District Looks at Over $10 Million in Capital Improvement Projects

A Capital Improvement Projects (CIP) discussion by the School Board included a question regarding the workings of the Tax Increment Finance District in the Pettengill Road area and further review of the proposed auditorium on high school property by Auditorium Committee Chairman Tony DeFrancesco.

School Board member Steve Young told the board at its Tuesday, June 17 meeting, that he had a call earlier in the day about the Tax Increment Finance (TIF) district. “It appears that they will be taking money from FedEx and the UPS jet engine distribution plant and inserting it into the TIF,” he said. “My understanding is the way a TIF works, you must pull a bond and the money that you take from your industrial base that’s in that area goes to pay down the bond.”

School District Business Administrator Peter Curro said that is correct.

“I see the industrial growth that we have at the north end of the town serving multiple purposes,” Young said. “It’s there, in my opinion, to reduce the tax rate to the homeowners, it’s there to fund capital projects that are on this (CIP) plan.”

But contacted after the meeting, Town Manager Kevin Smith said it is not necessary for the town to have a bond or debt to have a TIF district.

“You don’t need to float a bond in order to use the revenue that is coming into a TIF account,” he said. “Now if the revenue remains in there for 36 months and it remains unused, then it’s considered surplus funds and it has to be returned to the general fund. The money can also be returned to the general fund at any time if the Town Council wishes to release it that way. But you don’t need to have incurred any debt in order to use any of the revenue that’s in that account.”

Smith said UPS is building half of the new Pettengill Road, so there is no taxpayer involvement with that portion of the road.

“Say hypothetically in two years there’s $2 million in the TIF account from UPS, FedEx and say Milton CAT,” Smith offered as an example. “Hypothetically the town says, ‘well, we want to use monies out of that account to finish the rest of the road.’ It can do that with the monies that are in there and they would do it as an expenditure out of that account, but they are not incurring any debt. They wouldn’t have to float a bond because the money would already be in that account, and the road is completed without any debt to the town.”

The CIP from the School District and the CIP from the town are scored by the Capital Planning Committee as to need, Curro noted, saying some proposals will be shifted so voters do not have competing town and school items or too much bonding in one year. “Then the Planning Board changes it or endorses it,” he said.

Board member John Laferriere, referring to a spreadsheet, said Curro was looking to put $500,000 toward the auditorium in FY 17 and $9.5 million in FY 18, as well as $200,000 for District Office Renovations in FY 19 and $3 million in FY 20.

“It could move forward, but I had to start somewhere,” Curro said regarding the timing.

DeFrancesco told the board that there would be an 18-month buildout for the auditorium when it was ready.

“I want you to understand that in a perfect building situation, the scenario that Mr. Curro has given you brings you occupancy in the auditorium, should you decide to move forward with it and the taxpayers vote for it, in September of 2020,” he said.

“In a perfect world, everything goes according to plan but in New England you have winter and power outages. In addition to that you have permits and design, which may take another eight months,” DeFrancesco said.

“In this case you all entrusted me with a lot of money and I take that seriously,” he continued. “This committee is ready to go, we have pretty much crossed the T’s and dotted the I’s. We pretty much have the number and we’re now working on our presentation for Aug. 26.”

DeFrancesco said the committee would recommend that the bond be put forth for a vote for the March 2015 Town Meeting. “Because there’s no reason to do it any other way,” he added.

DeFrancesco said that if the voters approved it next March, there would be an eight-month permitting and design period, construction of 18 months “and occupancy in 2017.

“We’re behind on an auditorium. We’ve been behind on an auditorium since 1978,” DeFrancesco said, calling it “pathetic” that in 2014, Londonderry High School still didn’t have an auditorium.

“It’s a total school and total community building, not just for the arts but for education, with all the schools using it and fire and police departments using it for training,” he said.

School Board chair Leitha Reilly asked if he was suggesting, instead of Curro’s proposed $500,000 in FY 17 and $9.5 million in FY18, $10 million in March of 2015.

“I want to say publicly that that $10 million is a place holder, it’s not actual, just for public edification,” DeFrancesco said.

“What happens if it goes beyond $10 million?” Reilly asked.

“It won’t,” DeFrancesco said.

Asked how he knew that, he responded, “Because you entrusted me with the process and the money and I’m telling you that it won’t.”

Laferriere said it is only placed on the CIP plan, and emphasized they haven’t committed to anything yet.

“However the CIP committee is looking at say $10 million and that’s what we’re moving forward, and if in six months it becomes $15 million, they look at us and say, ‘well, where did you come up with the $10 million, and we have to back up where the $10 million came from, which is why there is a process of reviews,” Curro said.

Laferriere said that if they put the $10 million in FY 16 before it can go to bond, the total cost of the project must be known.

“At the end of the day, when are you going to tell me what the number is before we go to bond?” Laferriere asked.

“I’m going to tell you what the number is at the Aug. 26  presentation, and then I have until voting day in March, and at that point we’ll have signed documents,” DeFrancesco said. “You don’t have to have a bond to have signed documents.”

DeFrancesco asked Curro hypothetically what would happen if they bonded the building for $10 million and it cost $8 million. Curro said the remaining money would be reallocated for another purpose with a two-thirds vote or it would go back as surplus to reduce the tax rate.

Young made a motion to support the CIP plan FY 17 to FY 21 with $500,000 for the auditorium in FY 16 and $9.5 million for the auditorium in FY 17, and $200,000 for the district office in FY 19 and $2 million for the district office renovations in FY 20.

He said he reduced the renovations from $3 million to $2 million because $3 million to house 27 people “has always driven me nuts.”

The motion passed 4-1, with Dan Lekas the no vote.