked a series of questions concerning the retirement, medical, and life insurance costs for utility billing personnel and Mr. Sullivan advised that in FY01-FY03 there was talk of fringe benefits while in FY04 it was actually listed as retirement, medical, etc. They were the same costs. Asked if it was still 34%, Mr. Sullivan advised that the costs for FY04 & FY05 were actual as opposed to a percentage. He believed the actual percentage came out to 36%. In FY01-FY03 it was more informal and indirect costs weren’t specifically identified. They were included in the general fund. The difference between revenue and direct costs was assumed to be indirect costs but it was never identified as indirect costs through a process.
Even though there was a water & sewer surplus, Mr. Ciccariello asked if the indirect costs were just allocated at year’s end. Mr. Sullivan advised that an indirect cost schedule was prepared but that number was not the number that was in the general fund. For FY01 & FY02 the actual amount was short. In other words the general fund did not recover all of the indirect costs that were identified. Only in FY03 when the enterprise fund was created did the tax recap process start putting that number in and became part of the tax rate setting process.
Mr. Ciccariello thought the allocated debt in FY01 & FY02 seemed to be extremely high which indicated the bond may have been paid off for the DPW facility. He questioned when the bond for the DPW facility was paid off. Mr. Palmer responded that he would have to look at the debt schedules but if it had been paid off after 7/1/01 it would have been a FY02 event. Mr. Palmer agreed to get that information.
Mr. Ciccariello then asked about the special revenue funds, and Mr. Sullivan explained there were two special revenue funds – one water and one sewer pre-enterprise. The policy and practice was to budget revenue in the general fund for water & sewer and budget an appropriation for direct costs of water & sewer as a separate appropriation. The Town collected revenues whether user fees, tax liens, etc. and if more was collected than budgeted in the general fund those surplus monies went into special accounting entities called special revenue funds. What came out of the special revenue funds were appropriations for capital and at times the surplus money was appropriated to keep the water & sewer rates down. All money expended out of the two special revenue funds was voted by Town Meeting.
Mr. Ciccariello noted there was an opinion from Town Counsel regarding the transfer of funds. In Town Counsel’s opinion there was no law prohibiting the transfer although he (Mr. Ciccariello) was a little confused with the reference to Article 2 of Town Meeting after reading the article. Mr. Ciccariello asked if Mr. Sullivan knew specifically what was segregated.
Mr. Sullivan advised that his interpretation of what the article meant was that when seeking a vote (on the establishment of an enterprise fund) the administration was trying to tell the taxpayers the intent was not to raise additional revenue, but to take revenue already existing and put it into the enterprise fund. He didn’t believe the wording addressed the issue of pre-existing surplus balance. Mr. Ciccariello noted it then referenced Article 3 and requested a copy of that article.
From what he could see, Mr. Ostroff believed that overall what the Town did in terms of accounting for water & sewer funds was validated. Most of the Town’s practices were acceptable. Anything for indirect costs seemed to be supported by the audit, but there was a pre-existing problem with reconciliation which he understood was something that would be addressed within the next six months or so then there would be a team in place that would prevent the kinds of problems witnessed in the past years. He wanted to make sure everyone understood the context.
For context Mr. Ostroff inquired as to how many audits Melanson Heath had undertaken, and Mr. Sullivan replied that in Massachusetts they had about 100 cities, towns and school district annual audits. At times they did a wide range of special audits – sometimes similar to what Natick asked for and other times very different. Lexington asked them to do a detailed analysis of their Water & Sewer deficit. Some of the cities and towns use them to assist in setting up revenue funds, establish procedures, and address issues of what should be brought forward in terms of cash receivables. He had an extensive background in these issues.
Of all the audits done, Mr. Ostroff inquired if Mr. Sullivan ever found any that would suggest no improvements or mistakes. Mr. Sullivan’s answer was, “no”. Normally when they were called in to do something, it was anticipated that it was not running well. In follow-up Mr. Ostroff asked if Mr. Sullivan uncovered anything that would be well reported to the DOR or any other agency. Was Natick in jeopardy or did the ratepayers need to be better served. Mr. Sullivan didn’t think the DOR would see anything in this report that would give them concern. He felt it was pretty consistent with what he had seen.
If the report was accepted, Mr. Ostroff asked if it could be posted to the web site. Mr. Lemnios advised that it could be done.
Mr. Ciccariello noted that pages 18-19 talked about the Speen Street, Park Avenue, and pump station projects and the variation between the original estimates and contracts. The second paragraph of page 19 states that ‘we were unable to tie the actual contracts into the Project Summary provided by the Finance Department’…. Mr. Ciccariello asked if Mr. Sullivan was saying that he couldn’t find the actual contracts or if the financial information wasn’t available.
Mr. Sullivan advised that both were available, they just didn’t agree and he wasn’t able to reconcile the two. Mr. Ciccariello questioned if the DPW had any input in being able to reconcile the number, but Mr. Sullivan didn’t know. He (Mr. Sullivan) told Mr. Palmer of the inconsistencies and asked that Mr. Palmer look into them.
Mr. Palmer was asked if the items on page 19 had been reconciled. It was Mr. Palmer’s understanding that it was related to the police detail items, but he would have to sit with DPW business manager John Craig to resolve.
Mr. PersonNameConnolly agreed that Town Meeting Article 2 didn’t raise additional revenue, but as of June 30, 2005 the accumulated surplus was over $6 million and he wondered if that was additional revenue. Mr. Sullivan advised that it was not in context of the article. The article said that additional revenue was not being raised by the article. He agreed over time surplus monies were transferred into the water & sewer fund and over time those balances were increased to a $6 million surplus at the end of FY05, but it wasn’t the result of Article 2.
Mr. PersonNameConnolly commented that perhaps there wouldn’t be concerns from the DOR, but perhaps there may be some concerns from the general citizenry.
