AI-generated transcript of City Council Committee of the Whole 04-26-23

[Nicole Morell]: 23073 committee of the whole meeting notice Wednesday, April 26, 2023 at 6 p.m. Mr. Clerk, please call the roll.

[Adam Hurtubise]: Vice president affairs.

[Zac Bears]: Yes, here present.

[Adam Hurtubise]: Sorry. Councilor Collins. Present. Councilor Knight. Councilor Knight is absent. Councilor Scarpelli. Councilor Scarpelli is informed as he's not gonna be able to attend this evening. Councilor Tseng.

[Justin Tseng]: Present.

[Nicole Morell]: present for present three absolutely meeting is called to order. There will be a meeting of the Medford City Council committee the whole on Wednesday, April 26 2023 at 6pm, the Medford City Council chamber on the second floor of Medford City Hall and via zoom. The purpose of this meeting is to discuss the capital improvement plan presentation, paper 23-073. The committee has invited Mayor Breanna Lungo-Koehn and Chief of Staff Nina Nazarian to attend this meeting. For further information, aids and accommodations, contact the city clerk at 781-393-2425. Sincerely yours, Nicole Morell, Council President. The meeting notice says just what we're here for. I believe actually in lieu of members of the administration, we'd have Sarah Kincannon from the Collins Center, who is able to give us a presentation on the capital improvement plan Sarah, I believe you should have the ability to share your screen at this point.

[SPEAKER_03]: Excellent. Thank you. Let me share my screen. How does that look? Can everyone see it? And is it big enough?

[Nicole Morell]: Yes and yes.

[Unidentified]: Excellent.

[Zac Bears]: Do you think it would be possible to forward a copy of the presentation to the city clerk? We just haven't received it in any form other than we're about to receive it from you. And I'd love to be able to take a look at it after the meeting.

[SPEAKER_03]: Yes, absolutely. I can do that.

[Zac Bears]: Thank you.

[SPEAKER_03]: I'll write myself a note. All right. Shall I just get started?

[Nicole Morell]: Yes, please. Thank you.

[SPEAKER_03]: Absolutely. Thank you. So good evening, everyone. Thank you to the city council for giving me the opportunity to come before you tonight to provide a high level overview of the capital improvement plan that I have been assisting the city to develop. I've prepared several slides that kind of walk through the process and some of the results of the work that we've been doing in the city. And so at the end of the PowerPoint, I'd be happy to take any questions that you have. And I'm not sure if Bob Dickinson is in the room. He may also be available if he's there to answer any questions that you may have.

[Nicole Morell]: He's not physically here at the moment, but we were expecting him, so we will see.

