 Okay Andy we're recording and go ahead. Okay. Good afternoon on a nice warm afternoon. I'm calling the finance committee meeting of July 19. 2022 to order at 3pm. Pursuant to chapter 20 of the acts of 2021, which has been extended by chapter 22 of the acts of 2022 and legislation that further extends these provisions until March 31 2023. This meeting is being conducted via remote means members of the public who wish access have been able to achieve it by zoom or telephone and no person in attendance or members of the public will be permitted physically but every effort has been made to ensure that the public can adequately access the proceedings in real time via these technological means. So with that I want to go through the committee members and I'm going to turn it over to the committee members. I want to confirm that they can hear and we can hear them. And then I will turn it over to Lynn. Call the council to order. Lynn. Can you confirm your presence? Okay. Bob. Present. Matt. Yes, I'm here. And Alicia. Here. Okay. Well, thank you. So we've confirmed all members of the committee. We know we'll be here today. Lynn. Do you want to call the council to order? Yes. Given that we have a quorum of the council. Present. I'm going to call the council meeting to order. And now I would like to check on the. Shalini. Present. Pat. The angels. Present. Anika Lopes. I'll come back to Anika. Mandy. Joe. Anika. Can you hear us? Sure. She can. We'll get back to her. Okay. Okay. I'm going to call the council meeting to order and now I would call the council meeting. Okay. So the way that we're going to proceed today, this is a single agenda item. Minutes were listed as an additional agenda item. But for various reasons. They're not, we're not prepared as a committee to take them up today. There was a large group of minutes and they require a little bit of discussion. And an opportunity for review. So that leaves us with the most important agenda item, which is to just, you have a presentation from Sean. So. Kind of giving the background on the. Financial. Plan for. The meeting. We had a lot of projects and what we knew and didn't know at the time. And how it's evolved and what he expects going forward. After his presentation. There will be an opportunity for all members of the. Council and the committee to ask questions of Sean. And we will have an opportunity for public comment, but we're going to wait until after the presentation for public comment. And some discussion from the committee, but I want to assure members of the public. That there will be an opportunity. So with that. And I, and again, I will repeat what I said before, because I would, we weren't actually. In the full. Broadcasting weren't live at that point. The material that Sean is presenting is available in the packet for today's meeting and for members of the public who. Want to look at it. At a future time or even during the meeting. On their own though, Sean's can be showing it to us now. It is available by going to the council page on the town website. The finance committee section and under meeting packets for today's meeting. So with that, Sean. Turn it over to you. Thank you, Andy. Can everybody see the presentation on the screen? Yes. Okay. So. I'll spoil the conclusion and just say that there's not going to be a happy ending. It's not necessarily a tragedy, but it's not, there's not going to be a single model that we're going to share with you today that says that, you know, checks all the boxes of what we hope to achieve. We'll go over what our goals are in a second, but more or less we're trying to bring the committee back up to speed with what the model looks like, what's changed. And what we're going to be working on as we move forward. So we're going to cover a variety of topics. We're going to start with goals. So for today, we want to. Reintroduce the model. Update members who've seen it before for members who are new and haven't seen it, you know, we can answer questions about what it can do and what it can't do. And just kind of explain how the whole thing works. We wanted to cover some of the. Economic conditions that have changed in the past year or more since we shared the first model. We'll share a couple of scenarios that we're currently looking at. Updates a partial update on the status of each project and then share some of the next steps and recommendations as we move forward. And sort of a long presentation. So I'll stop every couple of slides and see if there's questions. So we're going to start with the initial model, which is was put together back in February of 2021. You can see the sort of the assumptions that are on the screen. This is really to set up baseline. So when we talk about what's changed, you can, you'll see pretty clearly where we were and where we're, where we're going. So for the Jones library, the, the cost back then was 15.8 million. It was after it was either right before or right after it was approved. And that number hasn't changed as we go forward. You'll see we're sticking to that $15.8 million figure for the town share of the cost. At the time, the new school, we had a total project budget of about $80 million and MSBA reimbursement for about half. There's been some major changes to those projections. That was a very early high level estimate before we had a designer on board. And before really some of the construction cost escalation went nuts. For TPW we projected a $20 million project and for a fire station, a $15 million project. And again, those numbers were really high level estimates before we had designers really get in and do a detailed cost estimate for a building. We made some assumptions around end dates and when debt, that would begin borrowing terms, 20 years for the library, 30 years for the other projects. Some assumptions around interest rates, which at the time were conservative. They're no longer conservative. Back then interest rates were in the ones and low twos. And it was a really ideal time to borrow, but that's changed a little bit. We assumed one debt exclusion at that time and it was for just the school project. And then some of the other assumptions that were built into the model. So how much we set aside of the tax levy for capital is an important concept to understand how this all works. The tax levy is one of our major revenue sources. It's all the property taxes and personal property taxes that we collect. You see it when we do the budget process each year. We're going to set aside a certain percentage each year. The town decided long ago that it wanted a policy to dedicate a certain percentage of that tax levy for capital to make sure that the operating budget didn't push out capital. So we said we were going to set aside a certain percentage each year, dedicate to capital so we don't fall behind on repairs and addressing, you know, more expensive needs of the town. So our financial policies right now say that we want to set aside about 10% of the levy for capital each year. So we put together back in 2021. We, when we looked at it all, we said 10% is good, but that 10% didn't really account for trying to do all these building projects at once. It was really just for the regular capital needs that come up during a year. And so we bumped that up to 10.5%. And that directly impacts the amount of funds we have available to make debt payments to do other capital needs in town each year. Another major assumption in the original model was how much we wanted to set aside for other capital needs. So how much we wanted to wall off from the four projects to make sure that we don't fall behind and maintain our assets in other places of the town. And so that model at the time said 3 million was the number. And that was based on looking at our plan and how much was coming up each year for cash capital and so on. And so that number we felt was in the right area. It could go up or down a little bit depending on what we wanted to do. And so the result of all these assumptions that we really look at and you'll see it on the newer models that we're looking at is when we plug all this in, what does the model tell us we would need to pull from reserves in order to make it all work? And the way we calculate that is basically where do the costs each year exceed how much funding we have available? And so the output from this model that we presented back in 2021 was that we would need to make sure that we pull about $4.6 million of reserves over a number of years. So it wouldn't all be in one year, but it'd be spread out. We would need to pull that much in order to make this model more or less work on an annual basis. So looking back, I think we would love to have this model back. But I think things have changed so drastically since then. That, you know, that's, that's in the rear view mirror. So before I go to what's changed, I guess I'll just, you know, I'll pause here and see if there's any questions on the initial model. Anything that people have had coming into today's meeting that they have a question on. And I can't see hands of, and if you see anybody with their hands up, let me know. I don't see any hands going. There's one. Hi, Sean. Thank you. Just a comment. For those to make sure I remember, I'm remembering correctly, but for others who haven't seen this, that 3 million is a per year amount that we were, that we were trying to protect. And the 4.6 is over this decade period. Is that correct? Yeah. Yeah. That's accurate. Okay. And then the other, I don't see any hands going. There's one. Hi, Sean. Thank you. Just a comment. For those to make sure I remember, I'm remembering correctly, but for others who haven't seen this, that 3 million is a per year amount that we were, that we were trying to protect. And then the other thing is we knew when we were doing this, that this was very tight on operating budget. You know, so it was, we were, but we're still coming out of COVID. And since then we've. Added a new department on the operating budget. So I assume you're going to, as we look forward. We were tight before and we're tighter now, I guess, but we're not going to, we're not going to, you know, We're not going to frame it, although we're recovering better than I think we initially thought we would. Yeah. Yeah, I think that's right. I think. One of the things we talked