TOWN OF REDDING
BOARD OF FINANCE SPECIAL MEETING-PUBLIC BUDGET HEARING
7:00PM ZOOM MEETING
Filed subject to approval.
Dr. Kimberly Yonkers, Chair; Ward Mazzucco, Vice Chair; Rob Dean; Jamie Barickman; Ed Miller; Jenifer Wyss
Steve Gniadek, Finance Director; Peg O’Donnell, Selectwoman; First Selectwoman Julia Pemberton; Michael Thompson, Selectman; Pat Moisio, Tax Collector; Wes Higgins, Treasurer; Chris Parkin, Redding BOE; Scott Reiss, Central Office Finance Director; Todd Johnston, Region 9 BOE; Members of the Public
- CALL TO ORDER
Chair Yonkers called the meeting to order at 7:09PM.
- BOND VS. BAN
Mr. Dean asked Mr. Gniadek about the difference between a bond and a BAN.
Mr. Gniadek said a BAN is a Bond Anticipation Note. It generally lasts for a one-year period and is considered short-term borrowing. Historically, the Town of Redding accumulates enough BAN’s to be rolled into one large bond which lasts 20 years.
Mr. Gniadek said for the two approved capital projects, Road Reconstruction and Communications Upgrade, the Town should borrow approximately $5,050,000.
Mr. Gniadek said the current BAN interest rate is around 2%. A 15-year bond would have an interest rate of 1.75%. He said it would be of financial interest to the Town to borrow at a lower interest rate.
Mr. Gniadek said it would take at least six weeks to go to bid for a bond or BAN. He said if the Town waits until after 7/1/2020, a principal payment would not have to be budgeted for the FY 2021 budget. Fees and interest for FY 2021 in relation to a bond/BAN are estimated at $105,000. This amount would be offset by a reduction in the debt service fund.
Mr. Barickman asked if there is a timing issue between the 15 and 20-year bonds. Mr. Gniadek said the Town will need to produce an official statement in order to get the best rates and most bidders. It will take approximately six weeks to generate. He said an issuance could happen in early July.
Ms. Wyss asked about the pros and cons of BANs vs Bonds. Mr. Gniadek said that historically the interest on BAN’s was less than 1%, compared to 3% interest for Bonds. He said this made them an attractive borrowing option. BAN’s have annual fees as opposed to Bonds, which have a one-time fee. BAN’s require a principal payment after three years.
Chair Yonkers asked Mr. Gniadek what the percent interest the Town has paid for past bonds/BANs. Mr. Gniadek said the last bond had an interest rate around 2%.
Chair Yonkers asked about the fees associated with a BAN/Bond. Mr. Gniadek said the fees are between $50-60k for a bond and about $20k for a BAN.
Mr. Gniadek said the Town can start the process of bonding by producing the OS and S&P and see how market conditions change over this period.
Mr. Dean asked Mr. Gniadek to define the terms “OS” and “S&P”. Mr. Gniadek said the OS is the Official Statement. It is a document that has about half of the content of the CAFR (Comprehensive Annual Financial Report) as well as ancillary schedules relevant to the particular Official Statement. This document is required to for the Town to bond to get the best rates and most bids. S&P stands for Standard and Poor’s, our bond rating agency. The Town of Redding has a AAA bond rating.
Mr. Barickman said the Communications Upgrade is an urgent need for the Town. He said it is risky for the Town to attempt to predict how the market will be in the future and recommended starting the Bond process.
Mr. Miller asked Mr. Gniadek what the difference in annual costs would be for a 15-year bond versus a 20-year bond. He suggested using $1m as the borrowing amount. Mr. Gniadek said for a $1M bond, a 15-year bond has an interest rate of 1.75% versus 2% for a 20-year bond. There is a difference of 25 basis points, thus, a difference of $2,500. Mr. Miller suggested using a longer-term borrowing arrangement to lower annual costs.
Chair Yonkers said the Communications Upgrade is a priority. She said the company doing the Communications Upgrade have offered the possibility of financing. This could be a favorable proposition for the Town.
Mr. Mazzucco asked Mr. Higgins his opinion. Mr. Higgins said the Town should do term financing due to record-low interest rates. He said the BAN market is slowly reopening and the interest rate is 1.5%. The low-interest rates that are available now make financing a viable option.
Mr. Mazzucco made a motion to borrow $5,050,000, pursue the preparation of an official statement, and decide at a future date whether the borrowing will be in the form of a BAN or Bond and if it will fall into June or July 2020. Mr. Miller seconded the motion. Discussion followed.
Mr. Miller asked the BOF if more money should be borrowed for other projects in anticipation of lower tax revenues for FY 2021. Mr. Gniadek said there are no other long-term capital projects that would qualify for bonding.
Chair Yonkers said the Town does not borrow money to fund operating expenses.
Mr. Dean suggested that the BOF should pursue long-term borrowing due to the possibility of changing interest rates. Mr. Gniadek said the Town should complete the Official Statement as soon as possible so there are plenty of options available to the Town.
