Bourne's Public Works Debt Exclusion - Questions & Answers

By: Diana T. Barth
Published: 10/25/12

Voters at Monday’s Special Town Meeting will be asked to approve a debt exclusion for the construction of a new Department of Public Works garage. The debt exclusion must also pass muster at the polls on the November 6 presidential ballot.

What follows are a few of the questions most frequently posed over the past weeks and a compendium of the answers to those questions offered by DPW Building Committee members and other officials.

What is a debt exclusion, and what does it mean to me?
Towns cannot, under the state law, raise property taxes above a certain percentage without voter permission. If a town wants more property tax revenue coming in for use in the general budget, it asks for an override. This increase remains as part of the tax levy indefinitely. If it wants to borrow money for a project, and pass the cost onto property tax payers for the life of a loan, officials ask for a debt exclusion. Once the loan is paid off, the debt exclusion comes off of the levy.

What is coming before voters this fall is a request for a debt exclusion to assist the town in repaying a loan of $6.33 million over 20 years.

Finance Director Linda A. Marzelli says that means an increase of 12 cents on the property tax bill of the owner of a home assessed at $300,000, or $37.16 (at current tax rate) for the first year of loan repayment.

What happens to that loan repayment amount over time?
As the principal of the loan shrinks, the amount of interest owed by the town lowers, thus making payments lower until the loan is paid and retired. Bourne Tax Assessor Donna L. Barakauskas said that, unless one buys a new home with a higher assessed value, fluctuations in the assessment of a home currently assessed at $300,000 should have only little bearing on loan repayment, and thus on the amount a property owner pays for the debt exclusion, alone.

As property assessments go up, the tax rate goes down, and vice versa, keeping taxes relatively stable, she said. All changes that add more to the tax levy than state law allows under Proposition 2 1/2 must be authorized by voters.

While no one can guarantee that the town’s current estimate of the financial impact on the owner of that $300,000 property will not change slightly by the time any town borrowing is bonded, Ms. Barakauskas said she thinks this is a good time to borrow, since interest rates are low and the town’s bond rating is very favorable.

Why is the new facility needed?
The highway department does far more than clear, repair, and maintain the town’s roads. Its employees serve as the parks department, vehicle maintenance department, beach overseers, snow-plowers, trash and recyclable collectors, and more. They also tackle tasks such as putting up Christmas lights, making signs, and helping other departments with their projects. They save the town an immense amount of money, officials have said.

Currently, the department is working in a facility that is more than 40 years old. Equipment and vehicles have to be stored outside, and temporary trailers have become permanent as the operation has expanded over time.

What does it mean for the ISWM operation?
Not only do town officials want better working quarters for the DPW, they understand that the facility needs to be moved off the landfill property.

The Department of Solid Waste Management has said it needs the space on which the public works operation now sits in order to move into a new phase at the site. That move, supported 100 percent by both the DPW and Integrated Solid Waste Management department, will allow the landfill to use the space on which the public works garage now sits.

First and foremost, landfill General Manager Daniel T. Barrett said, if the DPW does not move, the town stands to lose an estimated $23 million in gross revenues over the life of the landfill, since it would be unable to use all of the space contemplated for the new phase: Phase 6.

The move, however, will have no impact on how the landfill manages or maintains its equipment. That equipment is maintained by landfill employees. It will also not change the residential drop-off area, which is funded and managed by the 26-member ISWM staff.

Mr. Barrett said he and DPW Director Rickie J. Tellier have discussed the impact of the move on a number of aspects, including traffic. He said, for example, that if and when the new public works garage is built, trash trucks collecting the town’s waste and recyclables will need to cross over the Bourne Bridge the same number of times as they do now. Mr. Barrett said they both think the impact of the move on traffic will be negligible.

He also said that landfill employees have a great many projects, but can, for the sake of the town, support the construction of a new public works garage by scheduling landfill projects around the time needed to work on the DPW site, saving the town $1 million in site preparation costs.

How does the proposed cost for Bourne stack up against other recently built DPW facilities?
Representatives of Weston & Sampson, the engineering firm that has been assisting the DPW Building Committee with initial plans and cost estimates for the proposed new garage, said the $224 per square foot estimated cost of the new garage building stacks up well against facilities built recently by other municipalities. Weston & Sampson has been involved with the construction of more than 80 such public works garages. One of that firm’s engineers told selectmen that Bourne’s DPW does far more than similar departments in other towns.

The proposed building is not “a Cadillac,” DPW Building Committee member said, but a bare bones structure fitted out to provide the bays, shops, storage, office, wash bay, salt shed and other areas needed by the department in the foreseeable future. Its 37,000-square-foot vehicle-storage area would only be heated to about 45 or 50 degrees in winter, but would be adequate to greatly extend the life of the town’s vehicles and equipment, capital assets worth some $10 million dollars.

Why is a debt exclusion needed?
The estimated $11, 080,798 needed to build the new facility, complete with a fueling area and salt shed, can be offset by taking $500,000 from the town’s free cash reserves, another $500,000 from specially earmarked capital reserves and $750,000 from stabilization funds. Further, ISWM can afford to contribute $1 million from its reserves and repay another $1 million in borrowing. The town can also save an estimated million dollars by preparing the town-owned site in Bournedale in-house.

That leaves the town needing to borrow about $6,330,798. Town officials said they learned from the way in which the Bourne Middle School was financed that trying to repay such a loan from the general budget rather than a debt exclusion hampered rather than helped the town’s financial position.

Selectmen, the Bourne Finance Committee, and the Capital Outlay Committee have all voted unanimously to support the debt exclusion.