about back then was. Once we commit to a plan and we actually lock in. You know, we move forward, we lock in debt. That's going to lock things in and there, there will be times when the operating budget and the capital budget, maybe bump up against each other. And so how we handle that is going to be. And so before we move forward is are we willing to stick to what we set for capital in terms of funding. So I'll keep going. I don't see any other hands. So what has changed. So you don't really have to know this is really small. You can zoom in on your own version if you have a chance, but really it's sort of the shape that's more important with this. So this is around construction costs and the MSBA is reimbursement. And so what ends up being the town share of the school project. And so what you see on the screen, you'll see a bunch of little dots, which are individuals, and this all comes from the MSBA's websites, public information. And what you see on this project or the dots, those are individual school projects at various stages of the, their projects. So you can see on the right, the legend. So the orange boxes are when the project funding agreements are amended, you've got some bid numbers, schematic design numbers, things like that. So they're not all actuals, but it just gives you sort of the flow of where they're going. And the, in terms of the lines, one of the most important lines on there is the green one that sort of looks like a staircase stepping up over a number of years. That green line is the MSBA's construction costs per square foot limit. So all these, all this is construction costs per square foot. And so when you're above that construction costs per square foot limit, they cap your reimbursement. And so for, you know, whatever you're above, essentially is all on the towns, the towns funds. And so back to just where we are right now, actually I'll start there. This will change as if we're still sort of at a preliminary stage of the school project, but looking at the last cost estimate we had, our, this current school project is about $800 per square foot. So we're up near this dot over here. Again, that will change a little bit as, as design gets worked out further, but talking with our OPM we're in that $800 range. And for comparison purposes, the red circle is around the prior elementary school project, the Wildwood project. And then we were about $450 per square foot. So, you know, with this chart, what I'm trying to convey with this is that construction costs have really accelerated. This is school projects, but I think the shape of this, you know, is likely comparable to other industries of construction as well, fire station, DPWs that construction costs have just really taken off. And that the old assumptions around three or 4% cost escalation just haven't been accurate the last few years or really last year and going forward. And so why this is important again is the more your project is above this green line, the more that project is that's going to be un-reimbursable, where that cost is going to be completely borne by the town. And so that, you know, we'll have more information on this as our designers and OPMs support us and share that information with the building committee. But, you know, it's going to be a much bigger number than where we were before. Any questions on this chart? Matt. I see that Matt has a question. Sean, I may have missed this. Can you just speak to the, the average of following construction could the choice of those schools, the comparisons there? I'm sorry to say it one more time. The average, the six schools that we're comparing to, can you just speak to those real quick? Oh, those six. So that's from the MSB HR. We're starting point. We're not comparing. You're talking with a little box on the left? Yeah. Yeah, that's on the, that's on the chart. That's nothing that I'm raising for comparison. I think that's basically where the starting point was. When they started making this, this table or this chart. But just, just current levels. So that would have, that's back in 2010. It looks like when the, that information was, yeah. So just to jump in. This is a chart that's taken from the MSBA website. Yeah. Historical, historical construction costs per square foot numbers for different projects over time. Okay. Thank you. Bob. Yeah. I just wanted to confirm it's hard for me to see it, but the current reimbursement maximum is about 360 per square foot. Is that correct? Yep. It's in that range. You can see they, in some years they increase it every, you know, increase it each year. There was one year where there was a stretch, probably when we were sort of, where prices were maybe going down a little bit or staying really flat where they didn't increase it. You know, I think we're going to be pushing them to do another increase before we lock in our project. Cause if they do another increase that, you know, we'll be that much less above the line. And I think we'll, you know, we've been advocating for a pretty sizable increase. You can see they've done maybe 3% or maybe a little bit more. And some years, but we would, you know, our position is this should be a pretty large increase given what construction costs are doing. I think their point of view is they've got so many needs and so many projects. And if they, the more they reimburse the fewer projects they can do. Right. Thanks. Nothing. Sean, you may be about to say this, but the other thing that happens when they cap the construction costs, they have a cap on site costs. And it's 8% of construction costs. So you get double hit because they've. Capped your construction costs. And 8%. Probably would not have been enough anyway when you need to do. And site means. Driveways, playgrounds. You know, dirt. You know, so it's, it's, they're, they're hitting you, they're hitting you twice in the way they're restricting the flow, their share. Yep. Yeah, no, there's been some changes and there's, there's been some changes to the formula just in the past year. So according to our OPM that even further. Reduce what we, you know, compared to what we would have gotten before what we're anticipated to get now. So the MSBA has been. I don't know what their, their objective is, but it hasn't been helpful to the town in terms of our reimbursement. And again, this chart is, it's sort of interactive too. So I can send out the link to it if people want to look at it. You can, you can look at, this is new construction. You can look at renovation addition. You can, you can put some things on there and take some things off. So, so the next thing that's changed significantly is interest rates. So this is just a 10 year survey. You can see who provided it of averages. It's a different mortgage fixed rate mortgage rates or adjustable rate mortgage rates over the last 10 years. We don't, the town doesn't take out a mortgage. We don't follow exactly along with this schedule. Our municipal borrowing rates are generally lower, but we do sort of follow the path or the direction. So if interest rates, you know, are down, our rates are generally low as well. When interest rates start to go up, these types of rates go up so do ours. And so you can see where rates are going higher than, you know, where this like sort of golden age of, of borrowing for a couple of years and now we're back sort of a higher than the 10 year average. And so again, it's not interest rates aren't necessarily bad, you know, depending on your perspective and how long you've, you know, how long your experiences with interest rates, but you know, they're not great compared to the last 10 years. So, and our current, so what we're, when we work with our financial advisor to look at interest rates and we get a monthly report of all the borrowings that occur out in the market, municipal borrowings that occur out in the market and tell us how much is being borrowed, what their bond rating was, and then what the interest rate was that they received when they, when you go, when we go out to bid for bonds, it's bid out to different banks and lenders. So it's a competitive process and we can see what the rates are that different municipalities are getting. So we're currently in the 4% range. If we were to go out today for a, you know, a sizable borrowing. Bernie, you're muted still. No, Mike, and yet 4% seems high. I mean, the Nash right now, the, I don't have any mass specific info, but right now the national 20 year muni bond is about 2.8 and 30 years, about three. So 4% is, I think it's a bit high. Yeah, I can share that. You know, we can share some information, but it's, you know, it's actual, it's actual information. And that's what our financial advisors using as we project forward. Yeah, well that's, yeah, there's a lot of trust. So if, if he's generating those numbers and in a world, we'll certainly use them. The other thing is, is that we're, you know, this will be an override situation, this particular project and that should get us a little better rate. Yeah, no. And like I said, maybe I can put together, or maybe I can just find, you know, so every, there's no fixed amount for the rates. They're, they're competitive. So you'll get some projects where maybe it's a little lower than the average, some that's a little higher, depending on how much interest there is. But yeah, I think all the, a lot of the many of the projects in this past month have been in that mid threes to 4% range. Now they may tick back down. So I don't know if you're looking at what your month you're looking at Bernie or financial advisor said that there may be a little bit of a tick down for a period of time, because when they look at the long-term rates, but the main point of this is that it's much higher than where we were a year ago when we were in like the ones and twos. Rates are creeping down. So other things that have changed. Operating costs. I think Kathy mentioned this earlier. We've, you know, since early 2021 when we presented the initial model, we've created two new departments. We've added four new firefighter EMTs. And we've hit this period of inflation, which has put just greater stress on our operating budget and our capital budgets. On the capital side, we've approved the library project, which is a good thing. It actually kind of puts one of the puzzle pieces into place