Mr. Barickman asked Mr. Gniadek about the necessity of producing an Official Statement (OS). Mr. Gniadek said the OS helps to acquire as many bond offers as possible. Mr. Higgins said that current market conditions require an OS for BAN’s.
Mr. Barickman said continuing to maintain an option of a BAN when discussion is leaning towards long-term financing is confusing. He said the motion should be modified so that long-term financing is pursued.
Ms. Wyss asked about the Communications Upgrade amount.
Mr. Mazzucco made an amendment to the prior motion to change the borrowing amount from $5,050,000 to up to $5,050,000. Mr. Miller seconded the amendment. Discussion Followed.
Chair Yonkers said the BOS recommended the BOF use LoCIP (Local Capital Improvement) funds to pay for part of the Communications Upgrade project. She said there is $330k of LoCIP funds available.
Chair Yonkers asked Mr. Gniadek if the Town can be reimbursed for the Radios that have already been purchased for the Communications Upgrade Project. Mr. Gniadek said the Town could be reimbursed for this via LoCIP funds.
Ms. Wyss asked about the referendum question from last year’s budget referendum and if LoCIP funding could be applied to the Communications Upgrade project based on how it was written. Chair Yonkers said LoCIP funds cannot be used to reimburse a Town for a project that already had state funds applied to it.
Chair Yonkers said that State Aid may not be available in the coming year due to Covid-19 and the Town should use what it can while it’s available.
Mr. Mazzucco made a motion to borrow up to $5,050,000 by BAN (Bond Anticipation Note) or by bond to be determined in the future by the BOF, and to authorize the preparation of an OS (Official Statement) as soon as possible so the BOF has the flexibility to borrow in June or July 2020. Mr. Miller seconded the motion. The vote was unanimous, and the motion was carried.
Mr. Barickman made a motion, per the recommendation of the BOS, to authorize Mr. Gniadek to submit a request to use LoCIP (Local Capital Improvement Projects) funds for the communications equipment that has been purchased by the Town to date for the Communications Upgrade project, totaling approximately $300,000 of the $330,000 available. Mr. Mazzucco seconded the motion. Mr. Mazzucco suggested that the BOF ask Town Counsel for their legal opinion on the use of LoCIP funds for a Capital Project approved for funding via BAN or Bond.
Mr. Barickman made an amendment to his prior motion. The language is as follows:
Mr. Barickman made a motion, pending the approval of Town Counsel and per the recommendation of the BOS, to authorize Mr. Gniadek to submit a request to use LoCIP (Local Capital Improvement Projects) funds for the communications equipment that has been purchased by the Town to date for the Communications Upgrade project, totaling approximately $300,000 of the $330,000 available. Mr. Mazzucco seconded the motion. The vote was unanimous, and the motion carried.
- PUBLIC BUDGET COMMENTS FROM WEBSITE
Chair Yonkers summarized the comments that have been submitted via the website. She encouraged residents to visit the website to see the full comments.
Alex Zuluaga, 29 Sunnyview Drive, recommended increasing the number of paraprofessionals in the schools to assist teachers in the catch-up process due to Covid-19.
Christopher Tse, 111 Gallows Hill Road, said he approves of this year’s budget.
Howard Schloss, 57 Drummer Lane, said the FY 2021 budget should remain the same as FY 2020.
Lenore Pranzo, 781 North Park Avenue, said the budgets presented should be supported.
Martine King, 440 Rockhouse Road, said supports the proposed school budgets.
Peter Bonfanti, 44 Umpawaug Road, said the Town’s financial planning needs to focus on worst-case scenarios.
Steve Gagnon, 83 Cross Highway, said the budget should be reduced.
Trisha Sorrells Doyle, 12 Church Hill Lane, said the Town needs to fully fund technological preparedness as well as reading, math, and gifted & talented programs.
Seana Bedard, 16 Winding Brook lane, said the school budgets need to be maintained.
Amy Bloom, 203 Redding Road, said the school’s budget should be supported.
Vanessa Visners, 50 Pine Mountain Road, said the BOE budget should be fully funded.
Carolyn Baker, 15 Indian Hill Road, said the BOE budget should be supported.
Sarah O’Dell, 214 Black Rock Turnpike, said the BOS and BOE budgets should be supported.
Faith Hsu, 89 Seventy Acre Road, said the school budgets should be supported.
Jonathan Hopkins, 16 Little Boston Lane, said he supports the budgets as presented.
Brenda Phelps and Robert Mars, 2 Indian Hill Road, said they support the BOE budget.
Lisa and Robert Cederbaum, 23 Pine Mountain Road, said the proposed school budget should be supported.
Joel and Kathleen Kaplan, 41 Deacon Abbott Road, said the school budget should be supported.
Danielle Frenzel said her family requests a possible playground for the children of Redding.
Josephine Jabbari, 37 Wood Road, asked the BOF to support and possibly increase the school budgets.
Angela Caes, Deer Hill Road, asked the BOF to support the BOE budget.
- BUDGET PRESENTATIONS (PUBLIC COMMENT AFTER EACH)
Chair Yonkers opened the floor to the various boards for budget presentations.
