10 Year Property Tax Projections

Below is Article #1 for the Special Town Meeting warrant that will be discussed and voted on Tuesday, May 25 at Longmeadow HS. The Longmeadow Finance Committee (LFC) will provide a recommendation to the Town Meeting floor regarding the impact of the pending High School Building project on future property taxes.

ARTICLE 1
To see if the Town will vote to appropriate, borrow or transfer from available funds, a sum of money to be expended under the direction of the School Building Committee for Longmeadow High School, located at 95 Grassy Gutter Road, between Bliss Road and Williams Street in Longmeadow, Massachusetts, which school facility shall have an anticipated useful life as an educational facility for the instruction of school children of at least 50 years, and for which the Town may be eligible for a school construction grant from the Massachusetts School Building Authority (“MSBA”). The MSBA’s grant program is a non-entitlement, discretionary program based on need, as determined by the MSBA, and any project costs the Town incurs in excess of any grant approved by and received from the MSBA shall be the sole responsibility of the Town. Any grant that the Town of Longmeadow may receive from the MSBA for the Project shall not exceed the lesser of (1) fifty one point eight four percent (51.84%) of eligible, approved project costs, as determined by the MSBA, or (2) the total maximum grant amount determined by the MSBA.

In order to better understand the impact of the new high school project on property taxes I attended the LFC meeting on May 18 during which the LFC recommendation was discussed. (Interestingly enough, I was the only town resident other than members of the LFC in attendance at this meeting.)

The LFC reviewed a forecast prepared by Paul Pasterczyk, Longmeadow Finance Director showing the impact of the High School Building Project on Longmeadow property taxes for the next ten years (--> 2020). As part of this analysis, the impact of a series of 3- $1 million overrides (pretty conservative at an average of $3ooK/year) + construction of a new $9 million DPW facility in 2017 (much lower capital investment than the $150 million estimate for water/sewer and major building projects provided by the A Better Longmeadow/ Vote NO group) were included.

Three scenarios as described below were discussed:

Scenario #1
High School Project not approved + $1 million operational overrides in FY2012, FY2015 and FY2018.

Scenario #2
High School Project approved + $1 million operational overrides in FY2012, FY2015 and FY2018.

Scenario #3
High School Project approved + $1 million operational overrides in FY2012, FY2015 and FY2018 + construction of $9 million DPW facility in 2017.

Below are the results….

[click to enlarge chart]

One more case: do nothing.... a 2.5% annual increase (compounded) for 10 years results in a 28% increase in property taxes.

I was surprised by the relatively small difference in financial results for the three different 10 year projections. However, the analysis did show an increase in property taxes ranging from 39 - 48% for the average homeowner over the next ten years.

Obviously, there are many additional factors (state aid, health care costs, employee salaries, etc.) that could affect future property taxes, operational overrides and reductions in town services. This latest analysis is relatively conservative with only one additional $9 million capital project and 3- $1 million operational overrides over 10 years.

This type of financial analysis can be extremely useful in making long term financial decisions. I hope that the LFC continues to probe our financial future… it would be a welcome change from the year to year planning that Longmeadow always seems to be using.

Based upon what I heard at Tuesday’s meeting, the LFC will “recommend” that approval of the new high school project is “feasible”. They will likely share some of the 10 year property tax projections that I have included with this posting.

We need to do something with Longmeadow High School…. The key question is how much can we afford!

Some additional info

For those readers of this blog who are unfamiliar with the new high school project, here are a few illustrations to help clarify what Mark Gold is talking about in his school project position...

Below is a schematic drawing of the first floor current building configuration showing the various additions including the 1971 wing (pool + library + BTC/open space).

[click graphic to enlarge]

During the review of the current LHS facility, there were positive comments made about the condition of the 1971 wing which were presented at numerous SBC public forums.

1. The 1971 wing is structurally in better shape and has a higher potential for minor renovations.
2. The roof is in satisfactory condition.
3. Pool systems are in good condition.

The first floor of the proposed new high school building structure is shown below including the location of the 1971 wing...

[click to enlarge]

Below is a detailed look at the renovated 1971 wing....

[click to enlarge]

Here is a graphic showing the entire site plan for the new HS project.

[click to enlarge]

Tough Times Ahead for Longmeadow- Part IV

I have now been writing about Longmeadow’s budget problems for about one year (see A Financial Tsunami Is Heading Toward Us (1/16/09). The situation really hasn’t changed since the last time I wrote on this subject… see Tough Times Ahead for Longmeadow- Part III (12/06/10).

Previous posts include:
Tough Times Ahead…Part I
Tough Times Ahead….. Part II

Here is an overview of the current fiscal crisis facing Longmeadow…

• The town is facing a $2.1 million budget deficit for the upcoming FY11 without considering the financial impact of ongoing collective bargaining with the teachers, firefighters, police and other town employee unions.


• A 1% COLA adjustment for the current FY10 and FY11 years would add an additional $900,000 in additional operational costs (FY10 = $300,000 and FY11 = $600,000). Such a contract settlement would balloon the FY11 deficit to $3 million.