and makes it not a variable. We've approved the ladder truck that wasn't on our capital plan a year ago. We were hoping to find alternative sources of funding for that, but the timing was such that we kind of had to move forward with it. And then the climate action adaptation resiliency plan was approved. And we started to build more sort of ongoing sustainability funds into our capital plan. Again, which is sort of a newer capital need in the plan. And then another thing that happened was the approval of the reparation funding plan where we're going to take about roughly $200,000 per year. That would have gone into our general reserves and it will go into a reparation stabilization fund. So it'll just be that much less per year that could have gone towards something else, a capital project or other reserve needs. So the next phase, the sort of guiding principles, what we're still kind of sticking to as we look at these models. And before we say this is the one we want to move forward with, or we think, you know, you should consider moving forward with. It needs to be affordable. We need to have confidence in the revenue sources that they're predictable and that they can be relied upon well into the future. If it relies on reserves, the amount of reserves need to be something that we feel confident in that we either have it or our history shows we will have it very soon. And we need the debt exclusion to cover that payments for the schools. That's just sort of one of the key variables that if it doesn't happen, the whole plan sort of needs to be reconsidered. So we want to minimize impact on taxpayers the greatest extent possible. So that's, you know, controlling project costs, working with our financial advisor to smooth out any debt we take on, that's going to be debt excluded. There's ways we can, we can structure that debt so that it doesn't hit all at once. And so we got to keep that in mind. We wanted to complete all these projects expeditiously because there's, you know, the buildings all need it. And the more we delay projects, they, you know, they get more expensive. That being said, I think we're going to have to look at the timing of some of these projects and how we, how we've been modeling spacing them out and determine if it works for all of us. Maintain focus on asset maintenance. So this is how much we set aside for other capital needs. That's gotten more expensive just as a result of inflation, especially in the vehicle world, things that used to cost, you know, as we heard we have school buses that used to cost 90 or 95,000. Now they cost 120,000 from a bid. So things are getting more expensive. And so the amount we set aside for asset maintenance, we'll need to consider going up and then stay flexible. So we want to plan a model, but we also need to be able to step back if things change and kind of reevaluate that model. If a year ago we had, you know, committed to the model and stuck to it and said, we're not going to deviate from this. We'd probably be in trouble right now, but we're going to be able to move forward in the next year. So we need to do that. And that's what we're going to be doing in the next, the last year. So we need the model to be kind of look what it is, which is a guide, something we can, we can put the new variables into based on the market. And make the best decision we can. Some other prerequisites. So again, taxpayer approval of the debt exclusion for the school project. That's essential to really all four projects moving forward. Funding of capital at 10% of the levy. We've scaled. We've looked at it a year ago. Partially because of the cost of capital and, and the amount of other capital needs we have. And just trying to be a little bit more conservative on this. As we see the possibility of entering a recession of some sort in the next few years. Establishing budgets for the project. So, you know, budgets, we still have to kind of agree to what those budgets are, but we do need budgets so that we can plan around them. And once we do set budgets in place, we need to stick to them or have a path forward. If we make any changes use of reserves, we're going to need reserves to some extent, how much is really the big question that we all need to discuss is, what do we feel comfortable with? There will be an impact on future operating and capital budgets. If we move forward with all four projects one way or another, there's going to be some, there's going to be less funds available for both. And then impact on the debt load of the town. So we've been in this period of time where we've had really low debt, really the last really since I've been with the town, we've had relatively low debt. And so this will be a change once we take on, you know, start borrowing for these projects will go to a place of having sizable amounts of that. So any questions before we look at the models, Andy? Yeah, I just wanted to point something out as you were talking about the use of reserves. We always had a policy for many, many years and Amherst of trying to target our reserves total, including stabilization and free cash of 5 to 15%. But the number of years ago, probably more than certainly seven or eight years ago, at least we started deliberately trying to gradually increase above 15% in order to give ourselves more flexibility. And people have been pointing out how high our reserves are, but that was actually a strategic plan that was tied to knowing that we were looking at major building projects down the line. And, you know, we may want to talk about that a little bit more about how they're, why they're needed and how they would be used. But I just want to make that point. Yeah, no, that's absolutely right. I think, you know, one of the things you'll see later on is that we need to continue building reserves for capital needs specifically. And we've got some thoughts about how to maybe make it more transparent to the public, you know, what is, what are our reserves for sort of rainy day and for our budget and what are our reserves that we're specifically building for capital projects. So that's really clear to the public. Mandy. Yeah, I'm with the reserves I peeked ahead. So I know some of those numbers, but I'm curious what our current reserves are. So the percentage is about 25%. What's that in dollar amount though. It's around, I can get it to you before we leave. I think it's around 22 or 23 million some of that range, but Sonya, if she's here, she'll know it off the top of her head. Yeah, I'll get it to you before we leave just so you have that number. Thanks. All right, so, so we're gonna get into the models. I just want to kind of be really clear. We're not saying either of these models are, this is the one we want to move forward with. This is, you know, perfect. It's more to kind of say, what does it look like now? What are some of the challenges we're facing as we put in different inputs and what are we bumping up against? And then, you know, we're going to keep working at this. But so this first model, we've updated the estimated costs. So, and I want to stress these are estimated costs, but for the library, the 15.8 that one's pretty well set for the new school. So this is town share for the town only. This is not the total project cost. This is what the town piece would be. We're estimated at 70 million right now. This number could go down. You know, we're working with our OPM and our designer to estimate as best we can. There's a number of decisions that could be made that could get this number down quite a bit, but we wanted to err on the, at the higher end for now. So we don't have to make a dramatic change later. Public works, we've increased this 5 million. It was 20 million last time we modeled back in 2021. We've increased this by 5 million. We've increased the fire station by 5 million. Again, just trying to reflect that construction prices have gone way up in the last, last year. These two projects in particular, and I'll say this again in a little bit. We don't have detailed designs. And so until we get further along a design, which we do have funding for the council didn't approve funding for it until we get further along a design, these will be really high level cost estimates. And then we've also increased the fire station. The school and the Jones library, those numbers are getting closer and closer to, you know, what they'll ultimately be. We've proposed 30 year borrowing terms in this scenario. We can see we've increased our interest rate assumptions to be more conservative. 4% for the library because that one's in the pretty near future. 5% for the other ones. And a debt exclusion for just the schools. We've increased our capital. Three and a half million per year for other capital needs. We've increased that from the original model. Again, to reflect inflation that capital has gotten more expensive. And so one other, before I go to the chart, one of the things that we've changed from the initial model to this model is the way we are structuring our debt. So I know this gets a little into the weeds, but when we did the 2021 modeling, we were able to get a fixed. Principal model of debt, which means your, your debt payment starts out high in the early years and then gets lower as you go into the future. And that model of borrowing results in the lowest overall cost because you're, you're hidden principle with a lot at the beginning. There's another way you can borrow, which is more like a mortgage where you have a fixed payment for the life of the borrowing. So you'll see when we look at this, that the debt stays fixed each year for the life of the, life of the borrowing. And that's a change from the previous model. And so the result of this is that we would need to use about 13.4 million of reserves. Over the last couple of years, but that cost stays the same throughout the life of the borrowing. And that model of borrowing, it costs more. But it'll allow, it's also more manageable in the early years. When you're trying to, you know, do four building projects. So you'll see when we look at this, you'll see that there's a total of 13.4 million of reserves over, over the span of time shown here. So for those unfamiliar with this chart, the black line models, the funds that the town has available for capital. The yellow bar are the, the amount