Former Finance Committee member Jeffrey Phillips wanted to point out one strong inconsistency of what was reported in the audit over what happened several years ago. After the analysis was done on the overcharge of the retirement funds for FY04 & FY05, it was determined that FY05 would be corrected and that was done at Town Meeting. The proposal was to take the funds in the water surplus allocated for the purchase of a Bacon Street house but never spent and combine it with the remaining funds of a sewer force main project originally appropriated out of sewer surplus and that $544,000 would be used to pay the $15,000 in field maintenance work for the DPW and the $115,000 for snow removal and taking the remaining $414,000 to make the enterprise fund whole for the retirement miscalculation. His argument at the time was
that the money being used to make the ratepayers whole was already paid for by the ratepayers. When Town Meeting voted, he called for reconsideration and prior to the discussion on reconsideration, Town Meeting was provided with a copy of a letter from Town Counsel and a letter from Powers & Sullivan stating the Town didn’t have a surplus fund that the money actually belonged to the general fund and, therefore, didn’t belong to the ratepayer. That was being contradicted by a new statement from Town Counsel. He (Town Counsel) was right this time. The first time Town Counsel was incorrect. It was because of that particular discussion that evening that led him to pursue some of the other issues and where the money came from.
Mr. Phillips directed attention to page 21 (schedule of revenues and other sources, expenditures, etc. for June 30, 2001) and pointed out that this particular format didn’t square at all with what was done in FY01 by Tofias in doing the Town’s audit. The original budget where it said charges for services related to the argument he made. The $8.5 million represents the estimated revenue carried in Schedule A to the DOR that Town Meeting appropriated for water & sewer that year. He didn’t know why the fund balance of $2.03 million was here. It was funded by Town Meeting using surplus revenues from water & sewer that were surplused prior to that year that weren’t generated that year and when he tried to put together a spread sheet to explain some of this stuff, he was attacked for
taking money that was supposedly out of a savings account and counting it in the budget. The Bacon Street house and force main project came from the $2.03 million. The $191,000 (identified as other sources) was a direct vote in budget for FY01 made out of water surplus along with the $8.5 million for the regular budget. What was actually expended in direct costs for water and sewer operation and MWRA was about $6 million. The Town Meeting appropriation was close to $2.7 million above and beyond the direct costs.
Mr. Phillips pointed out that under expenses the $6.025 was an exact number that was budgeted under the DPW budget for water & sewer. The $2.034 million capital had been funded with surplus revenue prior to FY01. The debt service was the actual debt service for water & sewer projects and the transfer outs were now what were being calculated. He (Mr. Phillips) didn’t know where the number came from, but the number being made to balance the line was in excess of $800,000 of what the Board of Selectmen were given as indirect costs when the rates were voted for FY01.
Mr. Phillips noted that he came before the Board in April 2006 and gave documentary evidence to the Selectmen and administration showing the indirect cost calculation for that year was about $1.1 million. He questioned how an audit could be done now and have indirect costs of $2.8 million. That was not correct. How could it be said that it was just a general estimate? Were we saying the Town didn’t know what it was doing in FY01? When the discussion was had earlier and revenue sheets were given to show how much money was brought in FY01 the actual revenues appropriated were over $10.5 million for FY01 which was $2 plus million over what Town Meeting appropriated to support the budget. Those numbers don’t make an appearance in the audit. The $1.1 special revenue fund was understated by
about $900,000 from what was actually budgeted. When you see the $2.034 million under special revenue funds showing as a deduction from the expenditure column without showing the actual $2.034 million funded from another year, it would skew the number. The numbers were totally incorrect.
Mr. Sullivan explained that the intention of this presentation was to have what he hoped would be a clear picture of a complicated accounting system, as they were everywhere, when accounting for water & sewer and the general fund were mixed together. $8.5 million was budgeted in the general fund. The procedure was to collect revenues equal to the budget and any additional revenue would go to the special revenue. Any excess above and beyond $8.5 million was in the special revenue fund. The $1.1 million got deposited in the special revenue fund and the total was $9.6 million was collected. Those were audited numbers and it was the correct number.
Mr. Sullivan continued that the fund balance in a financial statement was a previous balance. It was not collected revenue. The use of the $2.03 million was the use of prior surplus as was the $191,000. An additional $1.1 million came into the special revenue fund as revenue and out of the special revenue fund $2.034 was used. $2.03 million out of water & sewer surplus was put in to cover capital articles. Those were specific votes. The capital article was part of the general fund budget because water & sewer was in the general fund. From an accounting standpoint the whole $2.03 million was a reported expenditure because it was either expended or encumbered. Out of the $6 million budget $5.6 million was expended. Capital articles were shown as fully expended, the debt service
paid, and then the indirect costs were paid. The indirect costs were not part of the articles. The only way the general fund recaptured indirect costs prior to the enterprise fund was to have budget revenues higher than budget expenditures. The documentation showed $2.8 million in indirect costs, and based on that documentation it showed that the general fund received less than the actual indirect costs to the tune of $962,000. Not all of the budget was expended so the net the general fund was out of money as the result of water & sewer was ($541,653). The purpose of his presentation was to see concurrently what happened in the general fund and the special revenue funds, and he (Mr. Sullivan) assured Mr. Phillips that these numbers tied out to the audited number.
Mr. Hughes asked Mr. Sullivan to address the negative $1.1 million under special revenue funds, and Mr. Sullivan responded that the $2.03 million was appropriated out of the prior balance as was the $191,000 so that the change in water & sewer over the course of FY01 was to bring in $1.1 million of additional revenues, but the Town expended a prior balance of $2.225 million so that the water & sewer surplus account decreased that year by $1.1 million.
Mr. Phillips questioned what documentary evidence the auditor was talking about. He (Mr. Phillips) gave the Board the documentary evidence that was used to establish the $1.1 million in indirect costs. He didn’t understand where the auditor suddenly got his documentary evidence that made indirect costs $2.7-2.8 million in FY01. The budget revenues of $8.5 million plus the $191,000 were $2.6 million more than the $6 million. There was $2.6 million set aside for everything else and the $191,000 voted as part of the omnibus budget was told to the Board of Selectmen and Town Meeting that it was money covering the fringe benefits for water & sewer employees. Maybe the Town has now changed the way indirect costs were calculated for the enterprise fund, but in FY00-01 the Board of Selectmen
were presented with numbers they voted on.
