Voters Approve Budget To Preserve Town's Bond Rating

by Tim Wood

CHATHAM --- Despite grumblings about a nearly 12 percent increase in the tax rate, annual town meeting voters Monday approved operating and capital budgets that officials said would help preserve the town's AAA bond rating.

But voters weren't exactly in a spending mood, turning down $9.5 million for a new fire station (see separate story), reducing funding for a new fire department ladder/pumper truck, and appropriating only half of the money requested to buy the former Meservey's Restaurant property in South Chatham. Two of three zoning bylaw amendments were also turned down.

For two high-profile non-profit groups, the news was good, however. Community preservation funding for historic renovations to the exterior of the Chatham Orpheum Theater building was approved, as was CPA money to renovate the St. Martin's Masonic Lodge building, despite a plea to turn down the measure because the Masons do not admit women.

Five hundred and sixty-five voters completed the 38-article warrant in about five-and-a-half hours Monday night.

A battle over the $25,877,235 operating budget was set up from the start with a divided board of selectmen supporting the spending plan but the finance committee opposing it. Fincom Chairman Kenneth Sommer said a majority of the committee members felt the tax rating increase could be minimized by further operating efficiencies and alternative funding sources.

Town Manager Jill Goldsmith said the goal of the budget was to preserve the town's bond rating, the highest given to municipalities, which has been in place since 2009. Most of the expected tax rate increase for the coming fiscal year is due to increased debt service to pay for the sewer expansion and police department/annex buildings. That accounts for 47 cents on the tax rate, while the operating budget increase of less than 2 percent increases the tax rate 14 cents.

However, both are offset by the $1.8 million savings in school costs due to the first year of the Monomoy Regional School District. That puts the actual tax rate increase at 29 cents, or about 11 percent.

To safeguard the town's bond rating, officials recommended shifting funding for the $1 million capital budget from free cash to the tax rate, which would add another 18 cents. That's necessary, Goldsmith said, to build up the town's undesignated fund reserves, which is strongly encouraged by bond rating agencies. The town has seen its reserves dwindle from more than $2 million in 2009 to $893,000 today, she said. Officials will be meeting with representatives from Standard and Poor's later this month in anticipation of a June sale of $43.9 million in bonds. If the town's bond rating is lowered, that will mean higher interest costs.

Even with the increases, Chatham will continue to have the lowest tax rate on the Cape and the third lowest in the state, said Chairman of Selectmen Florence Seldin. The average Chatham tax bill is the sixth lowest on the Cape, despite the town's high property values, she added.

Fincom member Richard Stenberg said he supported the budget and feared losing the high bond rating. Even a quarter percent increase in interest would cost the town millions. “That for me is enough of a risk to support the 2013 budget,” he said.

Steve West pointed out the town's tax rate would be 38 percent higher than in 2008, an increase of $600 a year for someone with a home valued at $1 million. “We need to stop spending more than we taken in,” he said.

Selectman Sean Summers said he opposed the budget out of concern for the growing cost of town government. He called the projected tax rate increase “astonishing” and said the town spends “significantly” more per capita than surrounding communities. If the trend continues, “I guarantee there's going to be a time when this community becomes affordable only to the wealthiest among us,” he said.

Steve Goldman said officials need to implement a three- to five-year budget plan so increases can be forecast better. “I don't know how I can be asked to vote for a budget for one year without knowing the consequences for future years,” he said. Seldin noted that developing a long-range budget is one the goals this year for the selectmen and Goldsmith.

The operating budget passed 412 to 103.

After approving the first Monomoy Regional School budget at $8.1 million, voters endorsed funding the capital plan through the tax rate, a one-time departure from the policy of funding capital purchases with free cash, Goldsmith said.

Selectmen proposed the same funding plan for a new fire department ladder/pumper truck known as a quint. The $850,000 one-time purchase would have added 14 cents to the tax rate. Fire Chief Michael Ambriscoe said the vehicle was recommended in a fire department study last year to replace a 26-year-old pumper which is “beyond its useful life.” The quint would not only replace the pumper but also serve as a much-needed ladder truck for the department, he said, giving firefighters a safe way to access structures under certain conditions.

The finance committee suggested leasing the quint instead of purchasing it outright, which Sommer said would spread the cost over five years and lower the immediate tax rate impact. Voters agreed, appropriating $200,000 for the first year of the lease.

