ATHOL – The Finance & Warrant Advisory Committee was given a capital planning presentation by the town bond advisor Lynne Foster-Welsh of UniBank Fiscal Advisory Services, Inc. Tuesday night. The fact-finding discussion included funding guidance and showed where the town stands debt wise. The meeting was part of an effort by the FWAC, Board of Selectmen, Capital Planning Committee and the town financial staff to develop a comprehensive five-year capital plan and to seek to identify potential funding, according to town Manager Shaun Suhoski.
Foster-Welsh told the committee that the Capital Planning overview is a 3- to 5-year plan that is subject to change and is to be looked at on an annual or semi-annual basis. She said the plan should be tailored to the town of Athol’s capital needs and to “flesh out what is the best fit for the town.”
She said that Athol’s taxpayers have been “very generous” by voting in debt exclusions, which gives the town more budget flexibility. In her report of the town’s current debt, as of Aug. 1, 2019, $12,567,398 has been voted excluded from Proposition 2 ½, representing 74% of the $16,913,027 permanent debt outstanding. In 10 years, 73.4% of permanent debt will be retired. Under fiscal 2018, the total general fund revenues equal $20,243,030. Debt service for fiscal 2018 equals $2,198,134 and $1,626,619 of FY 2018 is debt excluded. Debt outstanding is approximately 2.8% of operating revenues.
Foster-Welsh said capital planning involves all departments with each submitting a reasonable “wish list” that includes capital needs for five years listed by priority, with a brief description of the asset, its useful life and the importance of the purchase. “You can’t really do anything until you cast that broad net out there,” she said.
Also addressed in the presentation was finding ways to support the capital needs of the town by considering funding sources, levy debt versus bond issuance, exclusion, and whether to go short or long-term.
Funding sources could include the capital stabilization fund and to develop more policies for appropriating funds, as well as other considerations.
Athol has a current Standard & Poor Global credit rating of AA-, according to Foster-Welsh who suggested upgrades by formalizing the debt, reserve, investment and liquidity policies and timely completion of audited financial statements. FinCom Vice Chair Ben Feldman prior to the presentation had questioned how authorized/unissued debt affects the town’s credit rating. According to Foster-Welsh, authorized/unissued debt indicates future financing and it is recommended that as soon as the project is closed out, the authorized/unissued debt is rescinded at a future town meeting.
Feldman also asked if one debt exclusion vote can be used for multiple projects, some of which are construction and some for capital equipment purchases. Foster-Welsh said that one question on the ballot can be used for multiple purposes and that there is never a dollar amount stated on the ballot. It only asks for permission to exclude the particular project(s) from Proposition 2 ½. Massachusetts law, Chapter 44, Section 7 and 8 dictates the terms of the financing. Equipment is usually a 5-year term and can be extended by the Board of Selectmen up to 15 years. Construction is usually a 30-year maximum life.
The FWAC will use the information from Foster-Welsh and additional guidance from the Department of Revenue booklet to work on drafting capital planning policies with the aim to be done in time for the fall town meeting.
Members of the Board of Selectmen who attended the meeting moved to another room to formally vote in favor of rolling over the bond anticipation notes allowing the town to seek bids in the fall for permanent financing for the final phase of the Athol Community Elementary School project, the Exchange Street Bridge, the Department of Public Works highway barn roof, the Pleasant Street sidewalks, and other smaller capital projects that have already been voted, approved and some already completed. The bond for $6,652,971 will mature on Oct. 16, 2019 at which time it will go out for permanent financing.