The Capital Planning and Investment Committee (CPIC) voted Monday morning to recommend that the town appropriate an additional $188,233 needed to begin work this summer on safety and accessibility improvements at Hildreth House, the town’s senior center.
In a separate motion, the committee also recommended that the extra money be borrowed. If the Finance Committee rejects that approach, however, the capital committee recommended as an alternative that the money be taken from the town’s Capital Stabilization Fund, which has a balance of $928,374. Meanwhile, two selectmen stated at their board’s meeting Tuesday night that they preferred to use free cash instead.
Monday’s CPIC decision was the first of several hurdles that the Town Hall and Hildreth House Construction Committee must clear before work on improvements to the town’s senior center can begin. The Finance Committee has yet to make its own recommendation and was set to meet Wednesday evening, June 8, to review CPIC’s decisions. The ultimate decision, however, is in the hands of voters at the Special Town Meeting set for 7 p.m. Tuesday, June 14, at the Bromfield School. The selectmen will meet at 6:30 p.m. that night to decide on the source of funding. (See “The June 14 STM Warrant in Plain English”).
The Monday votes of the four members of the CPIC, the committee responsible for vetting Harvard’s capital projects, were unanimous. School Committee Chairwoman SusanMary Redinger, the absent fifth member of the committee, voiced her support for both motions in an email that CPIC Chairwoman Debbie Ricci read aloud to the committee.
Advantages of borrowing
It was Finance Director Lorraine Leonard who proposed that the money be borrowed. Borrowing is a time-honored way to pay for projects and amounts greater than $100,000, she said at the CPIC meeting and later in an email. Once a 20-year bond has been issued to raise the money, its principal and interest will be paid for out of the omnibus budget. Until then, said Leonard, the town has plenty of cash flowing into its coffers to begin paying for construction this summer. And with such borrowing, Leonard added, there is no need for a Proposition 2½ override or a ballot question; a two-thirds vote at Special Town Meeting will suffice.
Members of the building committee, CPIC, and Board of Selectmen have stated publicly that they are confident that the Special Town Meeting will approve the additional money, given the overwhelming support of the 2015 Town Meeting for the project.
But why not take the money directly from the $296,000 in 2015 free cash that Town Meeting refused to transfer to the capital fund two months ago?
It’s a question selectmen Lucy Wallace and Stu Sklar and resident Jim Breslauer of Poor Farm Road may raise at next week’s Special Town meeting. Breslauer and Wallace were among those who in April advocated withholding the transfer of 2015 free cash to the capital fund in case it was needed to pay for an increase in Hildreth House costs.
Free cash: For and against
“Why borrow the money when it’s available today?” Breslauer asked this week in a phone conversation. And in an email, Wallace said it was her belief that April’s Town Meeting had voted to hold free cash for the express purpose of funding the Hildreth House project. “I believe we should honor that vote,” she wrote. “I do not have a problem with debt, per se,” she added. “[But] free cash takes just a majority vote, while debt or [a] capital fund [transfer] requires a two-thirds vote by town meeting.”
Longtime advocate and construction committee member Connie Larrabee said in an email that she found the proposal to use debt “more confusing” than using either the capital fund or free cash and thought debt was therefore “more likely to cause controversy and opposition.”
“My first choice,” wrote Larrabee, “would be free cash (neat, clean, uncomplicated). My hunch is that the debt option will almost certainly cause somebody to propose using free cash instead, and then we could have another municipal meltdown to contend with,” she said, referring to the debate over use of free cash that erupted at this spring’s Annual Town Meeting.
But in an email, Ricci said she believes that capital projects should always be vetted by the capital committee and that taking money directly from free cash would set a bad example, violating the spirit if not the letter of the bylaw that recommends using free cash to replenish the capital fund each year. (The exact wording of Section 17-4, the relevant portion of the bylaw, appears in an adjacent box.)
In addition, Ricci argued, setting aside $188,233 of 2015 free cash to pay for Hildreth House now would deprive CPIC of money it may need to pay for capital items at next year’s Annual Town Meeting. CPIC members learned this week, for example, that the Conservation Commission will be asking in August for a $400,000 loan from the capital fund to underwrite the purchase of 50 acres on Sherry Road. Using debt to pay for the added costs of Hildreth House, she said, “helps to keep the capital fund at a healthy balance, which in turn helps us to stabilize the tax rate.”
Chairman of the Board of Selectmen Ken Swanton agreed. Swanton is one of the five voting members of CPIC. “Free cash is how the capital fund is replenished, and Harvard has a lot of capital projects that depend on it,” he wrote in an email. “Addressing these with free cash has contributed to avoiding overrides for nine years.”
Temptation of an end-run
“It’s tempting for advocates of the Hildreth House accessibility project like me to end-run the process and use free cash,” he continued. Allocating free cash requires only a simple majority vote of town meeting, Swanton noted. “But there’s a good reason capital projects and zoning articles … require a two-thirds vote,” he said. “They are long-term things that people should be sure of.” Besides, he added, “There’s such unanimous support for this project that it will get far more than [the required] two-thirds vote anyway.”
Town Hall and Hildreth House Construction Committee Chairman Rick Maiore said in an email that as long as the money to start the project is approved by Special Town Meeting, it is not an issue for him whether free cash is used or not. What’s needed, he said, is a large turnout at the Special Town Meeting and for the finance committees to do a good job of explaining their positions: “They are versed in the various financial options; I hope [their recommendation] can be explained clearly to the STM voter.”
