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News/Events - Meeting Minutes
Advisory Committee, June 10, 2004
MINUTES OF MEETING
JUNE 10, 2004
Members Present: Wendy Ballinger (Chair), David Friedman (Vice-Chair), Joe Armstrong, Al Bangert, Kathy Donahue, Dave Friedman, David Grace, Marla Minier, Scott Roberts, Anthony Vegnani
Scott Roberts moved to accept the agenda. Al Bangert seconded the motion and the Advisory Committee unanimously agreed to accept the agenda.
Wendy Ballinger made an opening statement regarding procedure and stressed the need to limit comments so that all Committee Members and other interested parties could have an opportunity to comment. Ms. Ballinger thanked Joe Norton, Sue Phippen and Jim Casey for meeting with herself and Al Bangert and herself to discuss refinements to the proposal. As a result of this cooperative discussion, the proponents jointly decided to modify their proposal so that only Waterways Commission Enterprise funds would be used to pay for the proposed $4.2 million-purchase price through a general obligation bond issue.
Ric Agnew noted that the Selectmen had not yet voted on the proposed financing change but that he understood they would vote on the change soon. Ms. Ballinger responded that the Committee would therefore vote twice, once on the original proposal and again on the modified proposal (funding only from Waterways Commission Enterprise Fund).
Al Bangert provided an overview of the additional analysis performed by the “Trust for Public Land” (The Trust) in cooperation with a number of Town officials over the last week. Mr. Bangert then highlighted the proposed revised borrowing and repayment terms. The revised plan assumes a 4% interest rate on a 20-year bond, with no lowering of current boat slip or boat storage rental rates. In addition, the amended proposal includes revised capital improvement and expense estimates and shows the effect during the repayment term upon the general cash balance projections of the Enterprise Fund.
Frank Regan provided a further description of the current Enterprise Fund balance and the effect of the acquisition upon general Waterways Enterprise Fund operating budgets during the proposed bond term. Mr. Regan highlighted the effect of the proposed purchase if the same prices stayed in place after acquisition, including the allocation of staff hours to the new operation. Ric Agnew also provided detail regarding the proposed capital improvements and operational details for the new operation.
Marla Minier called attention to the capital improvements projections and asked for detail. Frank Regan noted that proposed improvements included the installation of new slips, portable bathroom facilities and their maintenance and other items, which were weighted towards the years one through five of the revised worksheet.
Marla Minier asked about the effects of high tide on the boatyard (especially the parking lot) and if any capital improvements were earmarked to solve that problem.
Frank Regan responded that EPA compliance regarding pollution controls were slotted for year 2006. Ric Agnew added comment that the parking situation was not addressed fully at this time within the projections since asphalt could not work there; and that gravel would likely be installed along with other water management improvements.
Anthony Vegnani asked if slip rental rates would go up in the future.
Frank Regan noted that rates would be going up as needed for both local and out-of-town rental rates as needed to meet operating and debt service needs. Ric Agnew stressed that the Enterprise Fund would not lower rental rates and would likely adjust them as needed to insure the Fund could meet its future obligations.
Anthony Vegnani inquires as to the current number of slips operated by the Waterways Commission. Frank responded that there were now 175 slips. Anthony noted that the Fund was likely to throw off significant cash flow, as it has over the years, after the bonds are paid off. Ric noted that the proposed additional slips would throw off much of the income and that such income could only be realized if the Town bought the boatyard.
Al Bangert further noted that the projections are more favorable to the Waterways Commission because there is no need to project profit and no required rate of return on invested capital as would be the case if a private concern ran the boatyard.
Wendy Ballinger noted that there would be no foregone tax dollars once the property leaves the private domain since the total levy requirements would be spread over other property owners in town.
David Friedman emphasized that the other taxpayers would absorb the tax burden. Kathy Donahue noted that if the property goes into the private domain increased valuation in the future would produce enhanced tax revenue streams that will be lost if the property becomes tax-exempt upon acquisition by the Enterprise Fund.
