RECEIVED MARCH 11, 2009 @ 10:23 A.M.
Michele R. Grande, Redding Town Clerk
4 pages
SPECIAL TOWN MEETING
March 10, 2009
MINUTES
Filed subject to approval
Present: Approximately 70 people.
The meeting was conducted in the Redding Community Center
First Selectman Ketcham called the Special Town Meeting to order at 8:10 pm
The first order of business was the election of a moderator.
Motion to nominate Ward Mazzucco as moderator, seconded and unanimously approved.
Mr. Mazzucco asked Town Clerk Michele Grande to read the Warning of the Special Town Meeting.
Mrs. Grande read the Warning. (See attached copy).
Motion to accept the Warning as read was seconded and approved.
Mr. Mazzucco indicated that he had received a certification of publication signed by the First Selectman in accordance with Section 7-4 of the Connecticut General Statutes.
Mr. Mazzucco stated there were three separate matters before the meeting and there would be a brief presentation on each.
William Alvarez, Chairman of the Board of Finance addressed the meeting regarding town finances. He stated that the meeting was called to approve short-term financing pending long-term financing. He went on to explain the current debt structure of the town. There are currently three outstanding bonds, totaling $11,600,000 on an original principal of $22,400,000.
1. 1991 bond, a 20-year bond, with a remaining balance of $435,000 on an original principal balance of $4,300,000. Principal payments are $225,000/year and the interest for 2009 is $44,000 (6.26% rate). This bond will be totally paid during the fiscal year ending June 30, 2011.
2. 1999 bond, a 20-year bond, with a remaining balance of $7,200,000 on an original principal balance of $13,100,000. The yearly principal payments are $660,000/year and will be reduced to $650,000 during the last 10 years of payments. The interest for 2009 is approximately $396,000, at a rate of 5.25%. The bond will be fully paid during fiscal year ending June 30, 2020.
3. 2005 bond, a 15-year bond with a remaining balance of $4,000,000 on an original principal balance of $5,000,000. The yearly principal payments are $335,000 and interest for 2009 is approximately $156,000 at a rate of 3.8%. This bond will be fully paid during the fiscal year ending June 39, 2021.
In summary, the outstanding bonds total $11,600,000; our yearly principal payments are $1,200,000 which will decrease to $985,000 in 2012. Interest for 2009 is approximately $595,000 and decreases by at least 10% per year over the next five years.
In addition, there is a $4,800,000 BAN. A BAN is a bond anticipation note. BANS are used to finance capital expenditures on a short basis prior to obtaining long term financing. Obtaining a BAN is a relatively quick, inexpensive process as long as the BAN is around $1,000,000. BANS can be held up to 10 years, and must begin paying a portion of the principal after three years. Our current BAN interest rate is .61%, an annual interest expense of approximately $29,000. The BAN is rolled over every nine months and the interest rate is renegotiated at current market rates. The current BAN is for disbursements used to purchase the Levine & Hanssen properties. The Town of Redding has applied for state grants and is waiting for state reimbursements. The reimbursements will be
used to reduce the BAN. In addition, a portion of the Levine property is expected to be sold, and a portion of the sales proceeds will be used to reduce the BAN. The range of funds estimated to be received could reach approximately $2,000,000, and possibly $1,000,000 would be used to reduce the BAN. The exact amount would depend on exact dollars received according to various formulas. The Town needs to wait for state reimbursements before converting the current BAN to long-term bond. Assuming tonight’s request is approved, and reduces the BAN by estimated anticipated reimbursements previously described; the current BAN would be in the range of $5,000,000 to $6,000,000. If the BAN is converted to a 15-year bond, the yearly principal payments would be approximately $350,000 or $125,000 more per year than our current principal payments on the 1991 bond which will be fully retired in 2011. We expect to replace that bond with the current outstanding
BAN.
To provide an estimate of our debt service costs in tax dollars today, and based upon the current mill rate, Mr. Alvarez provided the following example. A property assessed at $100,000 would pay $2,100 in taxes, of which $61 represents debt service and $30 represents interest on the debt. If we convert our current BAN into a bond, in conjunction with retirement of the 1991 bond, assuming the passage of tonight’s request, and receive the anticipated reimbursements, the debt service will increase by $125,000/year which translates to $6.00 of tax based on the previous example of a property assessed at $100,000.
Mr. Alvarez concluded that proper use of debt funds to fund long-term capital expenditures will smooth out the tax dollar payment of these long-term capital items over their useful lives.
Item #1
Mr. Mazzucco asked for a motion on item #1.
Motion to approve the funding of $89,000 for water treatment systems at John Read Middle School and Redding Elementary School was made and seconded.
Mr. Mazzucco introduced Peggy Sullivan, Director of Finance, for the Boards of Education, to explain the request.
Mrs. Sullivan explained the request was for a domestic water booster system at both the middle and elementary schools. The current systems in the schools are similar to home systems, running on well water with water storage tanks. The systems in each school are 20-25 years old. The tanks are beginning to decay, repairs are increasing, and occurrences of contamination of water are increasing. The request is for replacement of the tanks and a booster system.