Noting the issue of Mr. Phillips presenting some numbers and Mr. Sullivan having some numbers, Mr. Ciccariello inquired as to where Mr. Sullivan got his numbers. Were they given to him by the Finance Department or was it through researching the approvals. Mr. Sullivan advised that it was both. He received the indirect cost allocations from the Finance Department. Looking at all the votes and articles the Town never voted indirect costs as part of the appropriation process. He (Mr. Sullivan) made that recommendation to the Town, but never was the indirect costs included in an article.
To Mr. Ciccariello’s comment that the indirect costs were never included in a specific article but included in the overall budget approach, Mr. Sullivan responded that they (indirect costs) were not included pre-enterprise fund.
Ms. Gloff noted that the indirect costs were included in the appropriate budget. It just wasn’t designated as being an indirect cost. For example FY01 said Police $110,000 and that was included in the Police Department for that fiscal year. Mr. Phillips agreed adding there were no indirect costs specified in the Town Meeting handout. There were direct costs showing $6 million for water & sewer and voted $8.7 million. He didn’t know what people thought they were voting. It was said it was to cover the cost embedded in the other things even though they weren’t pulled out.
As a public records request, Mr. Phillips requested any document the Board of Selectmen had when they set the rates that showed inter-government costs that add up to $8.4 million. It’s in the minutes of the Board’s meeting that $8.4 million was needed. There was never anything said to come up with $2.8 million. This was taking the number devised recently for the enterprise fund and going back but they were not the numbers used when Town Meeting voted the budget and the Board of Selectmen set the rates.
Mr. Lemnios responded that this audit was commissioned jointly by the Board of Selectmen and the Finance Committee predicated on some assertions made. If the point was that in FY01 the fund should have been accounted for differently or the representations now weren’t
consistent with the audit finding, that was the reason to do an audit. If people read the conclusions, on the bulk of the items Mr. Sullivan has said repeatedly that the practices were consistent with MGL and consistent with practices throughout the Commonwealth for the enterprise funds. He was sure Mr. Sullivan would make the work documents available.
Mr. Lemnios noted that if Mr. Phillips’ point was that something should be done differently in FY01, the Town couldn’t go back and correct what was done in FY01 but the Town could learn. Mr. Sullivan has provided a template for future budget reporting to avoid the problem in the future and the administration will employ that template. It was Mr. Lemnios’ recollection that the purpose of the audit was an alleged $13-14 million that was unaccounted for and to look at management practices and policies and provide recommendations for perspective years and identify areas where improvement was needed. He acknowledged that the way items were presented in FY01 could have been clearer, but reiterated that what happened in FY01 and FY02 couldn’t be fixed, but they could fix what would happen in FY07 &
FY08. Mr. Lemnios also pointed out that when asked if there was anything in the audit that the DOR should be concerned about, Mr. Sullivan’s answer was, “no”.
In response to a series of questions posed by Mr. Lemnios, Mr. Sullivan advised that there was nothing in his review that should cause Natick alarm relative to the financial dealings of the enterprise fund, he had not found any evidence of funds unaccounted for, he found areas to improve upon and that was normal. At that point Mr. Phillips interjected that Mr. Lemnios was leading the witness, but Mr. Sullivan continued that normally his firm wasn’t called in unless there were areas of concern. It was consistent they would have findings and recommendations.
Continuing Mr. Lemnios asked if Mr. Sullivan had seen anything in the water & sewer accounting system that was so dramatically broken or different from the standard practice that he would say it should be blown up and start over with a different model. Mr. Sullivan’s reply was, “no”.
Again Mr. Phillips interjected to say that this happened frequently. He read from page 1, 2nd paragraph ……’The procedures were a result of the Town detecting an error in the Enterprise Fund’s share of retirement costs during fiscal 2005 and the proposed 2006 budgets’. He noted there’s been an assertion that this audit took place because of assertions made by him (Mr. Phillips), but the audit was commissioned after the discovery of the miscalculation of the retirement cost. The end of May 2005 the vote was taken to hire the audit firm and some time in June 2005 when he came before the Selectmen to discuss a few other items was when the so-called assertions of the excess money were made and they were reported and those assertions were misrepresented as well. At that time
he said if you took the direct costs voted by Town Meeting and the actual revenue shown in the Town Reports for 1998-2002, there was a difference of $14-20 million depending on how certain things were calculated. He told the Board that he knew some of that money had gone for certain indirect costs, certain fringe benefits. The auditor was giving a report, which the Town paid for, indicating in FY01 & FY02 there were indirect costs in a certain sum and that was provided in some documentary evidence given by the Finance Director. Mr. Phillips questioned why those documents he gave the Board in April showing that the Board voted for indirect costs of $1.1 million was somehow eclipsed in 2006 by claiming it was $2.8 million. You could not go back and rewrite history unless he could be shown an alternate document. FY06 was closed and the DOR certified $2.7 million in retained earnings. Last Town Meeting spent $4.5 million in retained earnings
leaving a balance of “x”. What was the “x” and when FY06 was closed out, how much more was added to end up with $2.7 million.
Mr. Palmer recalled there being somewhere between $1.4-1.5 million after Town Meeting in April which meant $1.2-1.3 million was added as the result of revenue turnbacks and closed appropriations.
Mr. Phillips hoped another meeting was scheduled to have a discussion about this. There were a couple of issues not examined and as a water & sewer consumer he didn’t appreciate paying in excess of a service being provided. That was against the law. The ratepayers were being charged in excess of $1.2 million when $5 million was just spent for various capital projects. It was not the Selectmen’s money. The Board was allowed to collect it, but was supposed to do it with a plan. There was supposed to be a capital plan. The recommendations for the budget process were very good and were the same ones he had made for three years and the same as the DOR makes for enterprise fund budgeting.
Mr. Phillips identified one of the unresolved issues as multi unit single meter. It was said that to make it fair would cost $500,000 and the other ratepayers would be charged to make up the difference. That wasn’t true because the Town was collecting $1-2 million in excess of the budget each year. There was plenty of money to make it equitable without impacting the ratepayer. He also noted that the rates were charged out in three pieces – water, sewer, and MWRA. Currently the sewer and MWRA ratepayers were subsidizing the water rate. The vast expenses were water and that was one of the reasons the DOR recommends a separate enterprise fund for sewer and water. Mr. Phillips reiterated his hope for another discussion about this and noted that he would like to see some real time
documentation that would show the indirect costs were in the magnitude of $2.8 million.