[SPEAKER_03]: Okay, excellent. At any point in the presentation, if you have questions and you want to, you know, ask, feel free to just kind of say, hey, I have a question. Your videos are quite small on my screen, so I may not see you waving your hand or anything like that. Okay, great. So just one quick note before we get started. So the plan that I have been helping the city to complete is an FY23 through FY28 plan. We typically would do a five-year plan, but in this case, we decided to do a six-year plan. And that really had to do with the timing of when we were doing the work. We thought since FY23 is nearly over, we will extend it to six years that way. it would be a complete plan. So just by way of introduction, I want to introduce myself and the Collins Center. So as the Council President said, my name is Sarah Concanon, and I am the Director of Municipal Services at the Collins Center for Public Management at UMass Boston. The Collins Center was established in 2008 by the state legislature at UMass Boston to provide affordable and practical consulting and technical assistance to cities and towns around the Commonwealth. We also work with regional governments, school districts, state agencies, and any other public sector entity that is in furtherance of our mission. Two years ago, the city of Medford worked with me to receive a grant through the Community Compact Best Practices Program to develop a capital improvement plan. A year ago, the mayor asked me to come back and help her and her administration update the plan with the department heads. And so what I've been doing for the past year is sort of managing the process so that we can get to an updated capital plan. I want to just briefly for anybody who's watching who isn't familiar, just go through a few definitions. I mean, I know the Councilors know this, but what is a capital project and what is a capital improvement plan? So a capital project is typically a major non-recurring expense with a cost of at least $10,000 and a useful life of at least five years. The $10,000 threshold is a little bit low for a city of Medford size, but nonetheless, we thought using a lower threshold would make sense because we didn't want any projects that were in the $10,000, $20,000 range to get lost. So that is how we define a capital project. A capital improvement plan is a multi-year plan that is comprehensive in the sense that it covers all funding sources and all departments in the city. And it's also financially viable. So this is something that the call-in center really pushes our clients to think about. What we don't wanna do is spend a year developing a wishlist that will never be funded because that's not really the purpose of a plan. The plan is supposed to be there so that residents can know and expect that there's going to be certain investments in their schools, in their roads, in their water system. It also exists so that the finance team in the city can make appropriate decisions about issuing debt, about revenue, and about the operating budget, and so on. And so it's really important that that third bullet is achieved when you're going through a capital improvement planning process. If you don't achieve that, it's really not a plan, it's simply a wish list. Again, for any members of the public who might be learning about a CIP for the first time tonight, it's a really important document and it's an important process for a city or town to go through. If you don't have a capital plan, there are a lot of things that can go wrong. So for example, there could be negative impacts to public health or public safety. I think about, for example, an intersection that is not well-designed or maybe has not been updated in many, many decades. It could be a public safety issue. And so making sure that you get those types of projects on your list that are going to improve public health, improve public safety is important. There's also a certain degree of exposure to legal liability. If you're not investing in your facilities, if you have roads and sidewalks and facilities that are in disrepair, it could expose the city to legal liability. It could also create staff inefficiency and ineffectiveness. The best example that we hear all the time at the call-in center when we work with our clients is about vehicles. You know, public works staff are out in the field on the day-to-day and if they don't have vehicles that can work that can offer heating and cooling and aren't in the shop, then that makes them really inefficient. And so it's important to make sure that the tools that the staff have are up to date and periodically reinvested or rehabilitated so that they can be used to the highest degree of effectiveness. The other thing that a CIP really should help you avoid is costly emergency repairs. So if you have a school building and you know that the roof is 20 years old, you better start taking a look and inspecting it to make sure that you know when it needs to be replaced. If you don't, and there is a catastrophic leak, you would be forced to make an emergency repair, most likely at significant cost. Another potential pitfall of not having a CIP is poorly managed or poorly timed projects. And the classic example is you have a water main that needs to be replaced. and you have a road that needs to be reconstructed. Well, you should do the water main first and then the road, because if you do the road and then you need to make a repair on the water main, you're going to have to dig up the road. And so the timing of projects can be quite complicated in a municipality, and so it's really important to have a plan that thinks through the phasing of certain projects. Another issue with not having a robust capital improvement plan is you may have inconsistent debt service, which is really difficult to accommodate in an operating budget. You don't want your debt service to be a million dollars one year and then 750 the next and then one and a half million. You really want smooth debt service. And that's the best approach from a financial perspective. And so planning helps you make sure that you can maintain that consistent debt service year over year. And then the last one on here is general financial disorder and negative impacts on bond ratings. So the rating agencies that determine a city or town's bond ratings do look to see whether the city or town has a capital improvement plan, along with a lot of other things like a financial forecast, financial policies, etc. And that's an indicator to the credit rating agencies that the city is well run. And so it's really important that the city maintain an up-to-date, robust capital improvement plan. So this is a typical capital improvement planning process. for the city. So sometime typically in late summer or early fall, the administration and finance teams would develop what we call a capital investment strategy, which is based on a financial forecast and projected resources. The capital investment strategy is really the financial plan in terms of how much money is available to be invested in capital. And I'm going to talk more specifically about what the capital investment strategy is, and I'd be happy to answer any questions. Part of what they'll look at when they're developing the investment strategy is the historical spending, the historical budget, and looking at projecting what the operating budget is going to be out in the future. And then in the fall, all the departments are going to be surveyed so that the city can understand capital needs, understand the priorities, and understand what grant opportunities are out there. So the department heads are a really integral part of the process. And I can't really stress enough how much work the department heads have done Over the last year on this capital improvement plan, they really are providing so much information, and I really want to commend them all because they were all wonderful to work with. In early winter, the project requests are reviewed and assessed for their adherence to citywide goals and priorities, and the capital investment strategy is finalized. So one note on priorities. It's the department heads who are providing really good information about what the top priorities are for their departments. And that is invaluable because in a city the size of Medford, it's nearly impossible for one person to fully understand all the priorities that are going on. So we really rely on the department heads and take into consideration what they're telling us the priorities are. So, and then also in early winter, the capital investment strategy is finalized. Sometimes there's more information that will inform the capital investment strategy, things like developments in the operating budget process or information coming out of the state in terms of their own budgeting process. Then in the spring the capital plan is finalized and presented to city council, and then on an ongoing basis, the administration and finance staff need to provide oversight, while the departments are initiating and managing the projects, you know that is a really important. piece of capital planning that doesn't get talked about a lot. Once you have the plan, it's time to execute on the plan. And so one of the considerations that I always need to think of and I need to communicate is, what are departments able to manage in terms of projects? There are some departments, planning departments, DPWs, engineering. There are a lot of projects that they see as needed. And sometimes you don't have the staff resources to manage all those projects, let alone the funding to actually pay for them. So that's an important consideration. I will say that the project plan, which is the list of projects, is really a dynamic document. Priorities can change, resources can change. And so it's really important that the capital planning process be considered an ongoing annual process, just like you would an operating budget.