of money that we're sent aside for other capital needs in town. So this will be the three and a half million or so that we've selected here. And then the green bar that has the lines through it is our existing debt running off. And what we've done here is we've also, we've put in an estimate for regional school debt assessments into the future. Cause we know that they've got a lot coming up. And so we didn't want to pretend like that didn't exist. And then the purple bars, the deep library debt, the green bars, the DPW debt. And the red bar is the fire department debt. And I'll go to questions in one second. You won't see the school on here because it's a debt exclusion. So this looks at our, you know, our existing resources versus the debt payments because the school is being proposed as a debt exclusion that doesn't factor into this chart. And I think I'll stop there and see if there's any questions. We'll start with Matt. Thanks, Eddie. Sean, just clarifying that's a type of fire should be 23. Scenario one. 32. And this that I, maybe I missed. No, so this model. We've spaced it out more. Again, so not saying this is the model we're moving forward with, but this is a model where we said, what does it look like if we space these projects out further? And so this would have the fire department in 2032. A couple going back and forth. People can remember the numbers from the other slide. And so the $70 million for the school, if we say, we don't want to go out for that amount of debt exclusion. When you look at this chart, it says there is no room. To play it pay out of annual capital funds and reserves. If we try to do all four projects is the way I would read this. If, if we want to finance a bigger piece of the school. If we want to finance a bigger piece of our savings account, I'll just use that. Then we would have to make a different decision about fire and DPW. Is that, is that a, I'll ask us a question. Is that a correct statement? Because it's not out till 2050 that we're actually under your black line. Yeah. So I'd say two things. There's, yeah, there's, there's no, I wouldn't say there's room for another building project in this model. I don't like to say about this model before we get too far along as that. I don't like this model. We're shown again, we're shown it to you. So you understand kind of the variables and how it, you know, what it means is this model, maybe theoretically possible. Yes. I don't like a model. My major issue with this option is that. Planning on having to use reserves in 2032 is really far in the future. And there's so many things that could happen. That I wouldn't feel comfortable with it. But again, this is sort of a cautionary model of. We shouldn't move forward with something that projects needing reserves that far out in the future. The previous model, you know, the amount of reserves that we were. Going to use it was, it was confined to three or four years and that was in the relative near future. Where we, you know, had more certainty about what was available to us. So again, this model, theoretically, could we get to 13 million for reserves over 10 or 15 years probably, but I wouldn't say this is, you know, it's, you know, it's, you know, it's, you know, it's, you know, it's something that we want to move forward with. Just anything else you've, uh, Mandy. Um, Matt got to one of my questions with first the fire station at 2032. What does that mean to the. Estimated cost of building that fire station. Like is 20 million then a reasonable number. If we're not even deading it until 2032. And then the other question related to that is. What does that mean to the current fire station? And how does that mean to the current fire station? I mean, I think that's what we're talking about. Repairs to the current fire station because how is it going to last another 10 years? Yeah. No, it's, I mean, that's, we've talked about that. It's exactly right. I think, you know, fire station 10 years from now, um, is probably going to cost more. I think you're, you're right on with that. Um, and that there will be. There would need to be some maintenance of that building between now and then, um, Just to expect it to go another 10 years before it starts. I think that's what we're talking about. I think that's what we're talking about. I think that's what we're talking about. And so if you do space a project out and push one. Farther than the future. You know, that's one of the things we're going to have to consider is, um, This is how we, how we space these. And I want to. Besides adding to what Mandy Joe has, um, pointed out, uh, with regard to the cost of maintaining the existing fire station. I'm really increasingly concerned. About the amount that we're putting aside for other capital is sufficient. Uh, and part of the reason I am concerned is the condition of our roads. And the general overall inflation of other costs related to capital. So well, you know, we say an amount now, but that amount now in today's dollars is not going to buy. It's going to take some of those funds away. Um, We do escalate the amount for other capital needs. So it's not a fixed three and a half million that doesn't change into the future. We. It's increasing a little bit each year. Um, same way. The funds available for capital are increasing a little bit each year. And I think it's already low to start with. Thank you. Yeah. And I think that's it again. That's the right question to ask is how much do we need, uh, for other capital needs in town and doing these projects. Again, it's going to take some of those funds away. So I think that's one of the things that we're looking at. Um, I think there's a lot of funds available for capital or increase a little bit each year, but, um, no, that's one. So one of the things we're looking at is our capital plan going forward and just three and a half million cover the most essential projects on that list. Um, and I think the road, you know, the road question is one of those ones where. We know there's really no limit to what we could put into roads. Um, Um, given the, uh, what we've heard in terms of the, the backlog. So, um, that's a decision that will have to be made in the next few months, in order to make sure that the road of things is safe and safe. And then we have, um, you know, we have a lot of cross-country sidewalks each year. Um, and then what's left for everything else. All right. So, um, next scenario, so this scenario is a little more optimistic. Um, So the costs. Haven't really changed. Um, in this scenario, we try to do the fire station in FY 26. interest rates stay around 4% where they currently are. So if they, you know, if they do go up, if they come back by the time, come back down to where they are now, by the time we borrow, then that would be great. Again, one dead exclusion for the school. Again, this is a little bit more optimistic. This says what if we can get to the 10 and a half percent for the next five to 10 years for capital, really the next 10 years for capital, like the plan a year ago looked at. And what if we can get away with only three million for capital needs, which, you know, based on what Lynn just said, I think would be a struggle, but this is a big variable. The amount of money we set aside for other capital needs has the variable that probably makes the biggest impact on what we can afford. So you'll see what that means in a second. So the result of this would be a model that's much more, again, in terms of what we have to use for reserves, it's much more confined to a few years. We don't only need to pull about 5.7 million out over a number of years, which means we'd have greater flexibility to use those reserves, maybe to reduce other, to provide more for capital in some years if we needed to for other capital needs, if we had to, or to do something else with those reserves. But this model, again, a little more optimistic, but it gets us closer to something that we can, in terms of the reserves that we feel comfortable with. Kathy. I think, Sean, you know, when we, it feels like more than a year ago, it feels like two or three years ago when we were looking at these, but when you go to 10 and a half, it's squeezing operating. And I think we, I know you're just trying to, right now, give us some sense with these big projects. But I think we need to keep flipping over to the operating side, not right now, because operating, for those who didn't look closely at the budget out five years, we're assuming we can get away with two and a half percent increase each year in operating now. You know, so it's a, you all figure out how to live under two and a half percent. And it's not clear to me that that's possible with what's happening with health insurance and labor costs, not to mention supply costs. So it's a squeeze. I mean, this looks better. So that was just a statement about operating the same way Lynn was looking and Mandy were looking interactive with repair costs. So I want to ask how, what percent, what, how much do we need to keep in reserves over the long-term to be on the safe side? And so do, is it 5%, 8%? So when you said we have 22 million, we've built up reserves to pay for anticipating of these buildings. To me, that means therefore we should be drawing down the reserves as they're coming online. So we don't need to keep as much, but I didn't know what the steady state is we would be trying to look for. Yeah, so we've thought about that a little bit again, in relation to the capital stabilization fund and what amount would we want to keep in the regular stabilization fund and then everything above and beyond that would be moved to the capital. So I don't think there, we don't have a definite answer today or recommendation. Think about our old policy or the policy of 5% to 15%. We've been working with the finance committee to raise that, to factor in that we've been saving for capital. And so my thought was if we said 15% between free cash and general stabilization is what we want for the rainy day fund. And anything above that would go into capital stabilization fund. That would mean right now, based on our current reserve level we could move over about eight or nine million into the capital stabilization fund. And then each year, like we've been in the past when we do free cash transfers we would keep