Mr. Hughes commented that Mr. Sullivan’s recommendation came down to making the indirect costs more clear to Town Meeting. Mr. Sullivan responded that there were two parts: 1) That the indirect costs be included in the appropriation and 2) that water rates set annually be commensurate with the budget even if there was no change in the rate. If the Board was looking to raise money for capital, that should be done as part of the appropriation.
Ms. Collins inquired if Town Counsel had considered the Charter when he wrote the opinion dated September 21, 2006 that he was unable to find any law which prohibits the transfer of assets into the water and sewer enterprise fund, or which requires a vote of Town Meeting or a vote of the Board of Selectmen, or a vote of the Finance Committee in order to do so. Mr. Lemnios believed he (Town Counsel) did, but would have to ask him. Mr. Lemnios agreed to follow up.
Noting that Mr. Sullivan had done a lot of water & sewer audits, Mr. Ciccariello inquired as to how many towns had a combined water & sewer enterprise fund vs individual enterprise funds. Mr. Sullivan advised that it was much more common to have individual than together. The issue to look at here was, were the ratepayers for water & sewer the same base for each. Here the reason for increasing the additional cost and work was less.
Ms. Gloff noted that a comment had been made that the free cash for the enterprise fund had increased by $1.2-1.3 million over the past fiscal year. She asked if anyone could give her what contributed to that $1.2-1.3 million. It could be that the ratepayers were paying more than need be or it could be that individuals who failed to pay timely in the past paid up their bills or it could be that there was money left from projects. Mr. Lemnios responded that he would get the components.
If the Town contemplated having separate funds, Mr. Ostroff inquired if it would be Mr. Sullivan’s recommendation to undertake that after doing timely reconciliations. Mr. Sullivan didn’t think they were related issues. Mr. Ostroff made the point that if there were issues of reconciliation now, would it be more complicated with two funds. Mr. Sullivan responded that reconciliation of the receivables would not be more complex. Reconciliation of cash would be a little more complicated.
Mr. Ostroff inquired as to where the retained earnings were trending in comparison to other years. Mr. Palmer replied that he would provide a breakdown of the source of retained earnings, but pointed out that the Board cut rates by 4.5% and further cut the MWRA by 4.7% which would have an impact on the amount of generated retained earnings. There were also budget increases and capital projects that range between $800,000-$1.2 million per year that have to be funded from retained earnings. He agreed the ratepayers should not be overcharged, but he believed the Board of Selectmen has been taking action to reduce that from happening.
Mr. Phillips inquired if it were true that 10-12% of the population was not on the sewer system, and Mr. Lemnios responded that there were 1,500 septic systems. The total bills issued was about 13,000 so the Town was substantially sewered. Of the 1,500 a good number were passed by the sewer so if their system failed, they would undoubtedly tie in. Mr. Phillips felt there was still a significant population that was not sewered and water only customers and the ratepayers were paying MWRA for people with septic systems. The Town still paid MWRA for the population itself.
Given that 90% of the water ratepayers and sewer payers were synonymous, Mr. Lemnios asked Mr. Sullivan if his recommendation would be to run two funds. When Mr. Sullivan responded that it was up to the Town, Mr. Lemnios repeated his request for a recommendation. Mr. Sullivan responded that it should be looked at from the standpoint of managing. What was the Town looking for information wise and how would the information be used would dictate whether there should be separate funds. It was double the accounting and was it worth getting the information as to the water & sewer fund balance.
Mr. Wright inquired as to the pleasure of the Finance Committee and Mr. Sidney moved to postpone acceptance of the report until the additional information requested was seen. Seconded by Mr. Robbins and unanimously voted.
The additional information was identified as follows:
A copy of the budget models
Information on reconciliation
Correct the indirect cost charts and typo’s
A copy of Article 3 from 2002 Town Meeting
When was the DPW facility bond paid off?
Town Counsel opinion. What did he review? Did his review
include the Charter?
An analysis of the source of FY06 retained earnings. Ms. Gloff clarified that she did not consider this part of the acceptance of this report
The correction of some typo’s
Asked how much time it would take to get this information, Mr. Lemnios advised that the budget models could be e-mailed out as well as the Town Meeting article. He would consult with the Chair on the reconciliation information and he imagined Mr. Sullivan could make his corrections in 3-4 days. Mr. Lemnios estimated a week to get the information. With Town Meeting Mr. Wright suggested giving it two weeks.
On a motion by Mr. Sidney, seconded by Ms. Collins, the Finance Committee unanimously voted to adjourn their meeting at 9:15 p.m.
Mr. Hughes suggested that the Board of Selectmen postpone acceptance of the report until the requested information was received. Mr. PersonNameConnolly so moved. Seconded by Ms. Gloff and unanimously voted.
A recess was called at 9:15 p.m. The meeting was again called to order at 9:25 p.m.
GARAGE PUBLIC ART
PersonNameJay Ball stated that he was there as one of 5-6 members of an ad hoc group called Advocates for Public Art. As such he would respectfully ask that the Board include in the RFP for the garage to be constructed on the site of the existing Middlesex Avenue garage the use of some of the garage’s side panels to display the works of selected local artists. Mr. Ball introduced David Kahn, whom he credited with the idea, to make the presentation.
Mr. Kahn told the Board that the process started over the summer in a discussion about the garage and its need and how to have it not be an ugly garage. Different options were talked about, i.e. using a muralist. Being a Natick artist he knew there was a need for display space and he raised the possibility of using the exterior of the garage to hang art work to make it attractive. It was discussed with various people and was well received. As part of the process it was envisioned that a volunteer group – a public arts commission – be created to select a jury and select what art to be presented annually.