[Nicole Morell]: Sarah, we have a question from Vice President Bears. OK, excellent.

[Zac Bears]: Hi Sarah, thanks for the presentation so far. I just have a question on the survey of capital needs and opportunities. Could you go a little bit more into how the process occurred, and were there like standard operating practices that the call and center recommended to the city to conduct that process and then also to conduct the annual review, and then I have a follow up after that.

[SPEAKER_03]: Yeah, so what we did this year is take the list of capital needs which I typically will call the capital needs assessment. And that is basically a big spreadsheet of all of the projects. And we send that back out to departments. And we say, what has stayed the same? What has changed? Whether it is the scope of a project that's changed, whether it is the cost of a project that's changed, maybe last year, engineering told us that they were going to reconstruct a road, but now they realize they can only afford a smaller section or they need more money to do the full section. Project scope can change, project costs can change, and priorities can change. Basically, what we did was send that information back out to department heads and said, please let us know what has changed and add any projects that you weren't aware of two years ago that you now feel are high enough priority that you want to add them to the list. So that's the way that it typically works. And I will say, you know, the process can be difficult to manage. It's a lot of information going back and forth and departments can be on different timelines in terms of when they get information, when grant opportunities open up for them. And so it certainly is, it's a lot of work to manage and, you know, sometimes can be a bit messy as all municipal work can be, but that was the typical process. And that's the process that we followed last year.

[Zac Bears]: Thank you. Yeah, I guess that that brings me to my question. So my next question, which is, it sounds like this was kind of a project based assessment. And I'm wondering if that would be different from an asset based assessment in the sense that it sounds like we have a list of projects that people think we need, but we maybe don't have a list of all of the city's capital assets and what their actual needs are. Is that correct? Or am I, you know, am I misunderstanding it a little bit?

[SPEAKER_03]: Well, for a department head, a department head should have a list of their capital assets. And they are the experts in their capital assets, and they are the ones who review their capital assets. And then based on the condition, the use, et cetera, define projects that they feel are needed. One thing I will say the Collins Center is not strongly supportive of is Taking a look at asset lists, let's say you have a list of dump trucks, right? There's no, there are guidance, there's best practices around, or I shouldn't say best practices, there are typical lifespans, right? And manufacturers will tell you that this asset has a lifespan of X years, five years, 20 years, whatever it is. And there are guidelines that do exist. So, for example, fire engines and fire ladder trucks have there's guidance from NFPA about how long those should be used on the front line, how long they should be used as backup or second string. But those types of guidelines are great starting points, but they would not really be appropriately used to say, OK, your dump truck is 25 years old. You have to replace it this year. There are some communities, because environmental impacts can be really significant. There are some communities that keep police cruisers for three years, and some communities that keep them for seven years. Dump trucks, likewise, may last 10 years in one environment, but 20 years in another environment. So we don't take, and I'm not sure whether that's what you're referring to when you say an asset-based approach, but the call-in center is not doesn't typically recommend taking a look at an asset inventory divorced from the unique context that the department heads would be able to provide about an asset's condition, performance, etc. Does that answer your question?