the free cash and the general stabilization fund around at that 15% level we would fulfill the commitment for the reparations funding plan. And then anything above that would go into the capital stabilization fund and it could be built up. So that percentage I think could be discussed, but yeah. So just if we said 10 rather than 15 do we have benchmarks with, I know we've been building up and that made sense to me but I don't think we were at 10 per most of our history but I don't know that and I don't know name other towns. I don't even know who we would want to benchmark to but if we had to squeeze ourselves at the point the buildings and I'm going to question whether we can do three buildings is we've got one that we committed to but I'm going to question that but if we had to pull it down could we live with 10% for a while? As a question, I don't need you to answer it now. Yeah, I'll just give you I think one more thing to consider one thing that affects our bond rating specifically for the town is our reserve levels. That's one thing that's reflected really positively on our bond rating. And as we go forward and we take on more debt that's going to be a negative factor. It's going to, I mean, we've had really, our really low debt has helped contribute to our really positive bond rating as we become more like other communities and take on debt that's no longer going to be a positive in our bond rating calculation. So I just want to be really careful about not impacting other areas of our bond rating calculation and having those be less positive as well. So, we can work again with our financial advisor and bond rating agencies to see like, what is that? What is that level where if you're above it it's no longer really helping you? We can get more information on that. Yeah, I raised my hand but it's really just to respond a little bit more to what Kathy just was asking about. When the policy was originally established and I was on that committee way back when that was done, we identified two major reasons for wanting to make sure that reserves were adequate which went behind the five to 15% calculation that was made at the time. And I would guess that that was probably around 2007 roughly that we did that. One was because we recognize that reserves act as a rainy day fund the way that rainy day funds work in the legislature. That when going gets tough for economic reasons that it enables you to draw down and you can maintain essential programs and then rebuild as a later date and the others for major capital needs. And that's early already been talked about. I also want to remind people that it wasn't that long afterwards that we actually went into the wrong direction of building reserves because 2008 happened and there was a recession. And we were actually seeing our state aid going down in 2009 in an unpredictable manner. And that rainy day fund aspect of the reserves was absolutely essential to maintain just the essential ongoing programs of the town. So that's kind of the historical background. Obviously your hand is up, so I'll go to you next. Yeah, Sean could you just go through the assumptions around the capital allocation line, the black line, I guess it is. And in particular, I see it's going up very steeply between FY21 and 24 and then it sort of goes out at an average rate. Now, presumably 21 is an actual, 22 is close to actual and 23 is the budget, is that correct? Yeah, so that's a good cautionary tale of which we'll have more in a little bit. So we in response to the pandemic, one of the strategies that was used to preserve operating budgets was to reduce the capital budget. And so the capital budget was reduced roughly in half in I think it was FY21 would have been the first year. So that's why you see it starting at a really low point. We've the last few years, we've been aggressively trying to get back to 10% which we did for FY23. And then to your point, it kind of stabilizes from that point forward, it's really just a percentage of the levy. So if the levy grows 2.5%, then this grows 2.5%. Okay, that's what I thought. I just wanted to verify that. Thanks. Just to go back in history, the five to 15% recommendation is a one that was made a long time ago by the Department of Revenue. And I think Sean's point that we need to work with our financial advisor to find a spot where we're comfortable based on our spending history and what Mr. Market will, how Mr. Market will view us in terms of our bonds is a good one. We shouldn't worry about, we shouldn't worry about that. We should worry about what makes sense rather than a fixed number. Department of Revenue used to have, I assume they still do have a chart which shows you the reserve funds of every town on the Commonwealth. And they're all over the place. I used to tease John Musanti because your fields reserves were much higher on a percentage basis than Amherst's. And that's not true anymore, but it really would, you really have to focus on what makes sense for the town and what we're doing at the moment. Yeah, Sonia made sure of that, right? So she's, just take care of that issue. All right, so I will keep going almost done. So again, just to kind of reiterate some of the variables. Sorry, that's kind of knocked over. Just some of the variables and factors to consider. So debt financing, so interest rates, we don't have much control over as the town we really don't have any control over. The debt schedules we do. So we can structure debt in different ways. It's really a level principle versus level payment. And that's a decision the treasure will make at the time we borrow, but it does factor into our planning. Reserves, how much we wanna maintain for safety net for operating budgets versus how much we wanna support the capital plan with. As mentioned earlier, operating versus capital, there's gonna be years where things happen and we might have to reduce one or the other. And so we need to be able to stick to a plan but be flexible in any particular year. Construction costs and that kind of variable we don't have much control over. New revenues, cost reduction. So we do have some revenue potential from selling or leasing one school site and or the central fire station. So that's something that could build more flexibility into this model. On the flip side, there's also a talk of potentially repurposing those for other needs which could increase costs. So that one's really could go either way. We have reductions to operating expenses from energy savings. So if these buildings are net zero or much more energy efficient than where they are now, that should help their operating budgets and what they have to spend on heating fuel and electricity and so on. And then we have reductions to operating expenses from shifting from three schools to two schools. So the superintendent has already put together sort of a high level estimate of that for the MSBA. Sure, that'll get more refined as we go on. But again, there should be some savings there that will alleviate some of the pressure on the operating budgets. So cautionary considerations. So again, any model really doesn't matter which one it is. If we move forward with it with capital at a certain level, we really need to stick to that level and will a community be willing to accept those strict limitations if it means the operating budget is impacted in some way. So again, if we, before the pandemic hit, we had stuck, we executed a plan that said we were at 10% for capital and the pandemic hit and we had to make reductions to the budget. Those reductions would have had to come out of operating and would that have been acceptable? So that's a big one. The fire department and the public work projects, public works projects still have a lot of design work as I mentioned earlier. So those cost estimates are really high level. I think before we accept or kind of plan around any specific model, we want to get those detailed cost estimates. Any model will require significant levels of new debt which just limits some of our flexibility that we've had the past several years and we didn't have a lot of debt and we were all cash capital. We could move things around much easier. And I think everyone knows this that economic conditions are really volatile right now, costs, interest rates, several, many other factors, inflation and so on. And so we just have to be, I think, more conservative now than we were maybe a year ago given where we are and just the volatility we've seen the last year. I think some people thought that some of these things that have happened were impossible, like around construction costs, rising at 8% a year. But now we've kind of seen that it can happen. Some of the takeaways, very simply, construction costs and interest rates have increased. The debt exclusion amount has increased from the model back in 2021. Passage of the school debt exclusion is essential to any model. So again, if that doesn't happen, we have to come back and look at the whole plan. Town staff, so we're moving forward. We're going to continue to utilize this model, plug in the latest assumptions, work with our financial advisor around interest rates. We'll monitor construction costs as we get more information from the projects that are moving along a little bit faster. So we're continuing to work on it. Reserves will be needed, how much is a decision to be made. Expectations around project scope and timing that may need to adjust for some projects. I think everyone sort of had visions for each project of what would be included, what it would look like, given just the sort of economic realities, we'll have to kind of revisit those. And Paul and mine's goal continues to be to address all four buildings. But again, we need to kind of stick to our values of what we said is important as we do that. I've got one more slide, Kathy, can I wait one more? Okay, I'm assuming you're saying go ahead. Yes, go ahead, that's it. I would like to come back to that slide when you finish. And so next steps, we're going to continue our best to do our best to move forward with securing a location for the DPW. That's really sort of the key piece to get in a more detailed cost estimate is knowing where the site is going to be, what those site costs are, that all factors in. We want to continue building reserves to offset the