David Friedman inquired as to the status of the boat storage contract being assumed by the Fund as part of the purchase.
Frank Regan stated that the boat storage rates stay flat through year five as per terms of the existing contract but would be raised thereafter in accordance with lease terms.
David Friedman asked how the proposed additional staff allocation would be utilized at the boatyard.
Frank Regan responded that some of the staff hours allocated would be utilized for general maintenance visits and occasionally for general assistance to recreational boaters in tying up to slips.
Kathy Donahue asked about the worksheet projections showing a decrease in staff costs
Mr. Agnew noted that some security and maintenance staff were “floaters” who performed a variety of duties.
Kathy Donahue asked where the dredging cost was for the proposed boatyard acquisition.
Frank Regan and Ric Agnew stated that dredging was not necessarily required to expand the number of slips but that the engineering studies could show such need in the future. If it were needed, dredging of the boatyard would be included within the general dredging budget for the Harbor.
Kathy asked if all soft costs were included within the projected costs on the worksheet. Frank Regan stated he had confidence in the projections for costs.
Kathy Donahue asked for confirmation that slips rental rates could go up in the future. Ric Agnew stated that they could and that the previous concern about restrictions against making a profit were only raised at the June 2, 2004 meeting due to the possibility of general Town ownership of the marina which had been discussed. There would no longer be a concern about raising rates on either local or out of town slips as long as the Enterprise Fund was the owner of the marina.
Joe Armstrong asked why the projected non-debt expenses dropped from $133,000 to $80,000. Frank Regan responded that the revised estimates were more realistic and informed by new information presented since last week.
Wendy Ballinger asked that we consider three primary concerns in our questions; whether to buy the property, at what price it should be purchased and the timing of the proposed purchase in regard to Town Meeting consideration.
Valerie Talmadge noted that it was important to the Trust that public use and recreation be included through some kind of deed restriction or covenant so that the transaction was not just providing an income opportunity from the Marina and Boat Storage operations.
Wendy Ballinger responded that everyone involved seemed to agree that the purchase terms should stay consistent with that goal.
Anthony Vegnani asked why we would want to own the boatyard rather than keep it under private ownership and therefore within the tax levy.
Ric Agnew responded that the property would be free from risk of further development of residential or other use that may be considered to be negative to the Town, and that public access and recreation would be assured for future generations. In addition, Ric noted that it was not unusual for a Town to buy a parcel even if overvalued in order to protect against future development.
Valerie Talmadge stated that it might be possible to build something else there in the future, despite current use restrictions.
Neil Duggan stated that the current owner’s previous plan included a fifty foot high building that would be 150 foot long and that under existing rules, they would be allowed to expand the current building, even if not to the extent requested by the owner.
Kathy Donahue asked if that request had been turned down. Neil Duggan stated that the proposal was not rejected. Rather, it was withdrawn prior to formal consideration.
Jim Casey added that other coastal communities in Massachusetts, such as Cohasset, had far more developed recreational opportunities involving use of public access waterways and that such programs would work well in Scituate and be consistent with our local Heritage as a seaside community. He further added that the Town might regret it many years from now if the proposal was rejected.
Marla Minier asked if the Web Boatyard would work for the proposed boating education program considering the restrictions of the inner harbor.
Frank Regan responded that the site could be used for this purpose.
Kathy Donahue stated that she was an experienced boater and that the Webb Yard would be perhaps the most difficult place to learn for novice boaters based upon personal experience sailing within the inner harbor. Wendy Ballinger added that she had been in touch with the Recreation Department and that they believed the site was appropriate for their boating program and were pleased that it might be relocated there.
David Friedman noted that Frank Regan had done a great job running the business operations of the Waterways Commission but as a general principal, stated his general objection to the Town buying a business. Furthermore, general recreational use would be difficult at the property due to site limitations.