[Zac Bears]: Kind of, and I appreciate the context. more to me that this the CIP has always felt like step two in a process to me. And that's it sounds to me like step one is kind of just living in people's heads. And and that would be saying here are all of our capital assets. And this is what they're worth. This is how old they are. These are, you know, the issues we have with them and I don't necessarily mean, you know, more replaceable assets like a vehicle more I'm thinking about fixed assets like a building or roads and sidewalks. And, and the reason I'm asking is just like I think it's great to have a capital improvement plan and to say here are the projects that department heads think are the top priority for us to do, but I think the issue that we always have on the council and I think the public has is understanding, how did we get from what is our current condition. to prioritizing specific projects and, and, you know, so that that's why this is always felt like a step two to me, and something that we've been working on as a council is looking at a creating an ordinance for our budget to assess both our operating needs and our capital needs, so that we can have a shared framework and understanding of exactly the facts behind all of that so I don't know if I'm explaining myself entirely correctly but I guess what I'm saying is, you know, step one to me and all of this would be saying, hey every department head, what are all of our capital assets that you manage, put that in one place, then we have a list of all of our assets, then we know, you know, we can say okay Medford High School that's a capital asset we have, you know, what do we think the need is for you know bringing that up, you know, addressing all deferred maintenance on that asset. And then we would come to a capital improvement plan that says so we have 100 million in deferred maintenance at Medford High School and that may be across 10 different projects. Here's our capital improvement plan and the specific projects that we're creating, you know, over the next six fiscal years we're going to create So we're going to do six projects of $10 million and that's going to address 60 million of the 100 million in deferred maintenance. So, you know, sorry I couldn't make that. Sorry that was so long winded an explanation but that's really what I'm getting at and I'm wondering what you think about, about that.

[SPEAKER_03]: Yeah, absolutely. So what you've described has been done. So two years ago, I think I mentioned that we, was the first time I had done the capital improvement plan for the city. Now that project was very different from the project that I've done over the last year. That project was a full in-depth capital improvement planning process that I managed, and it involved interviews with every department head, sitting down with them and saying, what assets do you have in your department? Of course, you know, there are asset inventories for vehicles and facilities. There was a chapter that we wrote in the capital improvement plan that we had done two years ago that outlined in pretty good detail all of the capital assets in the city. And you can, I can certainly share that again. That is sort of, it was written for the public so that they could understand how extensive and expansive the capital asset inventory is in the city, you know, the municipally owned capital asset inventory. So there are lists of all of the parks with some basic information, you know, I think acreage and use, lists of the buildings, how many road miles, how many are residential, how many are collector roads, how many bridges, what are the years of the bridges, when were they built, when were they rehabbed, are they, you know, obviously municipally owned, And things like that. So those things do exist. Absolutely.

[Zac Bears]: Great. Well, sorry, go ahead.

[SPEAKER_03]: Well, I was going to say, and they are also the basis of generating the projects in the capital plan.

[Zac Bears]: Great. Well, that's helpful. to have that information. Did that document include on the asset inventory list, like the cost it would take for each asset to bring it to a state of good repair?

[SPEAKER_03]: No. That's a difficult question to answer, Councilman, because there It's a great question. And certainly, if there was somebody who was the capital projects manager, that may be something that they could pursue. But it is quite a bit of work and probably something that would not be accomplishable with city human resources, simply because it would be a staggering amount of work to do it that way. What I will say is that the departments staff are the ones who are using the assets all of the time. And so they are working to prioritize, defining the projects that they know are most needed. Certainly there are projects that could be needed, maybe are lower priority, that potentially didn't make it to our list. Although I will say, I think we've got I can you I don't want to misstate the number but you'll see it in a few minutes. There are more than 100 projects on the capital plan. And so, certainly, it's quite extensive.

[Zac Bears]: Yeah, that's helpful and I appreciate I understand it's a difficult process but I think you know for us from a city financial planning perspective, there really is a need for us to have that figure you know one of the most helpful documents that we have right now is the road and sidewalk condition and reports and the assessments that came along with that, where we now have an actual dollar number you know over nine figures about how much the city needs to spend to bring our roads and sidewalks into a state of good repair. And I think for financial planning purposes, you know, having something like that for all of our assets really needs to be a goal and I know it's not your job to to do that. So I'm not asking you to obviously speak towards that. But it sounds like we have a lot of really great data from the last process that you did and from this process. And that, you know, pulling all that together and working potentially with an outside consultant to really nail down the dollar figures for what the needs are for capital needs. The dollar amount needs for capital needs is important. And completely hear you on department heads, you know, knowing their assets the best and suggesting what the best most urgent needs are for capital funding but you know I think exactly what you just said about you know there may be other lower priority needs that don't get included, that's what we need to know about to you know the capital improvement is to me, how much we're investing and trying to bring us back to a state of good repair. but the figure that we don't have is what actually would everything in a state of good repair be. And that's what we need to be able to benchmark progress in my opinion. So just putting that out there, I completely understand your role in the process and that most of what I said is not your role, but I really appreciate your expertise and giving me the details I need to better understand what we need to get to the place that I'm talking about. So thank you very much.