First Selectwoman (FS) Pemberton addressed the BOF and presented the BOS budget.
Revenues FY 2021
The Town’s Grand List has increased by 0.32%
There is no guaranteed state aid.
Revenue from Town Services is down 7%.
Interest income down significantly.
Committed Fund Balance allocation ends at $208,000.
Debt Service Fund can be used to offset Bond Fees and Interest
Contracts for the Police Department and Highway Department expire on 6/30/2020
3% Salary increase for Town employees
CMERS Employee Contribution + 0.5 percentage Point
CMERS Pension increase % for Town + 2 percentage points
Add Part time facilities director
Major increases over $10k vs. Current Year Budget
Part-Time Facilities Director
Part Time Building Inspector
Mark Twain Library
Extended Day Part Time
Major Reductions over $10k vs. Current Year Budget
Police New Equipment
Gas and Diesel
The proposed BOS Budget is an increase 1.61% compared to FY 2020 Budget.
The BOS, BOE, and Region 9 budgets combined are an increase of 0.51% compared to FY 2020 Budget.
Mr. Barickman asked about major increases and salaries. Mr. Gniadek said most salaries increases were under $10k per line item expense except for Highway and Police.
Mr. Barickman asked FS Pemberton about reevaluating the budget and social services needs. FS Pemberton said 30% of Redding residents are living paycheck to paycheck. Chair Yonkers said the salary increase and food aid should be discussed.
Chair Yonkers opened the floor to public comment.
James Lang asked FS Pemberton about benchmarks for employee performance and salary increases. FS Pemberton said the Town does use benchmarking by skillset.
Dan Souza suggested the BOF to revisit the Bond motion so the town could add spending to it. He also suggested that the town cuts the budget 10% across the board and that we move to a quarterly tax billing.
Clay Cowan said it is an extraordinary time and the town should anticipate major shortfalls.
Susan Winters asked for the link to the public comments mentioned earlier in the meeting.
Brenda Phelps said the unemployment numbers include freelancers and self-employed people, who were never included before.
Chris Parkin addressed the BOF and presented the Redding BOE budget.
Special Education and Health Insurance are increasing.
Mr. Miller asked Mr. Parkin if cuts were suggested by the BOF could mean layoffs. Mr. Parkin said it depends where the cuts are made, but any significant savings would result in staff layoffs.
Mr. Mazzucco said there’s been discussion about a facilities manager. Mr. Parkin said there are collective bargaining issues concerning the Facilities Manager position, but it could be a possibility in the future. Mr. Mazzucco asked if this could happen this budget cycle. Mr. Parkin said he is cautiously optimistic this could happen.
Chair Yonkers opened the floor to public comment.
James Lang thanked Mr. Parkin for his presentation.
Brenda Phelps thanked Mr. Parkin. She submitted a letter of support for the BOE.
Angela Caes thanked Mr. Parkin. She asked Mr. Parkin about IEP costs in relation to covid-19. Mr. Parkin said there may be state and federal programs to get reimbursed but there isn’t a contingency fund to account for extra costs.
Carolyn Baker asked about technology resources and how this will impact the budget. Mr. Parkin said the Redding School District is not a 1-to-1 community and providing access to students is the primary focus of the schools currently.
Amy Arnold said cuts across all budgets would be a good idea in previous years, but this year is unique and any more cuts to the BOE will hurt student progress due to cuts in prior years.
Todd Johnston addressed the BOF and presented the Region 9 BOE budget.
For FY 2021, there is an increase to the budget of 0.90%. Redding decreases its share by 3.29% for FY 2021.
Mr. Barickman asked Mr. Johnston about Region 9’s budget process. Mr. Johnston said that Region 9 needs to follow the executive order when it comes to the budget process.
Jim Castingate, Blueberry Hill Road, asked about the executive order and how Region 9 is interpreting it. Mr. Johnston said Region 9 approved their budget prior to the executive order, and if they follow the executive order, the BOF needs to approve the budget and change the calendar to provide public notice.
- OTHER BUSINESS
Mr. Gniadek said there is an auditor RFP. A representative from the Redding BOF, Easton BOF, and Region 9 BOF need to be assembled for the Auditing RFP committee. Ms. Wyss volunteered for the Auditing committee.
Chair Yonkers suggested that the BOF discusses process and budgets at the next meeting, Wednesday, 4/22/2020 at 7:00PM.
Chair Yonkers asked FS Pemberton about a revised budget schedule. FS Pemberton said the executive order pushed the budget process back 30 days.
Mr. Dean said the BOF needs to produce a draft, adopt the draft, and then enact it.
Chair Yonkers said next week the BOF could discuss and adopt a draft. Public comment will be collected.
- PUBLIC COMMENT
Chair Yonkers opened the floor to public comment.
Chair Yonkers read a letter by Kim Thompson. She advocated for reducing the budget.
Mr. Mazzucco made a motion to adjourn. Ms. Wyss seconded the motion. The vote was unanimous and the motion carried.
The meeting was adjourned at 10:35PM.
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