November 9, 2020 ~ CIP Meeting

2020-11-09 · Capital Improvement Committee · 1:51:15 · watch on YouTube →

This was the first FY21 meeting of the Capital Improvement Program committee, held over Zoom on November 9, 2020, with four of five members present. The committee re-elected Paul as chair and Joe Tomm as vice chair, then spent most of the evening with town administrator Ruth going through the capital schedules, the bond schedule, the reserve accounts and the five capital requests on the table this year. Much of the discussion was about how little of last year's work reached the ballot: with no town meeting possible, the board took the capital questions off, and only the public works truck and a solid waste question went to voters. Ruth flagged a liquidity concern, with the town's unrestricted fund balance falling from nearly 40 percent in 2018 to a projected 23 percent, and said another tax anticipation note next year would not surprise her. The committee set a schedule of meetings running to mid-December, with the ranking due by January 1.

No written minutes could be matched to this meeting. The transcript records that the speaker changed but never who was speaking, so any name attached to a statement below is inferred from context and is marked (?).

What was discussed

1. 0:09
   Opening and introductions

   Paul, the past chair, opened the first FY21 CIP meeting and asked members to introduce themselves for the record. Brian Pike and Joe Tomm identified themselves as having served on the committee last year. One member, Curtis, was missing, and the meeting went ahead without him.

2. 0:09
   What the CIP is for

   Paul set out the purpose for members and for anyone watching: CIP is the process for ranking and prioritising annual capital expenditures against the comprehensive plan and the evaluation criteria in the CIP policy the selectmen approved about a year and a half ago. He listed the benefits as keeping the town focused on its goals rather than uncoordinated spending, saving over time to reduce debt and borrowing costs, helping stabilise the tax rate, forcing departments to forecast earlier than the budget cycle would, and giving residents a say early in decisions.

3. 5:14
   Election of officers

   Officers are elected each year at the first meeting. Paul was nominated as chair and Joe Tomm as vice chair, and both roll calls were taken on Zoom with the nominee abstaining in each case.

4. 5:14
   What was funded at the 2020 referendum

   Ruth (?) reported that of the capital items, only the public works truck passed. No capital funding questions went on the ballot at all; the board took them off.

5. 10:43
   The Quint and the modular pushed to 2026

   The board moved two items out five years, to 2026: the Quint and renovation work on the modular at the fire station. Ruth (?) said both are expected to be front and centre in a coming board discussion about the town's direction, and that the board plans to put out an RFP for a report on fire services and apparatus. Because that question is open, no capital request for the Quint has been submitted.

6. 10:43
   This year's requests

   Ruth (?) described the year's requests as slim: a reserve request toward a future fire truck, air packs, a plow truck for 2022, a truck for 2021, and a small request toward reconfiguring the town hall to relieve space pressure. The fire requests reached her only that weekend, the chief having sent them to the wrong email address.

7. 10:43
   Staying aligned with the Select Board

   Paul (?) confirmed with Ruth that the board had reviewed the replacement schedules and applications and given the committee the go-ahead. He said he felt there had been a disconnect the previous year and would email Kevin to make sure the committee and the board were on the same page before it started work.

8. 16:20
   Why so little reached the ballot

   Ruth (?) explained that everything shut down around March, town meeting could not be held, and the board worked to keep the tax rate flat and the ballot short; even trimmed it ran to 22 questions. Part of the reasoning was to reduce the impact on residents facing economic difficulty this year and next. Neither reserve request went on the ballot.

9. 16:20
   The assessing request

   The assessing request was also left off. Ruth (?) said the board and the assessor both felt too much was unknown about the market, which could have affected the town's valuation, and that it will come back around 2022 or 2023.

10. 21:35
    Fire items paid from capital reserve

    None of the fire items reached the ballot because most had already been purchased. Ruth (?) explained that the board may legally spend capital funds for the purpose the town voted them for without a further warrant article, though Durham has traditionally put such items to voters anyway. About $49,000 came out of the fire capital fund this year for the well, the septic and turnout gear. The utilities and electrical upgrade at the station was not done, and no consolidation of the bridge account took place.