[SPEAKER_03]: I will say that the pavement condition index is an absolutely vital tool that was also grant funded and was a great process for the city to go through. So that's great. It would be amazing if you had that type of report for each asset type. The other type of assessment that municipalities often do is to hire an architectural firm that can come in and do really deep facilities assessments, you know, the facade, all of the HVAC, the plumbing, all of that, and they can generate that number that you'd be looking for for facilities. Of course, that's quite a costly endeavor to bring in a consultant to do that, but I absolutely agree it's an invaluable tool not only for city council, but also for the department heads to help them understand what is the true cost and is there anything that I'm just not seeing. I really appreciate your comments.

[Zac Bears]: Thank you. Yeah, and could you. I'm sorry to Bogart I know I'm my other fellow Councilor the question but just how often that that the index, the either the process that you did at the beginning where you surveyed all the department has to get capital needs or the thing that we did for roads and sidewalk conditions how often would you suggest we do that iteratively, should it be every five year capital improvement plan we also do that, or should it be more more regular or less regular.

[SPEAKER_03]: I think that just feasibly, every five years is a great target. I mean, the thing about the pavement condition index, and certainly your DPW and engineering staff can talk more specifically about it, is if you, and just like any plan, say you do a road assessment, and then you say, oh, that's great, look at all that money we need to spend, and then you don't, follow up with the actual investment or try to get close to it, then the PCI becomes very stale. But if you're updating it and your staff know how to say, yes, we did do that road, let's put in the new PCI for that road, and it shows you and it's sort of constantly updated, then you have a better chance of stretching out how often you need to do that sort of consulting project. Does that make sense?

[Zac Bears]: Thank you so much. Yes, thank you.

[Nicole Morell]: Thank you. We have a question from Councilor Tseng and then we'll go to Councilor Caraviello after that.

[Justin Tseng]: Thank you. Um, so, I think, Councilor bears made some great points about needing to look at our assets and as a whole. Um, I think something that runs through my mind, as well as that there might be important projects that are important to residents in the city but, um, They might not have the resources to reach out to city government. They might not know who to go to. And so there might be a disconnect in a way between what we hear at City Hall versus what residents on the ground want. And of course, I do trust our department heads to know best what types of projects we need. But I was wondering if what you saw is the role of community feedback and resident engagement in this process.

[SPEAKER_03]: Yeah, thank you so much for asking that, Councilor Tseng. It's such an important component of capital planning. So there are a couple of different ways that residents can contribute to the capital planning process, because the capital plan is actually built on all sorts of other plans that already exist or should exist. So just I'll give you one example. The municipalities in Massachusetts are all required if they want to get certain grants to have an open space and recreation plan. And that plan, a master plan, and various other types of plans are really processes that are deeply, deeply, or should be deeply engaging with the community. And municipalities have really, I think, in the last number of years, kind of expanded their view of what engagement means. It doesn't just mean saying there's going to be a meeting, posting an agenda, and saying, hey, we have a public meeting. Come if you find out. Come if you come to the website and find out about it. It's really more proactive than that. And so cities and towns in Massachusetts have been doing a decent job of trying to really build out their capital engagement capacity. And that means going, say you have a charrette, you know, or say you have a A charrette's like a meeting, for those who don't know, a charrette's like a meeting where people can come and really deeply engage with planning and land use type of activities. And so it might mean something like going to, leaving City Hall and bringing that charrette activity to a community center. or a school where people are comfortable. They may not be comfortable going to City Hall, but they may be comfortable going to their child's school to participate. It also means offering meetings in different languages to meet people where they are. It may mean something as small as providing child care so that people with young families where kids can't be left alone can participate. And so it's such an important part So the capital planning process is built on those types of plans. So when you're planning development and sustainability department provides me with the list of park projects that they see as priorities, what they're doing is referencing the plans that have been built with strong community engagement. So that's one thing. But the other thing, which is really interesting, is that I've seen in some municipalities a more robust direct community engagement with the capital planning process. And it could be something like, now we didn't do this, but it's something that you could consider in the future, something along the lines of creating a form, a Google form or a digital form, where residents can contribute ideas for capital improvements. And they're not going to be able to tell you how much the road is going to cost, how much asphalt you need, but they're going to be able to tell you, hey, if this road's not on your list, it should be. Or they may tell you, I'm really disappointed that the school playgrounds are not accessible. And that might trigger the departments to say, oh, yes, I'm seeing a lot of conversation. I'm hearing a lot from community members that this is important. And that could elevate a project. And there may be other ways to engage community members. So you could look for individuals, but you could also go to community-based organizations that maybe speak for a larger demographic group and say, hey, what are you seeing? Any capital needs that you see could be PTAs, it could be religious groups, it could be, you know, different affinity groups. So that's a really interesting and innovative way of engaging the public in the capital planning process. Again, not something that's very widespread, but something that's on the cutting edge, something that I'd absolutely recommend that you all consider. And if you have more questions about that, I'd be happy to think about who I know in other cities and towns that have done things similar, and maybe we can make a connection.