Mr. Kahn saw four real benefits which he listed as follows:
1) It was important to have an attractive garage
2) It was an additional venue for artists to showcase their work along with possible sponsors
3) The cost was less than other attractive options
4) The belief it would be newsworthy
Mr. Kahn continued that Natick was seen as an arts destination and the group believed this (public art on garage) would re-enforce that. The only thing being requested in the RFP was to ask the bidders to add brackets mounted above and below the cement walls. Mr. Hughes inquired if the Board was being asked to make the brackets mandatory or as an add on. Mr. Kahn responded that the preference was for it to be a required piece. It was a modest cost with estimates of it costing about $6,500 on an $8-9 million structure. He added that he thought this could simplify things. If the Town didn’t know what it wanted, the designer may plan an exterior design that may involve more time at a higher cost.
Mr. Ostroff was interested in hearing the procurement officer’s vantage point and if making the brackets options made it less or more likely to be considered.
Mr. Lemnios advised that the Board of Selectmen had the ability to make it required and had the ability to make it an ad alternate. The question was what would be exchanged to get that ad alt. If it was an alternate the developer might alter another element to take into consideration the cost.
Mr. Hughes pointed out that the Town wasn’t going to own the building and would be requiring a developer to display art chosen by the Town. Mr. Lemnios noted that the Board could put conditions in place that would dictate any number of items. As the issuing authority the Board could place whatever conditions it desired.
Mr. Hughes inquired if Mr. Kahn envisioned a role for the people who would own housing on top of the building to determine what art work went there. Mr. Kahn thought it was possible to include a representative of the residents but quipped that they (residents) didn’t have a vote on what was put on other buildings they face and didn’t see the outside of their walls. It was unlikely that anything anyone did would be loved by all. Mr. Hughes acknowledged that people living there wouldn’t see the art from the inside, but it wasn’t just a parking garage. People would live there, would be in and out, and would have other people coming there.
With the national exposure that could be achieved, Mr. Kahn thought it could attract people who liked the idea of living on such a structure. In his opinion this would bring more acclaim to Natick and would help produce a structure that was attractive.
Referring to the proposal submitted, Mr. Ciccariello noted there was an annual replacement budget of $12,500 which was suggested to come from the developer, the Town, or through sponsorship. If the Town and the developer didn’t support it, what was the guarantee of getting sponsorship? His (Mr. Ciccariello’s) concern was what happens if it got to the point where it was no longer possible to put up art work and there had been a trade off from less expensive design and then no art work.
Mr. Kahn didn’t see the maintenance of the panels being terribly high compared to other things and saw the opportunity for sponsorship to partially offset a Town obligation as something that could be included in the maintenance agreement with the developer, but it was seen as a Town commitment.
While he liked the concept, Mr. Ciccariello noted that every time a cost was placed on a developer something was lost and he had to be a little concerned.
Mr. Ostroff inquired if it was practical to integrate into the RFP as an option that would get bonus points but not be mandated. Mr. Lemnios advised the Board could do that.
Mr. Ostroff then inquired if this would add substantial time to developing the RFP, but Mr. Lemnios said no. He thought the information provided by the group was substantial and there was nothing onerous in terms of time.
Mr. Ostroff asked if anything like this had been done that could be used as a test to see if it would be desirable. Mr. Kahn replied that the majority of people talked to have been very favorable. A few have raised concerns, but the general impression was that people were intrigued by the concept and interested in learning more. Mr. Ostroff noted that he wanted to see the stakeholders, people who lived in the building and managed it, have some say.
With the idea that the clamp would go across the top and the bottom, Ms. Gloff questioned what was on the sides. Mr. Kahn advised there was nothing on the side. The tension holds the piece. Everything had been certified and tested. Ms. Gloff was concerned about the wind if there was nothing on the side, but Mr. Kahn said that was asked of the company making the clamps and they were assured it was good.
Mr. PersonNameConnolly thanked Mr. Kahn and Mr. Ball for bringing this to the Board’s attention and asked about the necessity of insurance and if there had been any feedback from the Design Review Board. He applauded the sponsorship and the different revenue than the Town. The concept was intriguing.
Mr. Ball advised that he spoke with the Design Review Board and they were generally positive. They suggested a system similar to the one the group was proposing. The same was true with the Cultural Council.
Regarding the insurance, Mr. Kahn wasn’t sure. He knew that Natick had outdoor signs across Route 27, etc., but didn’t know the extent to which there was insurance coverage. Mr. Hughes couldn’t imagine the Town’s insurance covering a banner on a private building. He thought either the developer or the homeowner’s association would have to insure the building and part of that would be to cover any damage.
Mr. Lemnios inquired if the panels were fireproof, but Mr. Ball didn’t know.
Mr. Hughes proposed waiting to see a draft of the language in the RFP and then the Board could vote whether to include it as mandatory or an add on.
Mr. Ostroff applauded the proposal. In his view anything to integrate design and beauty and make this an investment in the community was praiseworthy.
FIVE CROWS: REQUEST TO CLOSE ADAMS STREET
Representing the Five Crows in their request to close Adams Street on October 29, 2006 for an Open Studios weekend was Deborah Parritt.
Mr. Hughes referred to a follow-up memo from Safety Officer Sergeant Brian Lauzon in which he recommended that the tents be put in two parking spaces at the Court Street end. He recommended allowing the event with the understanding that the roadway was to remain open for public safety personnel along with employees and residents of the adjacent building.
Ms. Parritt told the Board that they wanted to close one end of the street but Sergeant Lauzon said that couldn’t be done because someone could turn into Adams Street and have to back out. He said they would have to close the street and allow access for emergency vehicles. Ms. Parritt assured the Board that all the demonstrators would be on the side allowing a lane in case emergency vehicles had to have access. That was based on Sergeant Lauzon’s input. The businesses were enthusiastic about the event.
Ms. Gloff noted that Sergeant Lauzon’s current e-mail indicated that the demonstrators would only be setting up in two parking spaces. Ms. Parritt responded that she had left two voice mails for Sergeant Lauzon and was very clear that it would be more than a couple of parking spaces. The intent was to put up pop tents and she spoke with the people who park there. They were aware of what was being done and most said they wouldn’t be there on Sunday. Everybody has been enthusiastic about having a street fair. It was a way to support the arts community and get attendance for the open studios.