annual impacts of new debt or to potentially reduce the amount of debt needed. I mean, if we were able to build that up over the next three or four years, we may be able to take a chunk of one of these projects and not have to borrow for it. Again, interest rates are not as advantageous as they were a couple of years ago. Consider the creation of a capital stabilization fund to better prepare for the projects. Again, I think that's around transparency. It's around getting more concrete around what portion of our reserves is for capital. And once we do that, I think that will help us with our develop this plan a little bit further. We want to continue work or we're going to continue working with the school OPM and designer to estimate the debt exclusion amount and communicate those impacts to the community. We're starting to get those questions. We want to make sure when we do go out with impacts that it's really solid and based on the most up to date information from our professionals, the OPM and the designer. So I anticipate that will be soon. So we're proposing to meet again in September, October when I think we could start sharing more of that information. And we can update anything that's changed with any of the variables I've changed since today's meeting. And we can also talk more about those debt exclusion impacts the next time we meet. And so I think with that, Cathy. Thanks, Sean. Could you go back to that one? Okay, so one of my takeaways is that I think we need to rethink the plan that the world has shifted dramatically since we, and I only weekly said, I don't think we can afford all four when we said go for all four. I weekly said it. Now I want to more strongly say it. I'm not sure we can go for all four. So I don't know what that means. And DPW and fire are linked. It's not like we can do fire, but not DPW or because of the way we talked about that. So I would like to schedule a time to say, do we need to rethink this? And right now it's been easy. Your little line is very nice because you removed $70 million because it's coming from the taxpayers, directly from the taxpayers. If we were to say we don't want to get, have to go out for that much, but if we wanted to go out for 45 or 50, where are we going to get the rest of it? That's the Amherst Chair. So I would like to put on the table, start thinking about how much ARPRA money have we not designated the second tranche that's coming in? How much of that can we use? Is there something on the current list that we don't have to spend that we could reallocate to the school, but really be able to be telling the taxpayers that we really scrubbed our resources before we go out for the debt exclusion? And I know there are pieces of it that could be grant supported, including Community Preservation Act for the field improvement. And we'll get a number on how much of the school is not the school only, but the fact that we're getting community fields. But so if you had early on a budget goal, I would like to also have a debt exclusion goal of not to exceed and press ourselves hard on how we get there. So it's just based on when you go back, everyone, when you go back and look at his line, that dark line that Bob asked about. Yeah, every time we're above it, it means we're pulling on reserves. And if we go way above it, then we pulled down reserves, whether it's down to 5% or 10% or 15%, we're pulling it down. So there's just not a lot of room there to do what I'm saying, because the MSBA just wants us to finance our part. It's not saying how we finance it. So we can have some of it is from debt exclusion. Some of it is from internal resources. So I just wanna have that discussion, not necessarily tomorrow, but sooner rather than later. And it doesn't seem to me like it's a one-hour discussion. It's a longer discussion. So that's the rethinking the goals that were set with one town, one plan, all four. Maybe we can't in this time. And then what do we do? Mandy's question of the fire station is falling apart and DPW is falling apart. I think we need to have a plan. It's not what you say, forget it. So I'll stop talking right now, but I keep looking at these numbers and 70 million when we see the impact on taxpayers, I think it's a scary number. Yeah, just related to that. So one thing I'll send out after this meeting is if anybody wants us to model different assumptions, we'll send a little table that you can plug in your numbers and send it back to us and we were thinking when we do meet again, we can review if anybody has different assumptions they wanna see modeled, we can model them and review them at that time with the finance committee. So we'll send out, it's a pretty simple table you can plug in, what cost you want. If you don't want a project on there, you can indicate that and we can update the model to show what it looks like. All right. Yeah, I just wanted to refresh my memory on what the debt exclusion looks like to the taxpayers. So we borrow some money, let's say the taxpayers approve a debt exclusion, we borrow some money and property taxes go up a certain percent or a certain amount for 30 years or for some period of time. Does the increase, so does the increase in property taxes the first year, does that become a baseline for against which we do the 2.5% increase or does the 2.5% increase remain at the baseline prior to the debt exclusion? Yeah, so Paula, I don't know if Sonya isn't here, correct me if I'm wrong, but with the debt exclusion, it's separate. If it was an override, I believe that becomes part of the new base but since this is specifically for debt and it goes away eventually, I don't believe it gets calculated into the base that the 2.5% is applied to, but I can give a definite answer unless Paula or Sonya have that off the top of their head. First response from which 2.5% you're talking about is talking about the increase or the absolute cap, which you can't check. The allowable annual increase in tax or the levy increase of the. The term debt exclusion comes from the fact that you are excluding debt from your regular budget that is governed by the 2.5%. Right, that doesn't get calculated. But the voters and that's where the term comes from. I agree with that. I think that it is excluded and we can get clarity on that unless Sonya is here. But it is excluded from the calculations from Prop 2.5 to provide the way they've set it up. Right, it doesn't get added to your base. Yeah, I think it would be important to communicate that when the time comes because I think people would be concerned about oh, we're gonna compound this every year. No, and again, so the amount of debt that gets excluded is whatever that year's debt payment is unless we have some other source of funding to reduce it. It's whatever that amount is. And so that's why again, how we structure the debt is important because if we do the level principle option where it means that that impact of the debt exclusion is gonna be greater in the early years and then get smaller in the future. If we do the level payment option, that impact will stay roughly the same each year. And so again, that sort of builds into the planning process of what taxpayers would prefer or what they can tolerate. Thanks. Are there additional questions now from the committee or from the council? Because if I said that at an appropriate time, I would ask to see if there's any public comment since that's traditional part of all council and committee meetings. And so I wanna go there unless there are questions with the council or the committee won't ask right now. So turning then for members of the public who are present, if you wish to make public comment, we will certainly welcome public comment for three or so minutes at maximum on what you've heard and your thoughts about this if I'll just pause for a moment to see if anybody who's an attendee wishes to comment, then they should raise their hand. Seeing no request for public comment, I will turn it back to the council and the committee to see if there's any other questions or comments about the presentation or sort of the underlying assumptions. Lynn. Kathy raised a question and if we have an answer for it, I would like to at least understand the parameters and that is the question of are there any ARPA monies either left or that could be recaptured that could go toward the school and if there are, what is our estimate of those and is that allowable? And what would we really have to do in terms of finding using those monies or others to make a significant impact on what we went out to the public for? Now, I have a follow on question, but let me pause with that. So right now for our brothers, I think a little over 2 million, that was not in round one. I can't speak to, we're still sort of at the beginning of ARPA, so it's hard to say projects that have already been allocated funds, what aren't you gonna spend? But we will be checking in each year with whoever's in charge of those projects to find out how they're doing. But in terms of funds that are just, that we haven't earmarked for anything, it's about 2 million. It's not really within the intent of ARPA, I wouldn't say, but I would look at the sort of core uses of ARPA, what it was designed for in terms of helping people recover from the pandemic, but also kind of rebuilding out of the pandemic and kind of rebuilding your economy. That being said, we have talked with our legal counsel a little bit about it, if it would be eligible, it's not 100% clear. There would be a lot of reporting requirements that we would have to look into further to find out if we could use this for a capital project. There may be other ways to achieve that outcome where the funds aren't used directly for the school project, but I think we would need to know, again, if that's the direction we wanna move in. I think we have had preliminary thoughts how to use the remaining ARPA funds that we feel like are good uses for those funds and that we wanna discuss as well. So we can get more information on that, but we have had some initial conversations and it was basically the answer was, you have to be really careful if we decide to go that route. I'm gonna pause and since we're kind of on this topic and come back to my other topic afterwards. I just wanted to say, Sean, at least one person, but I don't know