[Justin Tseng]: Thank you so much. I think you read my mind on the next question, which is that, you know, we do have a lot of plans, and I was wondering how this plan engaged with those plans. I have tons of questions, but I know you have more to present, so I'll let you get to that, but I did have a question because we started to talk a little bit about prioritization. And so I was wondering if there were metrics that we were using to evaluate how we prioritize projects or if it was really, you know, left up to department heads or to these plans.

[SPEAKER_03]: Yeah, so the Collins Center does have what we call a scoring methodology, which has a number of parameters with which we score projects. And there are things that you would expect, things like, is there a public safety issue? Does this project advance environmental concerns? Does it have an economic development benefit to the town? Is there external funding available? Things like that. In this particular case, the process we went through in the past year, what we did was we were able to essentially accommodate all, basically all of the projects that the department heads identified. We just spread it actually over seven years. So there were a handful of projects that got pushed out to FY29, but we were able to accommodate basically all of the projects that departments identified as priorities. And so that was really great. But we do have that scoring methodology that goes through. I can't remember if it's 15 parameters or 19, something like that. And those are really, and department prioritization is one of the very important ones. But those are, that scoring is very useful for for guiding a conversation, especially if financial resources are tight. Now, I will say in this particular case, we've had a special, you know, very unique funding source, ARPA, which has really changed the game in terms of you know, these couple of years where we can spend it on capital needs. So that's a little bit of an anomaly. And so the scoring becomes less imperative, because there are a lot of resources out there. But yes, absolutely, you need to have some sort of methodology that allows you to assess objectively the different projects. And if there are financial constraints, you have to make difficult decisions. And sometimes it can be really challenging to say, well, what's more important, you know, a dump truck or three new cruisers? Like they're both super important, both absolutely essential. So how do we make that work within a financially feasible plan? It can be a challenge.

[Nicole Morell]: We'll go to Councilor Caraviello.

[Richard Caraviello]: Thank you, Madam President. Thank you sir for the presentation so far. I agree with Councilor Bears and what he said it earlier that I think maybe we are putting the cart in front of the horse here a little bit. Being on this council longer than anybody else, I've seen capital plans come and go in this community. We see them, we develop them, and they never really ever come to fruition. Maybe one or two things ever happen on them. But I think the city is at the point where right now is, I think we need to take stock of our assets and see where they are and the condition that they're in. We have a history in this community of letting our assets just really fall apart. So over the last six years, or maybe a little longer, we have a brand new DPW building, we have a new police station, and we have a new library. And before then, the only really capital improvements that we ever did was we built the new schools, and now those, those schools are 20 plus years old, and we didn't do our job as as as a city and maintain them. So I say, so I think you'll tell me his idea of, let's, let's get our assets down on paper, see what condition they are, and then we can develop our priorities and know where we have to go. And my other question is, do we have the staff to see the capital improvement plans coming through. Every department we have right now is short staffed here. Some departments don't even have department heads. So that's a concern that I share with the capital plan going forward. So just my opinion for the next few minutes and then I'll come back with some more questions after.

[SPEAKER_03]: Yeah, excellent. Thank you for those comments, Councilman. I think you're absolutely right. Just to go to your last point first, you need to have the staff to manage projects. Now, some projects can be done in-house to a large degree, but most of them need to be, you need to procure experts to do them. And then you need to provide oversight for those those contractors. And so you do need human resources to manage a capital plan. Absolutely. And that is a challenge for Medford and many cities and towns around the Commonwealth. And the other issue with human resources is directly tied to your point about deferred maintenance. Many communities can spend a decade moving toward a major construction of a new building, and it's a lot of work, and getting everybody to buy in, figuring out how we're going to fund it, maybe pursuing a debt exclusion. But then if you don't have the staff to do the regular preventive maintenance on the building, checking those HVAC filters, cleaning things, and just monitoring what's going on with the systems, then they're not going to last as long as they should. And so that's a really significant challenge for cities and towns around the Commonwealth. Those costs fall within the operating budget. And, you know, obviously you guys know very well how challenging developing the operating budget and funding what really needs to be funded can be.