11. 26:47
    Excise tax held up

    Asked about the revenue risk, Ruth (?) said the fear about excise tax had not come to pass: new registrations and new vehicles have held up and excise revenue has come back.

12. 26:47
    Last year's disconnect with the board

    A member asked what had not aligned between the committee's rankings and the board's decisions. Paul (?) said the board had wanted more detail than the first year's materials carried, noting the replacement schedules then ran only ten years and now run twenty, and that the board had concerns about particular items which the committee had not been aware of while working. He said the committee's role is to rank what is given to it against the criteria, and that the best it can do is start this year already aligned.

13. 31:54
    Process for this round

    The plan for the season is to review the materials tonight, schedule meetings with department heads to ask about their schedules and requests, meet once more to make sure questions are answered, and then go away and score against the criteria in the policy.

14. 31:54
    The combined schedule

    Ruth walked through a spreadsheet she maintains for her own purposes, outside the policy, which brings all departments together: the capital fund balance, where funds for each request would come from, what is added to reserves, and what is raised in taxes for public works, fire and administration. The bottom lines show the amount raised in taxes for the capital plan alongside existing debt, plus a line for any additional bonding. Her worked example was a fire truck in 2024 where saving gets close but leaves about $171,000 to be either bonded or raised.

15. 31:54
    Public works dump truck for this year

    Public works is asking for a single axle dump truck estimated at $95,000, and the reserve holds $95,000, so it can be paid for out of the capital fund with nothing raised in taxes.

16. 37:03
    Air packs: unclear request

    Ruth had sent the chief questions and had no answer by the meeting. The application asks for $60,000 but does not say whether he intends to buy half the packs in 2021 and half in 2022, or all of them in one year, and does not say how many are needed in total. Members explained the distinction matters: all in one year makes it a reserve request, split across two years makes it a two-year project request totalling $120,000.

17. 37:03
    Tandem axle dump truck for 2022

    Public works also wants to replace an older tandem axle dump truck with plow in 2022 at an estimated $200,000, against $126,000 in reserve, leaving about $73,000 to raise in taxes that year. Ruth (?) noted the board has instructed her not to count public works operating fund carryover, which has traditionally been substantial but is decreasing, because it cannot be estimated reliably.

18. 42:23
    Consistent budget year on applications

    A member asked that all departments put the budget year at the top of the capital request form, since one application was headed 2020 while the others said 2021, so everyone is using the same language.

19. 42:23
    Bond schedule

    The bond schedule, updated through 2029, shows one bond dropping off in 2024 and another in 2025, with everything paid off by 2030. FY20 was the high water mark: the payment rose by roughly $280,000, being the 2019 bond of about $240,000 plus the ambulance bond. Ruth (?) said the board kept that off the mill rate by cutting the public works maintenance paving line in half, which she described as not something to do every year.

20. 47:29
    Debt payments by department

    Ruth showed a second schedule, prepared at Calvin's request, splitting the debt payments between fire and public works and showing the decrease year by year. The public works share falls by about $177,000 from 2023 to 2024, another $141,000 in 2025, and $221,000 in 2029. The figure read out for the FY20 total debt payment is garbled in the recording; the following years were given as roughly $980,000, $969,000 and $958,000.

21. 47:29
    Undesignated funds applied to the budget

    To lessen the mill rate impact, the town appropriated from undesignated funds: $10,000 to the emergency fund, $50,000 toward debt payments and $4,300 rolled over into the cemetery fund. A further $77,410 had been raised for RSU 5 but came back, because when the RSU went through its audit the auditors found what it had charged the three towns was inconsistent with the warrant it had passed; the board applied that to this year's budget.