whether you'd have to do research. The suggestion was that we might be able to use it for the designer fees or the OPM fees for that, so not the thing that that was potentially an allow when you said capital versus, I don't know how those are things. And the statement was they thought at least a town was doing it, but I don't know. That's hearsay rather than I know for sure. No, I think you're right. Not every town is, there's a big swath of how pounds are spending their ARPA funds. That's why I don't wanna say it's not possible, but again, we've sort of taken the approach of getting community input and where people most impacted and focusing our funds that way. And so again, we'll get more of a official response on whether it's even possible and if there's easier ways to do it than others. Bernie? Yeah, I would just wanna reinforce the idea of using ARPA funds as I've said before. If there's some capital project to need capital project or purchasing that we can do with them to then save money later, we should try to do it. I understand the danger with ARPA is the rules are vague and everything's gonna be checked on a post audit basis. So we may spend the money and find out five years from now, we shouldn't have done, but those are the risks we take. And I just encourage you use the ARPA funds for to relieve us of this much current spending as we can. The other thing is, is I think we need to issue a caution to folks that they need to tap the brakes in terms of what they think needs to happen in terms of other programs and other facility uses in town. We're hearing about how we've senior center, we need this center, we need that, so we can reuse the school for this, we can reuse the school for that, we can turn the central fire station into a performing art space. All those are wonderful ideas, but they may just have to be set aside in the face of the economic reality. The third thing is, is that really, Amherst hasn't demonstrated that it can do things rapidly in time, time is money. So I would favor, if we're gonna look at models, I'd favor a model that compresses things and that we push very hard, very fast to get some good designs on the remaining two buildings and good costs so that we can act sooner rather than later because time's money to use that old cliche. You know, we're paying the price of not acting five years ago, we're paying the price of just kind of taking our time for whatever reason with the design on the other facilities. Thanks. Anything else for the committee? Lynn, you had something else that you wanted to raise? Yeah, I wanna go back to the fire and DPW and Paul, you recently in a comment talked about the condition of the DPW building and I'd like you to share that with the entire group. And then I would also just go on and say, I think we are too rapidly willing to say these are not necessary buildings for our community. And that is not correct. They are necessary buildings for our community. They are very much part of our public safety. Both have been on the books for a while, particularly the fire station by the time I chaired that group, it was the third study. So delaying those any further may mean that we're actually looking at enormous costs to try to stay in buildings that are so antiquated that we're just throwing good money after bad. So Paul. So yeah, so I mean, many of our buildings are in bad shape. We know that that's why we've been building up the facility money in our capital plan to address many of our buildings. The town has always in my view prioritized the two school buildings as needing replacement. I mean, it's unfortunate. We didn't do that when we had the opportunity. That's a multimillion dollar issue for us. We had a delay with the library because of a lawsuit that cost us a year basically. So I think that the condition of the fire station and the DPW, especially the DPW is becoming dire. We looked, one of our exercises is to say, suppose we can't move forward. Suppose we have to restore the buildings that we have. For instance, for the DPW, it needs a new roof. There's a question and we have not done the engineering on this, whether the building could, the structural integrity of the building to support a new roof. If we just said, let's stay where we are, right? That's one of our things. Are we rebuilding what's there? And then there's also all kinds of water concerns in the DPW right now that we can't fix without a new roof. So things are getting dire. We are doing what we can with funds that we have. We, I think Sean tried to address many of these things in his presentation. We need to regage our appetite to say, we're not doing the ideal. We're doing basically what I call like for like. What we have as a fire station is what we're gonna get as a fire station. We're not gonna have a lot of new bells and whistles. We'll do what's mandatory and what's needed to make sure our employees are working in a safe environment. And the same with our DPW. There's a lot of desires that we have that would be an ideal situation, and I think we have to bring that same kind of approach to the library and to the schools as well. There's a lot of things that we'd like to have that we're just not gonna be able to afford. But I think the situation in our two public safety buildings, the DPW and the fire is getting bad. And so these are things that can't wait as well. They're just complex. So I have one additional concern and I expressed it before in a different context. And I'll just say it again, but very simply, that is the operating budget assumptions for future years do need a review. And I think that there's an intent to do that. But to remember that we have been assuming each year, essentially two and a half to 3% increase in operating budgets and have been building budgets based upon that, thinking that that can continue services. But with inflation, I think it's a questionable issue. Kathy mentioned that concerns about health insurance. There are other costs that we incur on a regular basis that are going up at a greater rate than that allowable amount. And the other factors that get thrown in there is that we funded new departments and certainly Crest and DEI were built into the FY23 budget. So if you assume a percentage increase on existing budgets and anything that was built into the budget, you've got covered, but we have four firefighter positions that were funded through ARPA. And the ARPA runs out in two years. So I really think we need to be thinking very carefully about what the operating budgets are going forward, how that interplays with what we're talking about today with capital budgets. And just to make council in the community cognizant of the fact that our resources are limited, not unlimited, which is I think where some people have begun to view them. And can I just add to that quickly too? And we'll talk about this more when we do the financial indicators report, but I think all of that also speaks to the need for economic growth in town. The town's been pretty good at that the last few years. I think Dave Zomek and Paul, you guys have done a great job at spurring that economic development, but we're gonna continue to need it to keep pace with, well, just to help fund the vision that a lot of people have for the community in the future, that new growth on top of our existing tax base is essential. So we'll reemphasize that in the fall when we do the financial indicators report, but it really is critical to accomplish the goals that we've set. I'll have a few hands up. Yeah, I just had a couple of things, thoughts, random thoughts to throw out. One is that the models are assuming a 30-year borrowing period. Can we borrow for 40 years or 45 years? Would that, obviously would reduce the annual hit to the town. And the second thought I had is, we've assumed a debt exclusion for the school building, but maybe we need to assume or maybe we need to look at a debt exclusion also to cover one of the other buildings, because it may be that with the pressures on the operating budget, we just can't get there without having a debt exclusion for some of the other, one or two of the other buildings. And I'm not suggesting we wanna do that. I'm just saying that we might wanna take a look at that and see what the impacts are. Yeah, I know, can I respond to that, Andy? Sure. We did set up, again, if you wanna, I'll send out the structure for people to submit different ideas, the model set up so we can debt exclude different number of buildings. We were, I think, considering two buildings under the prior assumptions before costs really accelerated, but it's still something that could be considered. And then to my knowledge, 30 years is sort of the maximum. There may be ways of legislation with certain approvals to go beyond that, but one of our other financial policies that we're gonna be testing, if not going past is that we try to maintain, have a certain percentage of our debt paid off within 10 years, and that speaks to just not having too much debt on the books, especially long-term debt. And so, the farther out we stretch the debt, again, it just kind of kicks some things down the road a little bit. So I totally understand trying to figure out different variables, ways we can make it all work. If anything, I've actually explored, can we go quicker, pay it off in 10 years, get a lower interest rate because it's short of the borrowing, you can usually get more competitive rates. And again, depending on how you space out the projects, maybe there's an opportunity there to do shorter borrowings and really hit the principal as fast as you can. So yeah, there's more to explore there. Linda, you're here. Yeah, I just wanna thank Sean and Sonia and Paul for this chilling presentation. It's a reality that it was high time for us to see and for those of us from the previous council to revisit and for the new counselors. And while several of the new counselors were not able to be with us today, it has been recorded. And when we come back to look at it again and say September, October, when we start getting more firm numbers for the schools, hopefully it'll be something that all of us can look at. It's the thing that I think is most important here is that it gives us the other part of the budget picture that has been alluded to, but not shown in the way that we have