[Nicole Morell]: Thank you. I believe that's the questions we have for now, if you want to proceed. Okay, thank you. Thank you.

[SPEAKER_03]: Um, actually this is a this is a good slide to come up next, you know, to the to the to the Councilors points about what are the capital assets in Bedford. This is a summary that comes from the chapter that I had mentioned to a few minutes ago. So, In Medford, there are a lot of capital assets that are municipally owned. There are more than a dozen city-owned buildings, police, fire stations, library, city hall, DPW yard. There are nine school facilities and associated components like athletic fields and parking lots. You have IT assets, computers, tablets, network components. And then there are many, many vehicles, trailers, mowers, sedans, police cruisers, dump trucks, fire engines, ladder trucks. I mean, these run the gamut from a $15,000 trailer to a million dollar ladder truck. So many, many vehicles across multiple departments. You have dozens of parks and recreation sites, including playgrounds, trails, athletic courts, athletic fields, pool, pond, skating rink. You have a lot of recreational assets in the city, and a lot of them need capital improvement. You also have passive use open space like veteran squares and monuments. cemeteries, things like that. You have 92 miles of roads and many, many, many, many miles of sidewalks that need to be maintained and improved from time to time. There are two city-owned bridges. There are countless culverts, drainage pipes, and there's even a dam. And then you have your water distribution and sewer collection systems. So there are a lot of assets. The Councilor mentioned the pavement road assessment, that's one very common one. As I mentioned, facilities are also typically, well maybe I shouldn't say typically, it's not uncommon for cities and towns to bring in architectural firms to assess, do a facilities assessment on their facilities. Water and sewer systems often will have assessments done by professional engineering firms. So those are the kind of first places I would guide you toward if you are serious about finding some money to bring in specialized consultants to take a look at your assets. Those are the ones that are most commonly targeted. I want to shift and talk about the investment strategy. And GF is a short way of saying general fund. So this is general fund only, it doesn't include the enterprise funds, water and sewer. So the capital investment strategy is based on historical data. Trend analysis is obviously a foundation of a lot of financial projections and planning. So here we look at three years of historical capital investment, and we compare that to the net budget, which is reported to the state on the recap sheet. So I'm going to walk you through this table. The top boxes are the existing capital investment. So the first line is your existing net general fund non-excluded debt. And when I say net, that means that if you have any subsidies, like from revolving funds, things like that, that's all netted out. So in 21, 22, 23, those were your debt service figures for the general fund. Then you have a capital lease for a fire truck. And in 2022 and 2023, half of that capital lease was funded from the general fund operating budget. And then you also have what is typically called pay-go spending or pay-as-you-go spending. That's cash that's spent on capital projects. Most likely and most typically, it's free cash. So I've added that as a note, free cash. So 2021, 2022, there was no free cash spending, which I think is an anomaly. In 2023, so far, there's been slightly over 2.9 million appropriated from free cash for capital projects. So the line there that says total existing capital investment, that's the total of all the money you've spent from the general fund on capital projects for those three historical years. And then moving down to the second box, the first line there says net budget with a 4% projected annual growth figure. We calculate net budget using the recap sheet from the state. And we're using 4% as the projected annual growth moving, you know, as we move into the future, 24, 25, et cetera. But what you see in these boxes is the actual net budget. The next line says funded via debt as a percent of net budget. So that means what is your debt service as a percent of your net budget? And as you can see, it's somewhere, it's between three and 3.15%. That's a typical number. It is a strong number. It's not too low, it's not too high. I think it's a good number for the city. for FY23. And then the total capital spending as a percentage of net budget. So you can see those totaled up. So the bullet at the bottom just has some notes about kind of what we interpreted from the findings. So historically, the city has invested approximately three and a half percent of net budget in capital projects, both from debt and cash. ARPA funds have significantly impacted the CIP that was developed two years ago and significantly changed things. Because ARPA is cash, we can fund projects that previously may have been funded with debt, but now we have the opportunity to fund them with cash, saving the taxpayers dollars because they're not having to pay interest on those projects. And it really is a significant opportunity. Before I go to the next slide, I just want to make sure there are no questions about this. Did I explain it well enough?

[Nicole Morell]: I believe so. I do not see any questions. Thank you.