Scott Roberts asked what legal restrictions would be needed to insure future public access and if conservation restrictions would accomplish this goal as opposed to deed restrictions.
Valerie Talmadge stated her preference for actual deed restrictions in order to protect some of the proposal’s key public space development goals including the waterfront park.
Wendy Ballinger noted that future applications could be made by the Enterprise Fund to the CPA for development of the park and other recreational uses.
Scott Roberts asked where people would park their cars for any visit to a waterfront park.
Ms. Talmadge responded that initial assessments showed there would be sufficient space for parking of cars for both marina use and recreational use.
Scott Roberts asked how the property could not work for the current owner at a price of $1.65 million and somehow work for the Town at a price of $4.2 million.
Ric Agnew noted that improvements had been made to the property, including new floats, but had no figure.
Scott Roberts asked how the valuation could assume use of 66 slips when he has not permit to do so at this time.
Valerie Talmadge noted that Chapter 91 applications would likely result in approval unless the Town thought there was insufficient space for an expansion in the number of slips and that this special appraisal assumption was reasonable.
Joe Armstrong stated his preference that the Town not buy the boatyard but instead negotiate with the current owner for the purchase of easement rights to build a waterfront recreational path, a limited public parking area. In this way, the property would stay on the tax rolls, provide the waterfront access we desire, but at a far lower cost. Such negotiations would also include tradeoffs with the current owner including a voluntary deed restriction limiting development rights to a smaller building in return for award of a limited non-residential sewer tie-in.
Wendy Ballinger stated that all Advisory Committee members had expressed serious concerns about apparent flaws in the appraisal and that the Committee should keep comments on this issue as brief as possible.
David Grace stated that the appraisal used Frank Regan’s revenue estimates for 66 slips and that application of the appraiser’s reversion rate and discount rate for the current number of slips results in a lower value of no more than $3 million.
Marla Minier stated her concern that no sales comps were included within the appraisal.
Wendy Ballinger noted that she reviewed the professional associate protocols for marina appraisals and confirmed that the income approach was the recommended one for similar properties rather than the sales comparison approach due to the great variety in operating variables experienced between different marina operations.
Joe Armstrong asked if this research gave insights into the lack of expense comps. Wendy Ballinger responded that this issue had not been researched given the limited time.
Kathy Donahue summarized her own discussion with a banker with experience with area marina financing who reviewed the appraisal on the Webb yard. The banker confirmed that such appraisals were normally based upon direct capitalization approach based upon today’s income, not upon future income post improvements. The banker stated further that the marina was more likely worth closer to $2-3 million. In addition, Ms. Donahue noted that the current tenant has the right of first offer on the property.
Wendy Ballinger clarified her understanding that the current tenant has the option to match the offer made by private parties only and that Foster Rigging did not have a right of first refusal in regard to public offers to purchase by the Town.
Joe Armstrong asked what Net Operating Income was used to multiply by the indicated cap rate to determine the $4.2 million value.
David Grace responded that his analysis indicated use of the fifth year projected income.
Joe Armstrong responded that to use fifth year projected income to determine value was outside the normal parameters of general appraisal practices.
Al Bangert asserted that the appraisal was irrelevant to the transaction since the price was based upon negotiations without regard to appraised value.
Scott Roberts inquired if the appraisal had been originally required due to the originally proposed use of CPA funds.
Valerie Talmadge stated that the appraisal was contracted in response to a request by the Selectmen. The appraiser was chosen by the Trust for Public Land.
Al Bangert asked Valerie Talmadge if proceeding now rather than waiting for a Fall Town Meeting would be more beneficial since the price had already been negotiated.
Valerie Talmadge stated her support for a decision at the June Special Town Meeting.
Joe Armstrong supported buying at least public rights to the land but noted that the short timing gave no opportunity for public discussion or renegotiation of possible other deal structures.