• There is $0 in our free cash account.


• There is $1.9 million in the Operational Stabilization Fund (OSF).The SB has recently adopted a policy that stated they will not authorize the use of OSF monies which depletes the fund below $1.0 million unless there is a plan to replenish the fund to that level.

A large majority of the town + school budget costs are employee salaries + benefits so a reduction of $2,100,000 in expenditures likely means significant layoffs and/ or furloughs. Paul Pasterczyk, Longmeadow’s Finance Director stated at a recent SB meeting (12/07/09) that any employee layoffs would also require the town to pay unemployment compensation/ severance benefits that could total as much as $450-600,000.

Achieving a budget reduction of $2,100,000 (~4% of total budget) will not be very easy without seriously affecting the quality of life in Longmeadow. One of the options being seriously considered by some SB members though not voiced during public meetings is the closing of Storrs Library. Closing of the Storrs Library would save an estimated $675,000 but it would be a severe impact to our community given the large number of people who use this important resource on a regular basis.


Other options that may be considered by the SB to reduce costs include:
- regionalization of town services including library, DPW, fire, water
- continued consolidation of town departments
- institution of a fee based curbside trash collection

The Town of Longmeadow is also engaged with the Massachusetts School Building Authority (MSBA) on a path to the building of a new high school at an estimated price tag of ~ $80.5 million. Approval by the MSBA will likely come sometime in late March after which the town has 120 days to approve the project. Longmeadow’s share after reimbursement by the state has been estimated to be ~ $44 million. The high school project must be approved at a town meeting and town election (Proposition 2½ debt exclusion override). If the Prop. 2½ debt exclusion override is approved, cost to the average property owner has been estimated to be $1/$1000 of assessed property value or $300/year for a $300,000 home. This is an extremely important project to the town but it would appear to be in serious jeopardy given the current budget crisis and national/ local economies (see my earlier LongmeadowBuzz post- Now Is the Right Time!)

The Town Manager is scheduled to present the proposed FY11 budget (including the School Dept) to the SB on February 26. It will be very interesting to see how the TM manages to balance the budget. From recent SB discussions, it would appear that town employee COLAs will not be included and any potential financial impact will be ignored. At their December 7 meeting the SB asked the School Committee to deliver 70% of the required cuts (~$1.5 million) in their proposed FY11 budget and the Town Depts to provide 30% of the required cuts (or $630,000). They also asked for priorization of the proposed cuts.

Here is what I see taking place later this year….

1. Presentation of a balanced budget (without contract settlements?) at the Annual Town Meeting (ATM) on May 11 with budget cuts significantly affecting both school and town services. It is possible that there also may be a vote on a Proposition 2½ operational budget override to balance the budget.
   
2. At the ATM there will be a warrant article for a Proposition 2½ debt exclusion override for $44 million to build a new high school.
   
3. Town elections will be held on June 8 to decide the two separate Proposition 2½ override questions. It should be noted that the last Proposition 2½ (operational) override for $2.1 million in November 2007 passed by only 6 votes. The outcome of these votes will influence the quality of life and services in our town for many years.

One thing that concerns me greatly is the lack of interest and/or understanding by many town residents about this current crisis. As I survey residents around town and ask them what they think, many of them are not very familiar with the school building process or the severity of the need to reduce the town budget. It will be too late if town residents wait until the annual town meeting to provide their inputs to town leaders…. the decisions will already have been made.

Now is the time to become involved and provide inputs to our town leaders about how to manage the budget!

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Now is the right time!

At the September 16 town forum seven different options ranging from "do nothing" to building a completely new school on a different site were presented by the project architect for review and comments by town residents. The Longmeadow School Building Committee met again on September 30 during which cost estimates for three of the seven alternatives were presented. After public comments and committee discussion, the SBC voted 14 to 1 to choose option 2B at an initial estimated cost of $80.5 million and a first year estimated property increase of ~ $1/$1000 (mil rate) of assessed value or ~$372 for an average home assessed at $370,000.

[click image to enlarge]

One town resident voiced his concern at the recent public forum that “now is not the right time” because of uncertainties in the economy including job losses, state level cut backs in funding, etc. Recent news shows that the state of Massachusetts continues to be plaqued by large drops in revenue which may result in future cutbacks of local aid to cities and towns.

The proposed high school building project should be examined in a different light rather than as a simple property tax increase.

A vast majority of our recent local property tax increases have been caused by increased operating costs rather than capital building costs. The estimated increase in taxes of $372/ year for a typical $370,000 home for the new high school building project should be looked at as a mortgage payment for the typical homeowner since the new high school becomes a valued assess of the town and its residents.

Using an interest rate of 4.5% and 25 years as the duration, a simple mortgage calculation reveals a principal amount of $5400. Given that Longmeadow’s reputation for excellence in education is one of the primary factors for our higher home prices vs. surrounding towns, a new high school would certainly add at least $5400 to the sales price of the median home. In these terms, building a new high school is equivalent to a minor bathroom home remodeling project and the investment should certainly be worthwhile since it will add to the long term value of the typical home.