Sensing there was some confusion between the applicant and the Police Department, Mr. Lemnios suggested authorizing a member of the Board to deal with Sergeant Lauzon and the applicant and give that member the authority to give the permit.
Mr. PersonNameConnolly raised the possibility of having the event on the Common, but Ms. Parritt explained that so many events happened on the Common that they were trying to not always have everything on the Common. There were several businesses north of the Common that didn’t get these types of events.
A motion was made by Mr. Ciccariello to approve the request to close Adams Street on October 29, 2006 for a street fair. Approval was conditioned upon all tents being set up on vacant parking spaces between 11:00 a.m.-6:00 p.m. with the displays only from 12:00 p.m.-5:00 p.m. Approval was further conditioned upon Ms. Parritt meeting with Sergeant Lauzon to decide what was appropriate in terms of leaving a safety access lane open on Adams Street. Seconded by Mr. Ostroff and unanimously voted.
Ms. Gloff requested an update at the following meeting.
PUBLIC HEARING: CCG COMMUNICATIONS GRANT OF LOCATION
Before the Board was a petition from CCG Communications, LLC to construct a line of conduits and manholes under the following public ways of the Town: Beginning at utility pole 178/2A located approximately 26 Summer Street and continuing in an easterly direction the length of Summer Street to Main Street, continuing across Main Street to a CCG Communications manhole to be located on the east side of Main Street, approximate distance of 302 LF. Above conduit to continue from CCG Communications manhole, in southerly direction along Main St. to the front entrance of #6 Main St., approximate distance of 148 LF. The work to provide telecommunication service to the Middlesex Savings Bank.
Representing CCG Communication was PersonNameJon Swanson.
On a motion by Ms. Gloff, seconded by Mr. Ciccariello, the Board unanimously voted to open the public hearing.
Mr. Hughes reported that Mr. Lemnios and he met with Mr. Swanson and worked out the easement agreement now before the Board. The easement agreement called for CCG Communication to make a one-time payment to the Town in the amount of $7,300. The payment was based on the installation of 480 linear feet of conduit at $60.00 per LF for the first 50 LF and $10.00 per LF for the remaining 430 LF. The Board’s policy calls for the installation of a shadow conduit, but Town Engineer Mark Coviello indicated there was no need for a shadow conduit and in return CCG Communication agreed to place a conduit at Sassamon Trace to use for the maintenance building.
Mr. Ciccariello assumed that Town Counsel had seen the agreement and Mr. Hughes confirmed that he had.
In response to a concern from Mr. PersonNameConnolly, Mr. Swanson advised that he had a meeting with the Town Engineer to discuss the traffic.
On a motion by Ms. Gloff, seconded by Mr. PersonNameConnolly, the Board unanimously voted to close the public hearing.
Ms. Gloff moved to approve the grant of location for CCG Communication per the easement agreement dated October 12, 2006. Seconded by Mr. Ostroff and unanimously voted.
TREASURER: BONDS
Treasurer Robert Palmer informed the Board that five bids were received on October 12, 2006 for general obligation bonds in the amount of $3,385,000. He recommended accepting the bid of the low bidder, Eastern Bank at a percentage cost of 3.9970%.
The issue purpose was:
Speen Street Sewer (Mall Betterment) $2,100,000
School Capital Improvements 334,000
Town Capital Improvements 46,000
Equipment 905,000
Mr. Palmer explained that the remaining 25% on Wilson Middle School would be received from the state shortly which was why he didn’t go out to borrow the bond anticipation note. Wilson was pretty much wrapped up and he hoped to see the list of non-allowed expenses within the next couple of days.
Mr. Palmer also noted that the Town received the designation of AA+ from Standard & Poor’s which was the next to the highest ranking. S&P cited the continued strong financial operations and management of the Town.
Mr. Ciccariello inquired as to the interest rate presently being paid on the bonds being reissued and was told by Mr. Palmer that they were on bond anticipation notes and the interest rates varied. The Town’s cost to borrow on a temporary basis was the same as borrowing long-term.
Mr. Ciccariello questioned why the field aerator wouldn’t be a three year bond vs five years. Mr. Palmer advised that it could be three years. Typically equipment was for five years and if the Town had more resources it would have been paid for outright and not bonded. Mr. PersonNameConnolly pointed out that some of the equipment on the list provided was for 3-4 years. Mr. Palmer explained that that was because they started on a temporary borrowing two years ago.
When asked by Mr. Ostroff how the AA+ compared to what had been seen lately, Mr. Palmer noted that S&P had rated the Town at that level for two years.
Mr. PersonNameConnolly stated that he was under the impression that used equipment went out to bid. Mr. Lemnios advised there was a combination, i.e. Police vehicles – if the Town had no use for the vehicle, it would be used as a trade in. From time-to-time some vehicles do get auctioned. Equipment Maintenance Supervisor Tom Collins could provide documentation on the vehicles turned in.
Ms. Gloff moved that the sale of the $3,385,000 Municipal Purpose Loan of 2006 Bonds of the Town dated November 1, 2006 to Eastern Bank at the price of $3,409,246.25 and accrued interested is hereby confirmed. The bonds shall be payable on November 1 of the years and in the principal amounts or mandatory redemption payments and bear interest at the respective rates, as follows, subject to earlier redemption at the option of the Town as provided in the Preliminary Official Stated dated October 4, 2006:
Interest Interest
Year Amount Rate Year Amount Rate
2007 $500,000 4.50% 2017 $105,000 5.00%
2008 495,000 4.50 2018 105,000 4.00
2009 490,000 4.25 2019 105,000 4.00
2010 195,000 4.00 2020 105,000 4.00
2011 130,000 4.00 2021 105,000 4.00
2012 105,000 3.75 2022 105,000 4.15
2013 105,000 3.75 2023 105,000 4.15
2014 105,000 3.75 2024 105,000 4.15
2015 105,000 4.00 2025 105,000 4.15
2016 105,000 4.00 2026 105,000 4.15
Seconded by Mr. Ostroff and unanimously voted.