Scott Roberts stated his support for delaying consideration until at least a Fall Special Town Meeting to give the voters additional time to evaluate the proposed purchases, especially since the originally structured deal (with CPA funds) had undergone dramatic change. Mr. Roberts further clarified that most of the prior discussions had been held in executive session and were not open to the public and that a June 21 decision would be unfair.
Kathy Donahue agreed with Mr. Roberts further stating that submission of information prior to an Annual Town Meeting required 90 days notification and that most citizens had not had a chance to absorb the proposal in its current form. In addition, Ms. Donahue recommended further refinements and reference to the Town’s Master Plan for a decision at the Fall Special Town Meeting.
David Friedman stated that the additional analysis was helpful but that given the size of the public bond being considered that additional time was needed.
Anthony Vegnani agreed that the additional analysis was helpful but that the general public did not yet have sufficient details to enable informed voting at a June meeting. Furthermore, Mr. Vegnani expressed his concern that given the short notification to the public, it was possible that only 100 or fewer voters could make such an important decision.
Marla Minier expressed her opposition to the timing of the decision given the importance of this issue at hand and that the vote should be made at the annual Town Meeting.
David Grace expressed his concern that we had only two weeks to consider the issue and that the citizens required additional time to consider their decision. In addition, Mr. Grace noted that the Sales Agreement was good until November 1, 2004, a date after the normally scheduled Fall Special Town Meeting.
Valerie Talmadge noted that the Trust may have additional deposit requirements prior to a Fall Special Town Meeting and that the risk going forward with such mixed signals could require the withdrawal of the Trust from further participation.
David Grace noted that this was the first time the deposit issue had come up to date and that we needed the answer to this question to properly ascertain risk of delay.
Wendy Ballinger noted that we have not yet seen the Sales Agreement, the details of proposed recreational use and that on the merits she would support the proposal if the decision were delayed to the Fall Special Town Meeting, while she could not support it now.
Valerie Talmadge contacted her attorney and said that a Fall Special Town Meeting seemed possible within the existing contract terms but would need further checking.
Wendy Ballinger opened up the hearing to the public.
Margie Sullivan stated that if the deal passed, attention must be paid to the recreational use of the property for the general public. In addition she supported the idea that income from this property and from the Enterprise Funds a whole should be utilized in a way that would benefit the whole town.
Peter Levitt provided history of former harbor operations and made the point that past acquisitions of waterfront property have also been controversial given the price at the time and that when the Town has the opportunity to buy waterfront property it should take advantage of it. Mr. Levitt agreed however, that additional time would be appropriate for the citizens to consider the question.
Jane Thompson agreed that the purchase could be a good idea in general but noted that she did not believe the current owner had put over a million dollars into the property. Furthermore, she noted that the property was usually under water and that the old red barn building should be torn down if we purchased the property.
Wendy Ballinger called for the first of two votes. The first vote was for or against the Article as written assuming the use of 1.2 million in CPA funds for the purchase. Al Bangert made a motion to support Article 1 as written. Marla Minier seconded the motion.
The vote was unanimous in opposition to Article 1 if CPA funds were included in the financing plan.
Wendy Ballinger called for the second vote on the proposal as written, but with no use of CPA funds, all the funds for the purchase to be provided by a general obligation bond issued for the Waterways Enterprise Fund. Al Bangert moved the motion as written assuming all funds to be provided by the Waterways Enterprise Funds. Mr. Roberts seconded the motion.
Mr. Roberts asked for a clarification about timing, noting that he might be willing to support the motion if considered at a later time, but not at the June 21st Special Town Meeting. Ms. Ballinger noted that this vote would be for the June 21st meeting, but that another vote could be taken with regard to future consideration of the purchase.
Vote: 6 opposed and 3 in favor. The Advisory Committee opposes Article 1 in this formulation.
Mr. Agnew then recommended that a non-binding vote be taken to give the Selectmen a sense of the Committee.
