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The Sudbury Finance Committee met on Monday, November 17 and discussed a number of articles for the Special Town Meeting scheduled for December 1.
The Special Town Meeting was called primarily for two school roof replacement projects at General John Nixon Elementary School and Josiah Haynes Elementary School. The Finance Committee asked Sudbury Town Manager, Andy Sheehan, and Assistant Town Manager/Finance Director Victor Garofalo a variety of questions about the project.
Member Ryan Lynch pressure tested the funding strategy for the projects. The Town is pursuing a debt exclusion, which allows them to raise debt over and above the limits of Proposition 2 and 1/2.
Lynch introduced his questions as an attempt to play devil’s advocate, though they were thoughtful and well-informed questions, all leading to productive conversation.
The crux of the discussion came down to the choice between funding the roofs with debt or paying for some portion of the projects with free cash. Town leadership explained that the primary reason for borrowing is because the useful life of the asset is over 20 years, so borrowing allows the Town to spread the cost over the residents who will benefit from the projects over the years.
Town Manager Andy Sheehan noted that using free cash would deplete reserves that the Town has deliberately built up with an eye on the massive list of capital projects on the freshly-minted 15-year capital plan.
Assistant Town Manager/Finance Director, Victor Garofalo, explained that it would be better to use free cash on capital like trucks and short-term assets. But he also acknowledged that the rates for borrowing and investment income were changing. It’s possible that borrowing rates could improve in the months ahead, and Lynch made a strong point that utilizing some amount of free cash could function as somewhat of a “hedge” against the current borrowing conditions.
Garofalo responded by pointing out that the Town will have an opportunity at the May Annual Town Meeting to adjust the funding source if conditions were to change dramatically. He also assuaged any concerns about the mechanisms for reimbursement from the Massachusetts School Building Authority, and explained that while the article calls for the full funding amount for both roofs, the language makes it clear that the Town can only borrow for the net amount owed after reimbursement as the project progresses.
Finance Committee co-chair Mike Joachim emphasized that the point about spreading the cost of the roofs out over the 20+ years of residents who will benefit from them was most persuasive.
At the end of the conversation, the committee voted unanimously to recommend approval of the two school roof articles at Special Town Meeting.