SUPERINTENDENT OF RECREATION & PARKS: SPOOKTACULAR
Superintendent of Recreation & Parks Richard Cugini requested permission to the use the Common on October 28, 2006 from 12:30-4:00 p.m. for the annual Spooktacular. In addition he requested the closing of Park Street from 12:30-4:00 p.m. and Court Street from 2:00-3:00 p.m. as part of the celebration.
Mr. Ostroff wanted to make sure that Safety Officer Sergeant Brian Lauzon was aware that the Open Studio Weekend was scheduled for that weekend as well.
Mr. Ciccariello moved approval of the use of the Common and the closing of Park Street and Court Street as requested. Seconded by Mr. PersonNameConnolly and unanimously voted.
NATICK SERVICE COUNCIL – SUPPORT OF GRANT APPLICATIONS
Wisa Wisa, Director of the Natick Service Council, requested the Board’s support of two grant proposals being submitted to the MetroWest Community Health Care Foundation. One was working with the BU School of Medicine on Dental Health serving the children and families in the community. The second was for a childhood obesity prevention initiative working with families to confront issues of obesity. $50,000 was being requested for the obesity program and $225,000 for the dental.
Ms. Gloff moved to support the Natick Service Council’s application for the two grants and to send a letter of support. Seconded by Mr. Ciccariello and unanimously voted.
CITIZENS CONCERNS
a. Ballot Question #1 – Sale of Wine in Grocery Stores
Peter Turlo told the Board he was there to raise awareness to the Board of Selectmen and the community on Ballot Question 1. If this were to pass it would create a new class of alcohol licenses. The Food Association tried and failed three times to get the State Legislature to grant this class. It was being marketed as wine in grocery stores.
Mr. PersonNameConnolly interjected to question if Mr. Turlo was campaigning and if that was allowed. Mr. Hughes noted this was the Citizens Concerns portion of the meeting and he would let Mr. Turlo say what he wished.
Mr. Turlo continued that the message sounded simple but it would mean 2,900 new licenses in Massachusetts. In Natick there would be 11. Currently there were 6 full liquor licenses. Every gas station that sold food could qualify. He believed the end game was for beer and wine and they were asking for wine now just to get a foot in the door. In his opinion 11 new licenses would not make control easier for the Police or Board of Selectmen. Natick had only one non-traditional store – Sam’s Club – and they had their share of licensing issues and then left town. Thirty Police Chiefs and the ABCC have endorsed ‘No’ on Question 1 and he was asking for the community to vote ‘No’.
Mr. Turlo specified that he did not come here to ask for the Board’s endorsement. He just wanted to get the point out for everyone to check it out before the election.
COURT HOUSE LEASE
Mr. Lemnios noted that the current lease with the Massachusetts Trial Court for the District Court expired September 30. The offer was made for a one year renewal with a discussion to follow for a potential long-term lease. There was a 4% increase bringing the lease to $183,000.
A motion was made by Ms. Gloff to renew the existing lease for the District Court for 12 additional months with an increase of 4% in rental payments. Seconded by Mr. Ostroff and unanimously voted.
FALL TOWN MEETING ARTICLES
Regarding the articles on Smart Growth, Mr. Hughes informed the Board that the 40R had to be approved by the State before it got adopted and the Moderator had ruled the changes were outside the scope. The Planning Board has recommended referral of Articles 19,20,21 and would probably ask the Board to call a Special Town Meeting. A hearing was held by the Planning Board on October 11 at which they took input and informed the neighbors that it would not go forward at this Town Meeting.
Mr. PersonNameConnolly noted that he was at the Planning Board meeting and was of the opinion the neighbors were uptight with some of the stuff going on. The traffic study was flawed and the neighbors had some serious concern. He thought it would behoove the Board to seriously entertain visiting with these people.
The Board had been looking for additional information on Article 28 (Noise Regulation) and Mr. Ostroff reported that the sponsors would be bringing a substitute motion that would say any noise that created an audible disturbance that could be heard in a residential building would be prohibited. That was based on what Needham passed and was approved by the Attorney General.
Ms. Gloff suggested that the Board wait to see the alternate wording before considering whether or not to support it.
AFFORDABLE HOUSING SUBCOMMITTEE/NATICK MALL
Ms. Gloff noted that she had participated as the Selectmen’s representative on a small subcommittee along with a representative from the Planning Board and Mr. Lemnios about the Mall affordable housing. As things move forward she would suggest that a subcommittee of the Board of Selectmen be appointed to look into some of the details with regard to getting the affordable housing approved. It needs to go through an approval process which the Board of Selectmen needs to sign off on.
Mr. PersonNameConnolly stated that he was at the Natick Housing Board meeting and they sent a letter to the ZBA. The question was who oversees affordable housing commitments. Mr. Lemnios explained that was one of the problems and the issue. It was partly addressed in the housing plan that discussed putting in place some type of a committee that monitors implementation. In particular at the Mall the Planning Board put in place a stipulation to provide so many units offsite and/or so many onsite and the Town would want to make sure there was no double counting going on and the units were truly affordable. Putting together a subcommittee would start to answer the question.
In response to Mr. PersonNameConnolly’s query as to who oversees that, Mr. Ciccariello responded that it’s been the Planning Board and Community Development Director for anything with the Planning Board. There was an agreement on Route 9 for additional units and the developer was to provide the Town with funds and those funds have been put in an account for use of affordable housing.
Following up Mr. PersonNameConnolly questioned if a unit was sold and only two years later it was sold again, who made sure that it was still sold as an affordable unit. Ms. Gloff didn’t believe there were any in that category now but all units counting toward the goal was listed in the housing plan. Every year DHCD sends out a list saying these were all the units designated affordable and the year it (affordable designation) expires.
Mr. PersonNameConnolly inquired if there was a timeframe for the Mall and was told by Ms. Gloff that the agreement was that the units would be available by the time the residential units at the Mall had occupancy permits.
A motion was made by Mr. Hughes, seconded by Mr. Ciccariello, to form a subcommittee of two. Unanimously voted.
Mr. Hughes then moved to appoint Mr. Ciccariello and Ms. Gloff to the subcommittee. Seconded by Mr. PersonNameConnolly and unanimously voted.