22. 52:45
    Revenue as of mid-September

    Excise tax stood at 73 percent of last year's total with about a quarter of the year still to run, which Ruth expected would at least match last year. LRAP road funding from the state was down about $4,000, unsurprising with less travel. State revenue sharing had brought in $225,000 and was dropping a little but not tanking as had originally been discussed.

23. 52:45
    Public works replacement schedule

    The big dump trucks are on a twelve-year rotation and the excavator on sixteen, subject to the condition of each machine. Reserve balances are projected only two years out because the amount coming into the capital fund from the operating fund is unknown, and because it depends on decisions the town has not yet made about whether to put a fixed sum into capital each year.

24. 57:59
    The capital account reform that did not happen

    The original warrant would have consolidated a number of capital accounts and stopped the practice of routing fire and public works operating surpluses, and possibly ambulance revenue, into capital funds, voting capital as a separate line item instead so residents could see directly what goes in each year. It was taken out because there was no town meeting at which to discuss it. Ruth (?) said it remains on the table, but that the next town meeting is likely to be a referendum ballot again, which makes the discussion hard to hold.

25. 57:59
    Fire replacement schedule

    The fire schedule uses 3 percent annual inflation, which the committee could change. The Quint sits at 2026 so it is outside the five-year working window, pending the board's discussion of whether to replace it and the outside report on what apparatus a town of Durham's size and proximity to neighbouring departments actually needs. Ruth also showed inventories of public works and fire equipment with year, mileage or hours and VIN.

26. 1:03:06
    Facilities schedules

    Calvin anticipates a new heating system at the public works garage around 2030; the salt shed doors will corrode and eventually need work; insulating the cold storage has been discussed. The fire station needs a boiler around 2024, put in at roughly $10,000, which Ruth stressed is a placeholder from anecdotal sources rather than a quote. The chief wants to remodel the modular for fire department use, with a possible move of the code enforcement officer into it.

27. 1:03:06
    Town office and meeting space

    With the town manager question passing on the ballot, the town office will need reconfiguring; it is very small and the meeting room cannot accommodate social distancing. One idea raised is turning the Eureka Center into a meeting room. A committee is being formed for the Union Church, drawing on the historical society and the historic district committee, to build an upkeep schedule.

28. 1:03:06
    Parks

    The conservation commission has discussed installing a vault toilet at the River Park, which Ruth put in as a placeholder for 2022 and thought grants might cover; the state paid for the vault toilet at Runaround Pond Park because that is a state park. At War Memorial Park the gazebo, bricks, flag poles and memorial need little, and painting the roof next year would be too small to count as capital. Nothing at the Eureka Center exceeds $10,000.

29. 1:08:08
    Fund balance and liquidity

    The undesignated fund balance was 16.12 percent in 2010, 10.57 percent in 2015 and 13.08 percent in 2019, with about 13 percent projected for 2020. Ruth (?) explained the town has been able to run an undesignated balance that low only because its unrestricted fund balance, meaning capital funds plus undesignated funds, has been high, and that cushion is what carries the town through the six months of the year when no taxes come in.

30. 1:08:08
    The cushion is shrinking

    The unrestricted fund balance was almost 40 percent in 2018 and Ruth projected about 23 percent this year, which she said could be a problem. Buying the truck uses two thirds of the public works capital fund, and with nothing being added back the town loses liquidity. She said this becomes an issue in the next couple of years unless the town increases its undesignated fund or puts more aside in capital accounts.

31. 1:13:38
    Tax anticipation note

    The town took out a tax anticipation note this year. Taxes are normally committed at the end of June with the bulk collected in July and August, but COVID delayed the budget and the school budget was pushed to the July 14 primary, so taxes could not be committed until the end of July and the money did not arrive until August and September. Ruth (?) said she would not be surprised if the town needed another TAN next year.