The next steps for this project include a presentation to the Massachusetts School Building Authority (MSBA) in mid November. If Longmeadow’s high school project is approved by the MSBA, there will be months of intensive efforts to finalize the project’s details and costs before final presentation and approval by the MSBA next spring. Longmeadow will then have 120 days to approve the project (Proposition 2½ debt exclusion override) which will include a required 2/3 vote at the Annual Town Meeting in April and a majority YES vote at Annual Town Elections in June.

If the town of Longmeadow votes no on this project, we will return to the end of very long line with another 160 Massachusetts school projects awaiting consideration. The cost of continuing to "fix" our high school will continue to escalate with corresponding increased operating costs and property tax increases (and/ or reduction in town/ school services).

There is a need to do something about our deteriorating high school. Please support this important project.

NOW IS THE RIGHT TIME!

For additional information (including web videos of the recent public forums) and to stay informed on this important project. visit the SBC’s website.

Decision Making Time

The Longmeadow School Building Committee will be meeting on Wednesday, September 30 (6 PM, LHS cafeteria) to decide which school building option to move forward for approval by the Massachusetts School Building Authority (MSBA). This is an important decision because it sets the path forward ending with a town meeting vote in April 2010 and a town election vote in June 2010.

At the last public forum on September 16 seven different options ranging from renovation to all new construction were presented to a group of ~ 150 town residents.

[click graphic to enlarge]

The presentation revealed that there has been a great amount of effort thoughtfully expended with a number of interesting options identified. The one that seemed to be the frontrunner in the discussion was called Option 2B. This option involved renovation of the 1971 section of the building (to preserve the pool and building wing in best condition), demolition of the remaining sections and the building a new addition of 190,000 sq ft for classroom and primary core spaces (see figure below).

[click graphic to enlarge]

Other than qualitative commentary, one important piece of information was missing from all of the options presented was cost. From what was presented, it appears likely that option 2B may be the most expensive choice since it will involve construction of 190,000 sq ft of new facility that is not considered “model school”. Options 3A and 3B will likely not be far behind. If the new Wilbraham-Hampden Regional HS cost is any indication, we should expect a pricetag of option 2B to be in the neighborhood of $70-80 million. It would have been of considerable value to have an estimated cost for each of the 6 options presented at this public forum. For a copy of the full presentation or to view the forum video, visit the SBC website.

At the SBC meeting on September 30 cost information for the six options will become available and used to make the final choice. According to Bob Barkett, co-chair this information will be presented at the beginning of the meeting.

Longmeadow is getting a chance to do something about its deteriorating high school facility and have the state of Massachusetts provide a large amount of the required funding. The SBC needs to make the choice that has the best probability of being accepted by the residents of Longmeadow. Because the state has ~ 160 other school building projects in the pipeline, it will be a long time before we will get another chance.

I wish the SBC much wisdom and good judgement with the decision that they make on Wednesday night.

Longmeadow School Building Project Continues to Move Forward...

The Longmeadow School Building Committee (SBC) has been working hard developing a plan to renovate or build a new high school. A number of factors, taken together, will determine whether the SBC selects an addition/ renovation or a completely new school as the long term building solution.

The current project timetable shows a presentation to the Massachusetts School Building Authority (MSBA) (November 2009), final MSBA project approval (March 2010), a debt exclusion vote at the annual town meeting (April 2010) and if successful, a followup vote at town elections (June 2010). Longmeadow will get only one chance through this process so it's important to get it right the first time.

A first public forum to discuss the status of this work was held on August 18. A web video of this event and the accompanying slide presentations are available on the SBC website.

Most recently, the SBC posted a series of FAQs on its website that should be of interest to most town residents.

The SBC is charged with developing two options for the MSBA and then the MSBA makes the final decision. On November 18 there is a scheduled meeting between the SBC and the MSBA to review Longmeadow's proposals.

**It is important to understand that the town will not be able to vote on new vs. renovation nor will the town be able to vote on multiple options. There is only one vote- by the SBC.

On Wednesday, September 16 at Glenbrook Middle School at 7 PM there will be a second (and last) public review session conducted by the SBC for feedback and discussion. The architects will be presenting several building options for the long term building solution for LHS.

The purpose of the public forums is to present the options to town residents and solicit feedback. Community input is essential in order for the SBC to make informed decisions. The forums are designed for residents to come and speak up and ask questions. The School Building Committee will be voting on the final recommendation on September 30.

This school building project is one of the most important issues facing our the town in recent years. Take the time to come to this last public forum on September 16.... listen, ask questions and provide feedback to the SBC.

Visit the School Building Committee's website often to keep abreast of new developments.

Feedback can be sent to the SBC via email to: longmeadowsbc@yahoo.com

or simply shared by commenting to this post.