Joe Armstrong suggested that the Committee vote to indicate support or non-support for the article for a Town Meeting prior to November 1st.
Mr. Agnew asked if the Committee would consider a vote to recommend indefinite postponement rather than opposition to the Article. There was consensus that this would be acceptable.
Mr. Armstrong moved reconsideration of the previous vote, having voted in the majority to oppose the article. Mr. Roberts, also from the majority, seconded reconsideration. It was voted 8 to 1 to reconsider the previous vote.
Ms. Minier moved the Advisory Committee recommend indefinite postponement of Article 1, with an additional recommendation that the article be brought back to a Town Meeting to be scheduled between September 1 and November 1, 2004 and that the future article include financing the purchase solely from Waterways Enterprise funds. Mr. Roberts seconded the motion.
Vote: 8-1 in support.
Article Four: A proposal sponsored by the Selectmen to make certain adjustments to Article 6 of the 2004 Annual Town Meeting by deleting the figure $363,791 and substituting the figure of $523,777, and to deleting the figure 225,316 and substituting $245,849, and by deleting the figure $138,475 and substituting the figure $281,365.
Ric Agnew explained these adjustments were to the budget of the Waterways Enterprise Fund assuming the purchase of the marina at Edward Foster Road to pay for increased operating expenses.
Scott Roberts moved to recommend indefinite postponement of Article Four. Joe Armstrong seconded the motion.
Vote: The vote was unanimous to support indefinite postponement.
Article Three: A proposal to make certain FY 2005 adjustments to Article 8 of the 2004 Town Meeting by deleting the figure $1,302,005 and substituting $1, 121,005 and adding the words, “and transfer $181,000 from Wastewater Retained Earnings” or take any action relative thereto.
Ric Agnew explained the need for these adjustments.
Al Bangert moved to vote the question. David Friedman seconded the motion.
The vote was unanimous in support.
Article Five: A proposal sponsored by the Committee of Selectmen to transfer $75,000 from the Free Cash account to make alterations to the Headquarters Fire Station or take any other action relative thereto.
Ric Agnew described the need to make the alterations to existing restroom facilities to provide for gender-neutral locker rooms/bathrooms.
Scott Roberts made a motion to support Article Five. Al Bangert seconded the motion.
The vote was unanimous.
Article Six: A combined proposal to approve items A-G for the Community Preservation Fund as detailed in the warrant for the June 21 Special Town Meeting.
Item A: Administrative Expenses of $14,700
Motion by Al Bangert to support the item. Seconded by Kathy Donahue.
Vote: The vote was unanimous in support of this item.
Item B: To establish a Community Housing Reserve in the amount of $29,400
Motion by David Grace to support the question. Seconded by Anthony Vegnani
Vote: The vote was unanimous in support of this item
Item C: To amend Article 16, item C of the 2004 Annual Town Meeting Warrant
Motion by David Grace to support the item. Seconded by Anthony Vegnani
Vote: The vote was unanimous in support
Item D: To amend Article 16, item E of the 2004 Annual Town Meeting Warrant
Motion by David Grace to support this item. Seconded by Anthony Vegnani
Vote: The vote was unanimous in support of this item.
Item E: To establish a Historic Resources Reserve of $6,500
Motion by David Grace to support this item. Seconded by Anthony Vegnani
Vote: The vote was unanimous in support.
Item F: To appropriate $439,415 towards the purchase land on Edward Foster Rd.
Motion by Al Bangert to support this item. Seconded by Anthony Vegnani
Vote: The vote was unanimous in opposition to this item.
Item G: To reserve $233,585 from FY 2005 Community Preservation Fund revenues.
Motion by David Friedman to support this item with the addition of $439,415 from
Vote: The vote was unanimous in support of this item with the addition of funds from Item F.
Wendy Ballinger assigned write-ups for the June 21 articles.
Al Bangert moved to adjourn the meeting. Joe Armstrong seconded the motion. The meeting was adjourned at 9:40.
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