32. 1:19:06
    Fire reserve request for a pumper

    This request is to start raising money toward replacing engine 21 with a new pumper in 2024, and is separate from the Quint. Ruth (?) described a $100,000 request and said that even so the town would not reach the anticipated cost and would have to borrow part of it; the cost figure itself is garbled in the recording. A member noted the first bond drops off around the same time, freeing about $200,000.

33. 1:19:06
    Town office reserve request

    The town office municipal account holds $25,000. Ruth recounted the history: a design for an addition done around 2007 that came in over $500,000 and was rejected, then a plan to reconfigure the back storage room into an office that never happened, and instead furniture bought to use the space better. She expects a space problem once a town manager is hired, noting her own office is tiny and unsuitable for confidential meetings, and proposes raising $10,000 for the account, partly because interest income will be about $10,000 lower this year.

34. 1:19:06
    One-ton truck request for 2021

    Calvin is asking for a one-ton truck, which would carry crews to jobs in summer, since he has had two crews working on opposite sides of town with no vehicle to move them and no vehicle for the mechanic to fetch parts, and would plow smaller subdivision areas in winter. It does not require a CDL, so most people with truck experience could drive it. The small vehicles the department already has are a 2008 Chevrolet flatbed, a pickup with a plow, and Calvin's own truck.

35. 1:24:36
    Dump truck reserve request for 2022

    Calvin also asks for $100,000 this year toward replacing another dump truck over twenty years old in 2022, anticipated at about $200,000, with the balance raised or appropriated depending on the capital fund at that point.

36. 1:24:36
    How reserves should be structured

    Ruth recalled the committee had landed on creating a separate account for each specific vehicle, which saves for that item but ties the town's hands, since redirecting the money would need a town meeting vote. Paul (?) argued from New Gloucester's practice for departmental reserves instead, one each for public works vehicles and equipment, fire equipment and facilities, so unspent balances roll forward rather than leaving small residuals in accounts nobody remembers the purpose of. Ruth (?) said her own preference would be a single capital fund for the whole town.

37. 1:29:37
    Truck numbering

    A member could not reconcile the truck numbers with the years. Ruth (?) explained Calvin renumbers the trucks as older ones leave the fleet, so numbering restarts. The scrap truck was taken off this year's list at Calvin's request because it is not a truck any more. Some year and description mismatches against last year's list were flagged to be checked.

38. 1:34:47
    Selectman liaison

    Paul (?) noted the policy points toward having a selectman on the CIP committee to encourage coordination. Ruth (?) said Mark had been volunteered and that she would make sure he was invited to the next meeting.

39. 1:34:47
    How to put questions to department heads

    Options discussed were emailing questions individually to Paul or Ruth to be forwarded, holding a separate committee meeting to work out questions together, or an unscripted question and answer session. Members wanted department heads to get a fair shot at presenting first, and noted from budget committee experience that questions sent in advance still generate follow-ups on the night. The committee settled on meeting to develop questions together, then letting department heads present and asking live.

40. 1:39:56
    Scheduling

    The process must be finished by January 1, and members wanted to be done before the Christmas holidays. Working around a board of appeals hearing on the 17th, a planning board workshop on the 18th and a probable conservation commission meeting on the 19th, the committee settled on Monday, November 23 at 6:00, with Ruth to send the Zoom invitation and put it on the calendar.

41. 1:45:19
    Department head meetings

    Fire trainings are usually on Thursdays and the December 8 and 9 dates were taken by other meetings, so the committee looked at December 1 and December 7 and preferred the 7th, asking Ruth to check both department heads' availability. Members wanted both in a single evening, separated by 45 minutes to an hour so they were not waiting around together. A further committee meeting was set for Tuesday, December 15 at 6:00 before members go away to score.

42. 1:50:26
    Scoring and close

    Ruth (?) offered to tabulate the scores, and Michelle, who did it last year, said she would do it again. Ruth agreed to share the meeting schedule with Mark, and the meeting closed.