James Miller, Middlebrook Pond Road: clarified that the atmospheric tanks would be replaced with pressurized tanks.
Lewis Goldberg, Dayton Road: question about the life span of the new systems. Response was not clear.
Ray Gilman, Deacon Abbott Road: questioned whether the children had to drink bottled water at the school on occasion. Mrs. Sullivan responded that on occasion, when the water gets contaminated, the system must be chlorinated. All the drinking water is shut down and bottled water is brought in.
Steve Martin, 22 Mountainview Drive: questioned why the $89,000 was not funded out of the operating budget. Mr. Alvarez explained the purpose of bonding in this instance.
Mr. Mazzucco called for a vote on Question #1
Vote to approve funding $89,000 for water systems at JRMS & RES. Approved, Unanimous.
Item #2
The motion to approve replacement of three highway trucks was made and seconded.
First Selectman Ketcham explained that the purchase of three trucks had been deferred for the last three years. The trucks in service are 13, 14 and 16 years old respectively. These trucks are used for snow/ice control during the winter months and for material transportation during the rest of the year. The trucks are subjected to heavy loads and extended idle time which increases wear and tear on the engine. They are also subject to premature body rot due to the de-icing material they carry. It is not cost effective to spend $60,000 to replace truck bodies on trucks that are 13 to 16 years old. In addition, replacement parts are either not being manufactured or are difficult to find. The new trucks are more efficient, have stainless steel beds, the engines burn cleaner and more
efficiently and new computer controls for de-icing controls will save money by controlling of the spreading of the material. Purchased off the State bid list, these trucks with all the plowing equipment each costs $165,091. If the purchase is approved, the town will sell two trucks, one to pay for the bonding cost and the other to put into the repair account, allowing for a corresponding reduction in next year’s operating budget. The third truck will be kept for “parts”.
James Miller, Middlebrook Pond Road: clarifications that the three trucks are trucks equipped with snow/sanding equipment, not just snow trucks. They will be used for hauling material in addition to be used for snow/ice.
Brad Muscott, Portland Hill Road: questioned whether the old plows be used on the new trucks. Response from Bruce Sanford, Highway Superintendent - it is a package deal, the new trucks include the plow equipment.
Nina Steitzel, Gallows Hill Road: given the bad condition of the trucks, how can they be sold? Response from Mr. Sanford was that there are towns in upstate Vermont that are looking for trucks that can be used for their parts. The value of the trucks is $5,000 and $10,000.
Steve Martin, Mountainview Road: question regarding the total number of trucks currently in the Highway Department. Mr. Sanford responded that there are eight trucks. Mr. Martin suggested the possibility of the Town having to replace the other trucks in the next 2-3 years, why is money being borrowed for this, why not include it in the operating budget. Mr. Alvarez responded, explaining the financing and the benefits thereof. It was also noted that the truck purchase has been deleted from the operating budget three years in a row.
Mr. Mazzucco called for a vote on Question #2.
Vote to approve Question #2, to finance the purchase of three trucks. A voice vote was taken. Mr. Mazzucco, hearing some no votes, asked for a vote by standing, raising the green vote cards. The majority of those present voted for the motion and Mr. Mazzucco declared the motion approved by a wide majority.
Item #3
Motion: to approve $1,004, 725 for road reconstruction work.
First Selectman Ketcham explained the request for road reconstruction. Mrs. Ketcham reported that in January, the Board of Selectmen did not intend to come forward with a major road reconstruction project. They hoped to propose the minimum expenditure on roads, to get by until the economy improved. However, with the growing road damage, as a result of the severe winter weather, the Board of Selectmen recognized that they had a responsibility to bring the issue to the voters. The current situation regarding roads is not unique to Redding; most towns in the area are experiencing the same conditions. She quoted from an article in the Danbury New Times which explained the condition of the roads in area due to freezing and re-freezing on a near daily basis. This condition causes cracks and potholes.
Those towns with large operating budgets for repair, such as Easton with $1,000,000, are better situated to deal with the problems. Redding has $200,000 in the road maintenance account in the proposed operating budget. The roads that had drainage work on them last year survived the winter well. Because the roads are a long term asset, the Board of Finance has recommended borrowing to fund the necessary repairs. The Highway Superintendent currently has 18 roads on his “watch” list. Residents have requested that additional roads be added to the list. The money requested will be used for those roads most in need of reconstruction when the full extent of the winter damage is known. This falls under the category of “emergency response to unforeseen conditions.”
Mr. Mazzucco called for public comment, but there none.
Vote on Question #3, to approve $1,004,725 was approved by the majority of those present, and Mr. Mazzucco declared the motion approved by a very wide margin.
ADJOURNMENT
The moderator adjourned the meeting at 8:45 pm.
Respectfully submitted,
Mary Maday, Recording Secretary
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