seen it today. We've been now through one budget setting period with the new council and all 13 of us, but it didn't include, it included some capital, but it didn't include this part of the picture. And so it's very critical that the time that was spent on this by Sean and Sonia and Paul is just critical that you've laid it out. Thank you. Paul. Yeah, just to frame it. So the timing of this is we will come back in September, October with the latest, we will have more clarity on the school project in particular, and then on all the projects actually. The council will have the fall to sort of grapple with this because in December is when the council will need to decide if it's going to go for a debt exclusion override. When the council makes that decision, it's gonna need all the information, all the financial information possible. And assuming that the timing right now is for a debt exclusion override to happen in March of 2023, the council will need to make that decision come December. You're gonna need the fall to sort of examine and sort of pour, you know, go through all these numbers and really understand them. So when you come to December to make your decision, because the people are gonna need to know that by the first of the year in order to make their sort of campaign and their decisions by March of, that's how we're sort of laying this out. So the next meeting when we are able to update this with little, with firmer numbers across the board, I think we'll be really important meeting for the entire council and finance committee. Thank you. Matt. Thank you, Andy. And yeah, I just want to echo that. I really appreciate Sean, Paul, Clarity and all the work that went into this. I, this is a question, it's probably, this question may not be helpful, but I'm just trying to get my head around the scenarios and I realize that these are just sort of places for us to start the conversation. But changing the start date on borrowing for the fire station and then from scenario one to scenario two, so that's kind of a huge variable change there, but then also changing the use of 13.4 in reserves all the way down to in scenario one and then all the way down to 5.7 in scenario two. Can you, you may have explained this and I just didn't quite follow you, but why is scenario two using such a low amount of the reserves? Yeah, so that was a good question. So the reserve number again is really the plug. So it's the number that could spit out after you plug in all the other assumptions. The spreadsheet just calculates how far you're above. And so the two, a couple of the big reasons why scenario two uses such lower reserve amounts. One, it increases the capital allocation to 10 and a half percent. So it's set aside more for capital. So that raises the funding level. It reduces how much is allocated towards other capital needs in town down to three million from three and a half in the prior scenario. That has a really large impact. If you think about 500,000 per year, every year that you were over, that's $500,000 less now. And then the interest rate assumption is lower in scenario two. It's using 4% instead of 5% for some of the projects in the out years. So those are the biggest factors why it looks better. But it's really a function of changing the 10%. Yeah, the reserve amount is a function of all the other assumptions that you make. It's basically what do you need then to make this work? Okay, yep. But I mean, just to follow that up just a little bit further, I mean, it would be interesting to look at scenario two with a more realistic timeline for the four projects with a higher reserve amount and see what the implications were. Yeah, I mean, scenario two, I mean, scenario two's timeline is not all that different from what we've been thinking for a timeline. I mean, the fire station may be out a year or two farther than what we thought before, but scenario two was sort of the timeline we were, we were trying to do the project as quickly as possible. Are you talking about pushing one out farther into the farther away or moving it closer? No, I think scenario two is a timeline that's being more palatable. Okay, got you. It's still a little further out than we'd like, but it's a lot better than 2032. Right, yep, I agree. Okay, anything else for questions for today? So I think that we've been given a lot to think about and so thank you. I wanna also join in Sean Paul and Sonia thanking you for the amount of work that went into making this presentation for the committee. I am not seeing right now that there's going to be a need to necessarily convene the committee for a meeting before September. We certainly have been meeting a lot through budget season and since the budget season, we will have a number of things that are coming up that are hard to predict in time. The minutes I do wanna get cleaned up and get them finalized and posted. So I'm gonna have to work with the committee to see if we end up needing a very brief, special meeting for that purpose, but get the minutes together in a fashion that they can be easily consumed and disposed of. So I don't know if what else to say, Athena. Thank you, Andy. I just wanted to suggest that because we have such a large amount of minutes and they're not ready today and the next meeting may not be until September, the committee could designate one member to approve the minutes on its behalf so that we can get these done in the interim and then going forward with the usual process. So just for the ones that are on the agenda today, we could do something like that. Okay, this has been done by other committees and boards. It is permissible. Committee can't designate one person to approve minutes. Lynn, I see your hand up and then Kathy. Lynn? Yeah, unless somebody really is a glutton for punishment, I would also suggest splitting them up among us and see if there's three or four or five of us that are willing to take a couple of different ones and set a deadline by which we do it. That wasn't the reason I had my hand up though. I wanted to bring up another discussion. Okay, I'll come back to you in just a second, keep your hand up. Kathy, were you gonna comment on that? I was gonna talk about minutes. For the first three years, we did designate a person and it was me and Andy decided to remove, to relieve me of doing the minutes and then we didn't do them at all. But I like your idea, Lynn, of each of us taking three meetings worth, two meetings worth and just, and when I say, when I was doing it, the minutes we've been getting are quite excellent and I kind of would check them against my notes and quickly look at the Zoom thing if I thought something didn't seem right or we'd have a longer discussion on it. So I usually had what I would say quite minor edits to get to final. So I'm willing to take a few. I am not volunteering to go back to what I just saw in the list. I am not, it was indeed time-consuming but we, I think we haven't done it since I stopped checking them. So. Right. It's a difficult topic for me to talk about. I think that the minutes are varied. Some are excellent and can be disposed of really quickly. Some are not, because I have looked at some of the minutes Sean. Just wanted to follow up. I promised Mandy Jo that I would tell her the reserve level before we ended. And so to start FY 22, we were at 25%. As I said in our reserve, that in terms of dollars is about 21.3 million. So back to minutes for a second. Why don't I just send an email out to the committee since this is, I think something unless Athena thinks otherwise that this point we could do for at least dividing the minutes up. I don't think that it requires it to be done during an open meeting. Lynn, you had another topic. Yeah, people are aware because we've sent forward an email that the regional schools are putting together a guardrail committee to look at the way that they, if you will, balanced the last year's budget, particularly as it relates to the assessment for each town and yet provided some level of security, if you will, for not going above a certain percentage. In this case, it was 4%. They are forming the committee that was discussed during those email out. I have gotten responses from both Paul and Sean about interest and also from four counselors. And we will be bringing that to the town council on the 15th of August. And I should say also one of the non voting member residents of the finance committee has also expressed interest. I do have concern in that some people think of this as being mostly important for the elementary, I mean, for the other small towns and the reality is it's not. It's incredibly important for us as well. And so it's something that we will be also returning to. The thing that made it less urgent than it first was is that two of the towns have not even responded to the superintendent's request because many of the smaller towns don't meet during the summer. And so it now looks as if those meetings at the earliest would take place very end of August, beginning of September. And so that's why we haven't moved forward on that. But since that's directly related to the finance committee I thought it was useful to at least bring it up at this meeting. Okay. Yeah. Are there any questions that people have comments on what Lynn has just reported I was seeing on. So I don't think that there's any purpose of going forward. I will work with Athena and see if we can come up with a plan and then notify all members of the finance committee so that people have an opportunity to volunteer to take some minutes and review them and the more we can divide them up then the less any one individual needs to do. And so I will follow up on that. I'll keep you informed if there's a need for a meeting earlier than September but at this point I'm not gonna try and schedule one because I'm trying to avoid that. So is there anything else that anybody from the committee or for that matter from the council would like to raise before we adjourn because otherwise I'm gonna turn it over to Lynn to adjourn the council and then I will adjourn the finance committee. Given that we are at the end of the meeting I'm adjourning the town council meeting at 8.40. Thank you. 4.40. 4.40. 4.40. Thank you. And I'm adjourning the finance committee at the same time and thank you again, Sean, all in Sonia.