September 14, 2022 By Glenn Mangurian
Stew·ard·ship: the careful and responsible management of something entrusted to one's care
A few weeks ago I launched this series describing the importance of stewardship to our community. In this second installment I will describe the importance of making informed decisions that affect our current quality of shared services and the future of our treasured town.
Four Important Financial Decisions
During the next six months Hingham residents will make four important decisions – three are related to capital project borrowing and will be decided at the November 1 st town meeting and a week later by ballot vote. Municipal borrowing for capital projects is also called “Excluded Debt”. “Excluded Debt” is a temporary tax increase ‘excluded’ from the limits of Proposition 2 ½. The fourth decision relates to a potential operating budget override at next spring’s Annual Town Meeting.
Opportunities to Get Informed
Over the next six weeks town leaders will be communicating with residents about the details and tax impact of the November town meeting warrant articles. Information will be shared through town publications, on the town’s web site and at several public forums. The Advisory Committee (AdCom), which is comprised of fifteen appointed volunteer residents, will conduct due diligence of each decision request and make its recommendation in the town warrant and at the town meeting. All AdCom meetings are open to the public. Residents are encouraged to attend in person or via Zoom to listen to AdCom’s deliberations to ask questions, make comments and better understand the rationale for its recommendations including the need, timing, cost and tax impact. The schedules and agendas for the AdCom and Select Board can be found at the AgendaCenter on the town web site. In addition, the town web site will soon provide an easy-to-use calculator to estimate the tax impact that the proposed debt exclusions will have on your individual property taxes.
November Town Meeting
Here are the three considerations for this November’s town meeting:
- Foster School: The first decision will be whether to borrow funds for a new Foster School (currently estimated to cost $113 million) to be built on its current 39 acre parcel of land. The plans address flood plain concerns, including projected future sea level rise. The town meeting must approve the full amount of the estimated cost. The Foster School project is also financially supported by the Massachusetts School Building Authority (MSBA). Currently, the town estimates that the MSBA reimbursement could total up to $25 million. That reimbursement will reduce the amount borrowed.
- Public Safety Building: The second decision will be whether to borrow funds for construction of a new Public Safety facility at 335 Lincoln Street (Rte. 3A), which is a 3.07 acre site within the former historic Hingham Shipyard. That facility will combine a new fire station servicing north Hingham with a new, relocated police station. The land for that facility was purchased several years ago for $5.5 million after an affirmative special town meeting, November 2020. The Public Safety facility construction is currently estimated to cost $46 million plus the $3.6 million pre-construction costs already approved bringing the total project cost to $55.1 million.
- “Rainy Day Fund” to Reduce the Early Year Tax Increase: The third town meeting vote if approved will transfer up to $7 million from available reserves (“Rainy Day Fund”) into a “Capital Project Cost and Debt Service Stabilization Fund” earmarked solely to reduce the tax impact of both projects on property owners in early years associated with paying the debt service.
Each warrant article will be voted on separately on November 1 and will require a two-thirds vote of town meeting attendees. If approved at town meeting, the Foster School and Public Safety warrant articles must also receive a majority vote on the official Massachusetts State ballot on Tuesday, November 8.
Both Foster and Public Safety projects have been guided and evaluated by two building committees made up of dedicated, town volunteer residents supported by external professional project managers and architect/designers. AdCom will vote on its final recommendation to the town meeting in late September and include its recommendation in the Town Warrant to be sent to residents in October.
Debt Financing Options
The Select Board will make its recommendation on the terms of the financing. Hingham typically issues “Excluded Debt” with a 20 or 30 year term. A 20 year term has higher annual payments than a longer 30 year term. The Select Board will also recommend how to structure the debt. The Board will choose between Level Payments or Level Principal. Level Payments are much like home mortgages. The interest payments decrease as the principal payments increase while each total payment remains the same per period over the debt term. Level Principal differs from a home mortgage in that an equal amount of principal is paid per period thus reducing what is paid per period. Initially, payments are high and then decline regularly over the term of the loan thereby reducing the total interest paid on the debt financing. It is anticipated that the payback on the debt will begin in FY26. Hingham currently has three projects (High School Track and Tennis Courts; East Elementary School and PRS and Foster Improvements) whose excluded debt will be retired between FY27 and FY29 thereby reducing the temporary tax increase. You can learn more about overrides and debt exclusions at “Inside-Town-Finances” on the town web site.
Next Spring’s Potential Budget Override Decision
The fourth decision relates to a potential operating budget override which will be decided at the spring 2023 Annual Town Meeting. As part of the annual budgeting process, town leaders are beginning the work to estimate future operating needs and to determine the appropriate level of funding required to deliver town services. The formal review of the FY24 department budget submissions will begin in January 2023 with AdCom recommendation in the spring 2023 town warrant. If an override is recommended and approved by the 2023 annual town meeting, that decision will permanently increase taxes and fund the operating needs of the various town departments. Although these four decisions will be decided separately, taken together these are significant investments by all of us in the town’s future.
A good steward is an informed steward. Informed stewards seek answers to their questions and understand the compelling case for and tax impact of a “yes” vote as well as the consequences of a “no” vote. Take the time to be informed. Be a Hingham steward.
What questions do you have?