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Date: 4/4/2023
AMHERST — Continuing on from the previous meeting, Amherst’s Town Council and Finance Committee once again met on March 27 to discuss the proposed debt exclusion order for a new elementary school at the current site of the Fort River Elementary School.
Background
The proposal for the new elementary school building would mean replacing the Fort River and Wildwood Elementary schools, combining the student population to one location. The building is anticipated to be a net-zero carbon emissions building by running on all electric power while also providing financially and environmentally friendly heating, cooling and ventilation systems. Along with the environmentally friendly accommodations, the building will also include windows and doors designed to allow more daylight into the building.
After the debt exclusion was approved for a special town election on May 2, the Town Council has been working with the Finance Committee to determine the wording for the order for the debt exclusion. One area of debate that came up during the council’s March 20 meeting was how much money to use from the town’s reserves: $5 million or $10 million. At that meeting it was noted that the council is expecting a rebate of $5 million on the building due to green energy incentives for the potential new building. Another concern raised was the impact on the tax rate and affordability of Amherst.
The March 27 meeting
To start the meeting, Finance Director Sean Mangano presented the changes to the project from the March 20 meeting along with responses to some of the questions posed by the council at that meeting, specifically with potentially using $5 million or $10 million from the town’s reserves.
One question from the previous meeting was potentially using $5 million or $10 million from the town’s reserves to supplement the town’s payment for the school. However, Mangano said that the Massachusetts School Building Authority had posted the 2023 reimbursement rate, which would provide the town less money from the MSBA grant. The town initially expected to be reimbursed over $43 million through the grant but that number has dropped to $40,464,504. With the change in reimbursement rate, the town is now expected to be on the hook for $58,757,793 of the $99,222,297 project.
“The way the MSBA reimbursement rate works is you have a base rate and then they give you incentive points for certain elements about your community — your income, your poverty, property values,” Mangano said. “The one that changed for us is we were getting points under the old reimbursement rate for poverty, which they look at the number of free and reduced lunch students that you have, and they compare that to the state average.”
Because the schools were now under the state average in terms of free and reduced lunches for students, Mangano said the town lost out on some of the reimbursement rate. He also noted that the town was right around the state average and not “way below it.”
“It turns out that was due to some special legislation that allowed the MSBA previously to go back and look at a bigger span of time and choose your highest free and reduced lunch rate at that time. That legislation has since expired,” he added. “It seems like a flaw in the system, but it’s written in the statute, so it’s pretty straightforward with how they calculate it.”
Mangano said the town has reached out to local legislators to attempt to reinstate the special legislation.
Accounting for the change in rate, single family homeowners would see their property taxes increase by $496.12 per year with no money from reserves, $451.42 with $5 million from reserves and $406.73 with $10 million from reserves. With no reserves applied, Mangano noted that renters would see an increase in $87.20 per year, based on town calculations.
Another wrinkle in the presentation was the four projects the town is planning for the future —including a new DPW facility, the Jones Library project, a new fire station and the new school. By using money out of reserves, one potential issue would be pushing back work on the fire station, which the town is planning to pay for once the reserves reach $20 million.
On one of the slides in the presentation, Mangano noted that without using reserves the reserve fund would hit $20 million by fiscal year 2028 or 2029, using $5 million the reserve fund would hit $20 million by FY30 or FY31 and by using $10 million the reserve fund would hit its goal in FY33. However, if the town is able to get an expected reimbursement of $5 million to cover pulling that out of reserves, the latest the town would hit $20 million in reserves would be FY31. Mangano also noted that these numbers could change based on what the projects could cost in the future due to uncertainty around inflation and other factors in those years.
Mangano said that if the debt exclusion were not passed, all four projects could be in jeopardy.
“If you take out the debt exclusion, it sort of brings us back to revaluating all the projects and it’s possible we could lose the state aid, we could lose the fundraising and it could leave us with about $70 million or so,” he said. “The bottom line is we would not be able to address all the needs of all the buildings without state aid and without some of these sources of financing.”
With the tax increase from the debt exclusion that was pointed out at the previous meeting, Mangano noted some of the ways the town was trying to work to make it a more affordable place to live, including work to increase the general and affordable housing stock in town.
One issue Mangano pointed out is that the town has a large amount of tax-exempt land that affects the affordability of housing in town.
”On our tax exempt land, unlike many others, we have 15 to 20,000 residents that live on that land. Many other places have large portions of tax-exempt land, but not that level of residents living on it,” he said. “We’ve started a process to work with our legislators to advocate for changes to this and acknowledge that Amherst has a unique circumstance and to look at the formula and highlight the ways it’s disadvantaged Amherst over the years.”
Councilor Pat De Angelis said she was concerned about delays to the fire station and DPW projects, which are currently 90 and 105 years old, respectively.
“I’m going to go back to the DPW workers and fire workers, these are people that do all the dirty work in town, and we’re going to nickel and dime them to save 10 and 20 cents per $1,000,” she said.
When discussing the impacts of affordable housing and keeping Amherst residents in town, Town Manager Paul Bockelman said many nonprofit organizations focus on providing affordable housing to everyone in the area, not just those in Amherst.
“We always are having this push-pull with the nonprofit developers who have a mission of providing affordable housing in the Pioneer Valley, we always argue we are putting town funds into these projects they should prioritize Amherst. They feel their position is to ensure everybody has an equal opportunity to relocate to Amherst,” he said.
Councilor Mandi Jo Hanneke questioned the importance of the appropriations from reserves if renters would only be saving between $12 and $28 per year.
“If we’re really concerned about affordability in Amherst for those with the lowest income, is the use of $5 or $10 million of reserves the best use of that money given the actual savings those with the lowest incomes might actually see and given the concerns and potential costs of reducing reserves by that amount,” she said. “I’m personally not sure it is, but I am keeping an open mind.”
Councilor Jennifer Taub said it was important to consider everyone that would be affected by the use of funds from reserves, not just renters.
“For people whose houses are in the $478 range, the money that would save on this would also be important, so it’s important for people across town,” she said.
Councilor Ellisha Walker also said it was important to distinguish between renters and the town’s low-income residents.
“We should move away from the assumption that renters are the lowest of the income and also that renters live in apartment complexes because people rent things other than apartments. I don’t think the statement that the people with the lowest income will have the lowest impact is necessarily true because the impact of the increase is not based off your income, it’s based off the house that you live in,” she said.
Walker added that it was difficult to use the data for renters because “that is 100% the discretion of the landlord. We cannot control how much a landlord decides to increase their rent based off their tax increase.”
During the discussion Mangano noted that even if the debt exclusion is approved, the town has the flexibility to choose what to pay the debt with if different funding sources come together.
“We don’t have anything permanent that we’re confident in right now, we don’t want to say at this point we have anything definite. It gives you permission to exclude a debt, it does not require you to exclude all of it every single year,” he said.
The order was ultimately pushed to the Finance Committee’s March 28 meeting after the council voted to recommend that the committee consider using the $10 million from reserves as an option for the project.
The Amherst Town Council hosted a public hearing about the proposed debt exclusion order on April 3 and coverage of that hearing will appear in the April 13 edition of The Reminder.