Finance Committee Supports High School Building, Town Center Zoning Changes and Meals Excise

The Town will be asked to approve three articles which are part of our financial plan at the November 18th Special Town Meeting:   expenditure for a new high school building, modification of the existing zoning for the Mixed Use Overlay District (MUOD or “Town Center”), and passage of the local option meals excise.   The Finance Committee has assessed the impact of these proposals and recommends the passage of all three articles. 
 
First, the high school project fits with our long term capital plan of investment in infrastructure and does it in a financially sound manner. As enumerated by the High School Building Committee (HSBC) as well as our own assessment, building a new high school and taking advantage of the $25 million State grant is the right answer and the clear choice of all the alternatives.
 
Second, increasing the revenue generated by our commercial properties is key to removing the tax burden from our residents. The incremental taxes generated by the Town Center project will help balance our operating budgets with less need for overrides or additional service cuts. Even using conservative estimates, the additional revenues from Town Center will bring significant budgetary relief.
 
Finally, the local option meals tax is a tool the State is offering to compensate for recurring state aid cuts. Anticipated revenue (beginning in January 2010) will replace the revenues lost in state aid cuts since we passed the FY10 budget at April’s Annual Town Meeting.
 
The FINCOM at its October 26 Budget Guideline hearing announced that it is planning no override for FY2011. To accommodate this, the budget will need to be balanced with cost reductions which could total as much as 4%. Further, the FINCOM has outlined the framework for its updated long range plan which will be finalized in the next few weeks.   The framework revolves around a number of objectives, including: 1) maximize revenue in existing commercial zones, 2) regionalize various town activities with surrounding towns, 3) consolidate town functions to operate more efficiently, and 4) continue to control employee costs (pension, health care, wage increases). 
 
Some residents continue to question approving a large expenditure such as the new high school; they ask “does it just put us on the path for future overrides to fund our operating budgets?” No, these are mutually exclusive items; 1) the high school funded by debt exclusion; versus, 2) operating overrides which can be used to balance the Town’s operating budget. Voting for the high school project does not automatically lead to future overrides.
 
Passage of these three articles meets components of our financial plan for Wayland. More information on each article can be found in the warrant mailed to each household:      
 
High School Building (Article 2)
 
The High School project is obviously a large investment for Wayland with a significant impact on household taxes. The FINCOM analyzed it in two ways: 1) on the merits – and costs – of the investment itself; and 2) as a part of the larger portfolio of town operating and capital budgets in order to find ways of mitigating its effect.
 
In regards to the project itself, FINCOM reviewed the documents and data produced by the HSBC over the years as well as reviewed comparable school building projects and costs from the past several years. The current physical state of the facility and the fact that all the classrooms in it are outside of stated MSBA guidelines makes for a compelling reason for at least renovation of the buildings. A subsequent cost comparison of renovation versus replacement strongly indicated that the replacement option was optimal. 
 
The HSBC reviewed options like the MSBA “Model School” (utilized by the Ashland and Whitman-Hanson high schools) and saw that the footprints of those designs were unfeasible given the challenging site and zoning constraints of the high school property. We reviewed alternative options besides a new facility and found that renovation resulted in a similar cost, but with significantly less state reimbursement. Finally, we assessed the cost of a ‘no’ vote on this article and felt that we would be “kicking the can down the road.” There are significant maintenance investments that have been deferred in past years that could potentially expose Wayland’s taxpayers to higher and unforeseen expenses due to state mandates and regulations without any State reimbursement.
 
In sum, FINCOM believes that Article 2 is the right investment at the right time. We cannot predict the long-term future, but we do know that in the years ahead we will not see State reimbursement at levels granted for this project. Again, FINCOM’s presents this investment as part of the portfolio of spending and revenue opportunities that optimize the value of Wayland’s tax dollars.    
 
Town Center (Article 3)
 
Town Meeting is being asked to amend the Town Center zoning by reducing the affordable housing component of the MUOD from 25% of the total residences to 12%. Approval of this article only changes the percentage of affordable units; it does not remove or overturn the MUOD, and the MUOD continues in force. 
 
At STM in the spring of 2006, the Town passed the MUOD zoning. The Town and Developer also entered into a Development Agreement which included consideration in the form of financial gifts or payments towards infrastructure and other site improvements.
 
This past summer, the Developer approached the Selectmen to request changes to the MUOD and Development Agreement to enhance the economics of the project. Many factors have severely impacted the viability of the project: a lengthy permitting process, changes to the capital markets, falling rental rates, and the general decline in economic conditions. The Developer concluded that without certain modifications, the project was no longer viable and asked the Town to completely eliminate the affordable housing component. This would allow the Developer to realize full market value for all units. 
 
After considerable negotiations with the Selectmen, the Developer has agreed to include 12 affordable rental units and to contribute up to $1,122,000 to a Wayland Municipal Affordable Housing Trust based upon the sale of all housing units. In addition, the financial gifts in the Development Agreement will be deferred and tied to development milestones or the sale of residences. 
 
The FINCOM’s financial assessment shows this project could generate $672,000 annually of incremental taxes (this is above what is currently paid on the property). Given the potential alternatives, we believe this is the best use of the property and provides the greatest financial benefit to the town.
 
Local Option Meals Excise (Article 5)
 
The State finalized its budget package after we approved the Town’s budget at Annual Town Meeting last April. State aid came in approximately $100,000 lower than we anticipated, and we need to make up that difference. At the same time, the State offered cities and towns the choice to implement the local option meals tax as a tool to raise revenue to replace the aid cuts. Article 5 asks residents to allow a tax of an additional 0.75% or $0.75 on a $100 meal. Estimates of additional revenues range from $70,000 to $200,000 and provide us with a much needed source of additional revenue.
 
Summary
 
Managing the town finances has and will continue to be a challenge given the budget drivers of state aid reductions and increases in healthcare and pension costs. Historically, just the increases in healthcare and pension have more than exceeded the amount raised in new taxes allowed under Proposition 2 ½.   However, we believe implementing the FY2011 Budget Guidelines, the objectives of the long range plan and passage of these three articles will allow the Town to better navigate our financial challenges while making sensible long term capital investments.
 
The FINCOM strongly urges you to vote Yes on the debt exclusion ballot question on Tuesday, November 17, and to attend the November 18 Special Town Meeting and approve these three articles. The FINCOM’s presentation and financial analysis of both the High School and the Town Center can be viewed on the Town’s web site (www.wayland.ma.us).                                                                                    
The Finance Committee:
John Bladon
Paul Grasso
Dave Gutschenritter
Cherry Karlson
Bob Lentz
Sam Peper
Richard Stack

Leave a Reply (full real name required)

Your email address will not be published. Required fields are marked *