Goldsmith said Tuesday leasing the quint will add 3.5 cents to the tax rate, putting the projected tax rate increase for fiscal 2013 at about 50 cents. The tax rate will be approximately $4.94 per thousand, she said.

The proposal to buy the 1.36 acre former Meservey Restaurant property at 2175 Main St. for $346,500 failed to garner the necessary two-thirds votes needed for the land bank to borrow half of the money. However, use of community preservation money to fund the other half of the purchase was approved, a vote that required only a majority. Where that leaves the acquisition was uncertain at press time.

The land bank and open space committee began looking into buying the property, which was the subject of a bank foreclosure, last year, said member Jack Farrell. Its undevelopment – removal of the existing 1960s-era restaurant building and parking lot – was seen as a way to create a forested corridor along that section of Route 28 in South Chatham, he said, in accordance with the town's comprehensive plan, which calls for rolling back commercial development along the highway to neighborhood centers. The Chatham Conservation Foundation purchased the land for $315,000 in October to prevent it from being sold on the open market until town funds could be appropriated for the acquisition.

Both the selectmen and fincom opposed the purchase. Summers said he objected to the loss of a much-needed restaurant, as well as the process. Stenberg said the fincom had the same concerns, especially over the expectation by the Foundation that the town would buy the property. Some also objected to a driveway cutting through the property to serve two residents on lots behind the land, but Farrell said the land would be contoured so that the driveway would not be visible.

John Sweeney warned against jeopardizing the good relationship the town has enjoyed with the Foundation, which holds conservation restrictions on a number of properties purchased with land bank funds. Foundation board member David Doherty also reminded voters that the group had purchased and held the Valley Farm property off Barn Hill Road several years ago following a foreclosure until the town could appropriate the funds to acquire the open space. He called preservation of the Meservey property a “no-brainer.”

While the vote for land bank funds received a majority of votes, 233 to 164, it was not enough to reach the two-thirds required to borrow the money. The community preservation funds passed on a voice vote after Farrell urged town meeting to give the Foundation “half a bone.”

“In five years, you'll have a spectacular site, and never even know there was a restaurant there,” he said. On Tuesday he said he didn't know how the situation would be resolved.

With little discussion, voters agreed to use $398,712 in community preservation funds for renovations to the historic exterior of the Chatham Orpheum Theater building at 637 Main St. Voters also approved $56,030 to restore the exterior of the St. Martin's Masonic Lodge at 52 Old Harbor Rd., which was built in the 1850s as a Baptist church. Finance committee member Norma Avellar objected because the Masons don't allow women to join the organization.

“No taxpayer who is forbidden to be a part of an organization should be asked to pay for it,” she said.

Lodge Master Robert Denn said while women are traditionally excluded from the fraternal organization, all men “of good moral character” are allowed to join. He said the building is used by many community organizations and the Masons raise money for many local charities but is not vocal about it. Two years ago the group spent all of its money on a new roof, he added, and now the building is in need of further repairs.

A zoning bylaw governing sheds and accessory buildings and structures was approved after Mary Ellen Sussman amended it to allow sheds up to 12 feet in height; the proposed bylaw set the height limits at 10 feet. A bylaw amendment that sought to exempt open porches from lot coverage requirements was defeated, however. While planning board chairman Cory Metters said the change was proposed to encourage developers to add open porches to minimize the boxiness of large homes, others objected because it would allow increased lot coverage, as much as 37 percent, said Sweeney.

Rather than addressing concerns over large homes, “I believe this actually goes in the wrong direction,” he said.

Voters also turned down a request to change the bylaw to allow the Chatham Conservation Foundation to pursue a pier on a lot at the end of Strong Island Road. The change would have lifted a prohibition against piers for properties that had applied for an amnesty from the state between 1990 and 1996. Foundation board member Andrew Young said a pier on the group's property was destroyed in a 1991 storm and an amnesty application is pending before the state. Lifting the prohibition in this case would simply allow the Foundation to go through the regulatory process, he said, adding that the pier is needed to better maintain and oversee the organization's property on Strong Island.

But there was skepticism about the reasons for the pier as well as the navigational viability in that location. It was turned down on a voice vote.