STREET ACCEPTANCE: WOODBURY LANE
There being no way to meet the seven day filing notice, Mr. Hughes suggested that the acceptance of Woodbury Lane be tabled.
2007 LIQUOR LICENSE FEES
Mr. PersonNameConnolly inquired as to what was happening with the Sam’s Club liquor license. Mr. Hughes advised that Attorney David DeLuca of Town Counsel’s office wrote a couple of opinions. The Sam’s Club license was valid through December 31. Sam’s Club could make application for renewal and the Board would have to have a hearing on whether or not to renew because they don’t have a location.
The Board was in receipt of a survey of the liquor fees of surrounding towns. There was consensus by the Board members that Natick’s fees were fine as they were and there was no desire to consider any changes for 2007.
HOUSING PLAN: COMMUNITY DEVELOPMENT ADVISORY COMMITTEE
Mr. Hughes noted that the State had approved Natick’s housing plan and the Board needed to establish an oversight committee consisting of a member of the Board of Selectmen, a member of the Planning Board, a citizen in Natick actively engaged in the banking industry or a representative of a bank located in Natick, a citizen representing a low and moderate income neighborhood, a citizen representing the real estate/residential home building industry, one citizen at large, a youth representative.
With the exception of the citizen at large, Ms. Gloff noted this was essentially the same composition as the group that worked on the housing plan.
At Mr. Hughes’ suggestion, Mr. Ostroff moved to abolish the old Community Development Advisory Committee . Seconded by Mr. Ciccariello and unanimously voted.
A motion was made by Mr. Ciccariello to appoint Ms. Gloff as the Selectmen’s representative to the Community Development Advisory Committee. Seconded by Mr. Ostroff and unanimously voted.
Mr. Hughes requested the openings to be advertised for appointments to be made at the meeting of November 13. Mr. Ciccariello asked that something be sent to each local bank for the banking representative and that a notice be sent to the Natick Housing Authority.
MINUTES
Mr. Ostroff, seconded by Ms. Gloff, moved approval of the minutes of the June 5, 2006 meeting. The motion passed on a 4-0-1 vote. Mr. Hughes, Ms. Gloff, Mr. Connolly, Mr. Ostroff voted in favor of the motion. Mr. Ciccariello abstained.
STRATEGIC PLANNING OVERSIGHT COMMITTEE: REQUEST FOR BANNER
On a motion by Mr. Ostroff, seconded by Ms. Gloff, the Board unanimously voted to approve the Natick 360’s request to hang a banner across Main Street for the period of October 17-October 30, 2006 in advertisement of the “Vision for the Future Weekend”.
Having been asked by the co-chair of the Natick 360 committee to plug the weekend, Mr. Ostroff advised that people could register on line, download a paper application, or pickup a registration form at the Town Clerk’s office, Board of Selectmen’s Office, or at the library. Reregistering was helpful but not necessary.
ELWIN ROAD BLOCK PARTY
The Board had received a request from Mary Kenny to close the area between 20-26 Elwin Road on October 14, 2006 (rain date October 15) from 3:00-7:00 p.m. for a block party. As the request was for when the Board wasn’t meeting, Mr. Hughes said he had a letter of approval drafted.
Mr. Hughes noted that he was somewhat uncomfortable doing that, and proposed some thought be given to delegating Mr. Lemnios to deal with this type of request when the Board wasn’t going to be meeting before the event was planned.
PREPARATION OF MEETING WITH LEGISLATORS
Mr. Hughes announced that the annual meeting with the Town’s legislators was scheduled for December 4 and requested that Board members get any issues they would like to discuss at that meeting to him so they could be forwarded to the legislators ahead of time.
SELECTMEN’S CONCERNS
a. Parking Issue – Harrison Street
The Board was in receipt of a letter from Francis Crisafulli concerning a parking problem on Harrison Street. Mr. Connolly asked the Town Administrator to look into it.
b. Traffic Signal at Route 27/135 – Pedestrian Walk
Mr. PersonNameConnolly asked that the timing for the pedestrian cross be looked into. He didn’t think there was an appropriate amount of time to allow someone to cross the street.
c. Town Paint - Crosswalk
Mr. PersonNameConnolly noted that the crosswalk between the Common and Town Paint needed to be repainted.
d. Streetlights
Mr. PersonNameConnolly requested a log of Brite Lite’s last visit and their next visit. He was told the Police Department was putting in recommendations for repairs and he would like to get a copy of the log.
e. Newspaper Article – Benefits to Veteran
Mr. PersonNameConnolly distributed a copy of a newspaper article and asked that the subject be put on the next agenda. The article alleged that an individual had falsified his war record, and Mr. PersonNameConnolly wanted the Board to make a strong statement.
f. Financial Planning Committee
Mr. Ostroff inquired if there was a plan for the Board to receive some information from the Financial Planning Committee and if a report to Town Meeting was planned.
Mr. Lemnios advised that he planned to give a brief budget overview tomorrow night in which he would probably reference the beginning of the FY08 budget process. He expected to have two sets of recommendations:
1) Would maintain services at the current level
2) Would lead to a decrease in services based on financial projections. The certified free cash balance was better than anticipated, but not enough to get the Town out of the woods.
g. Youth Advisory Board Vacancies
Mr. Ostroff asked that the Youth Advisory Board vacancies be re-posted.
h. Re-Launch of Web Site
Mr. Ostroff announced that the Town’s web site had recently been re-launched. Mr. Lemnios noted that the IS Advisory Board was scheduled to make a presentation on the new web site at the meeting of October 23.
i. Perambulation of the Bounds
The Board scheduled the Perambulation of the Bounds for December 9.
j. Liaison Meeting
Ms. Gloff reported that she had a liaison meeting with the various departments and would try to write up the minutes for distribution to the other Board members.
k. Council on Aging Vacancies
Ms. Gloff called attention to a memo from Senior Center Director Moira Munns in which mention was made that the Council could use three more members. The Board asked for the vacancies to be posted.
ADJOURNMENT
The meeting was adjourned at 11:25 p.m.
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Carol A. Gloff, Clerk
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