What was decided

• 5:14
  Elect Paul as chair of the committee for the coming year. Moved by Joe Tomm, seconded by Michelle. On the roll call Joe, Michelle and Brian Pike voted in favour and Paul abstained, asking that the abstention be recorded.passed
• 5:14
  Elect Joe Tomm to continue as vice chair. Moved by Michelle, seconded by Brian Pike. On the roll call Paul, Michelle and Brian voted in favour and Joe Tomm abstained.passed
• 10:43
  Paul to email Kevin before the committee starts work, to confirm the committee and the Select Board are on the same page about the materials and about moving ahead. Agreed in discussion; no motion was made.passed
• 37:03
  Ruth to establish with the fire chief whether the air pack request is a single reserve request or a two-year project of $60,000 in each of 2021 and 2022, and how many packs are needed in total, and to bring a revised application back to the committee before it meets him. Agreed in discussion; no motion was made.passed
• 42:23
  Ask all departments to head their capital request forms with the budget year, so the committee is not working from forms labelled with different years. Agreed in discussion; no motion was made.passed
• 1:24:36
  Whether capital savings should sit in accounts dedicated to individual vehicles or in broader departmental equipment reserves was NOT settled. Members leaned toward departmental reserves so unspent balances roll forward, but left it as a conversation for the future.tabled
• 1:34:47
  Invite Mark, the selectman volunteered as liaison, to the committee's next meeting. Agreed in discussion; no motion was made.passed
• 1:39:56
  Do NOT send questions to department heads individually in advance. The committee agreed instead to meet as a group first to work out its questions together, then have department heads present and take questions live. Agreed in discussion; no motion was made.passed
• 1:39:56
  Hold the next committee meeting on Monday, November 23 at 6:00 p.m., with Ruth to send the Zoom invitation and post it on the town calendar. Agreed in discussion; no motion was made.passed
• 1:45:19
  Meet with the public works and fire department heads on December 7, or December 1 if that does not work, aiming to see both in one evening about an hour apart, with Ruth to check availability. Agreed in discussion; no motion was made.passed
• 1:45:19
  Hold a further committee meeting on Tuesday, December 15 at 6:00 p.m. to confirm everyone is ready before members go away to score the requests, the whole process being due by January 1. Agreed in discussion; no motion was made.passed
• 1:50:26
  Michelle to tabulate the members' scores again, as she did last year. Agreed in discussion; no motion was made.passed

An outcome reads "unclear" where the recording does not state it plainly. The recogniser drops short words, and "the motion does not carry" is one missing word from its opposite.

Worth knowing

• 1:08:08
  Ruth flagged a liquidity problem for the next couple of years. The town's unrestricted fund balance, meaning capital funds plus undesignated funds, was nearly 40 percent in 2018 and she projects about 23 percent this year, with the undesignated balance itself around 13 percent. That cushion is what carries the town through the six months of the year when no tax money comes in. Buying this year's $95,000 truck uses two thirds of the public works capital fund, and she said she would not be surprised if the town needed another tax anticipation note next year.
• 16:20
  Almost no capital reached voters in 2020. With no town meeting possible, the board took the capital questions off the ballot to keep it short, and even so it ran to 22 questions. Only the public works truck and a solid waste question went through. The FY20 debt payment jumped about $280,000, and the board kept that off the mill rate by cutting the public works maintenance paving line in half.
• 10:43
  The Quint and the fire station modular renovation were both pushed out five years, to 2026, so the board can decide whether to replace the Quint at all. No capital request has been filed for it. The board intends to put out an RFP for an outside report on what fire apparatus a town of Durham's size needs, given how close it is to other communities that can back it up.
• 47:29
  The town got $77,410 back from RSU 5. When the RSU went through its audit the auditors found that what it had charged the three member towns was not consistent with the warrant the RSU had passed, so Durham had paid that much less than it raised. The board applied the money to this year's budget.

Elsewhere

2020-11-23 Capital Improvement Committee →All meetings