[SPEAKER_03]: All right. So taking the historical data, conversing with the finance team about what they're seeing in terms of operating budget projections, their financial forecasting, et cetera. We developed a three pronged approach to the general fund capital investment strategy for the ensuing six years, five years. So one, free cash. We want to project free cash for capital investment conservatively because we really need to protect reserve levels. It's sort of been an economic whiplash from the start of the pandemic to today. There were dire projections. Then it turned out things weren't so bad. Now we have all this ARPA money. But what does the future hold in terms of the economy? We really don't know, but we do know that it's best practice, and it makes sense, and particularly in this case, to project conservatively. So we don't want to spend too much of our free cash because we want to keep some of it back to be held in reserve just in case we need it. The second prong of the strategy is those ARPA dollars. ARPA is really a unique opportunity to accelerate capital investment in the city. And there are some rules around when it needs to be committed and when it needs to be expended. And so you'll see that there's quite a lot of projects that are accomplished or have already been sort of committed. We've already committed a lot of our ARPA dollars. But then there's more that will be committed through this plan for capital spending. That is not something that's going to last forever. Obviously, there are time limits. But for the next several years, it's a key part of the plan. And then the third is the general fund debt. So our target says that we're going to try to keep general fund debt service at 3% of net budget to maintain affordability for residents and also to avoid significant up and down swings in the annual debt service payments. And that really is essential for operating budget development. In addition, the plan calls for water and sewer projects to be fully funded from enterprise fund revenues. So the enterprise fund is set up to run those services just like a business would, and it needs to cover all of its costs. And so there are two sources that the enterprise fund can use to pay for its capital projects. They have retained earnings, which is equivalent to free cash. And so any cash funded projects would be typically funded with retained earnings, and then they can also issue debt. And then the last piece of the plan, which is something that the city does really well is to continue to be aggressive and seeking grants, including MSBA and any other non tax levy funding sources. Obviously, this is something that just makes a ton of sense. for taxpayers. And there are a lot of opportunities at the state level that the city has a strong history of being very competitive for grants. And we're sort of entering a new era of opportunity from the federal government with the bipartisan infrastructure law, just kind of opening up the doors for a lot of infrastructure investment. And I actually think the city of Medford is really well positioned to take advantage of those opportunities. All right, so here's another table. And I'm going to walk you through it because I want to make sure that folks can understand and don't get confused. I'm going to move you guys so I can see this fully. The top is the same as the last table. That's existing capital investment, but it goes out to future years. So it includes 24, 25, 26, 27, 28. So we know, because the debt that you're issuing is long-term debt, we can project what those costs are going to be. And we can see that the debt changes over time. And we can also project capital leases. Here we have the lease for the fire truck listed in FY23. There are several more years of that. And those lease payments are actually included. in the plan to be funded from free cash. So those don't appear up at the top, but do appear in the bottom. And then obviously we don't know, there's no commitment yet in terms of PAYGO spending for those future years. That will come once we move forward with the plan that has been developed. So we know what the existing capital investment is where the city has to pay it. We have to pay for the debt that we've already issued. Then we can look at the net budget projection. So again, the net budget is based on a 4% projection. And we carry that annually. Now, that could change. It could be that after the FY23 budget is all settled and you start to get into the FY24 budget, the 4% feels wrong. Maybe it's too high. Maybe it's too low. That number can be changed. And obviously, it would impact the full plan. It would flow throughout the plan. So I'm in the middle of the, I'm in the, I'm in the third table here, the line where it says funded via debt as a percent of net budget. So that refers to the existing debt only, no new debt. So you can see the existing debt drops from three, percent to 2.7, 2.5, and so on down the line. What that tells us is that you have debt falling off, and we can recapture that debt service to be used for new projects, therefore keeping the smooth debt service that we really want to see in order to keep the finance folks happy. And then funded via PAYGO is also listed there. Again, we have no PAYGO committed. So then moving down to the last table, we can see it's titled target capital investment. So this is where we identify what the resources are that we want to commit. So the first line says debt service at 3% of net budget. What I'm doing there is taking the net budget that I'm projecting and figuring out what 3% of that would be. And that is going to be compared to our existing debt service to generate the amount of money we have available for new debt, which is that next line you see. So looking to FY24, under the line that says available for new debt, there's $564,000 available for new debt service. You can see it grows as the years go on. Now $564,000 for debt service, that doesn't mean you can only do a project that's $500,000. It means the debt service would be $500,000. So you can do exponentially more in terms of the issuances, the total project cost. Down at the bottom, you can see the free cash investment target and the ARPA investment target. So these numbers were developed in conversations with the mayor and her team and the finance team. And so we've got 1.5 million from free cash in FY23. 1.5 million in free cash in FY24. And then we're going to drop down because we are not sure whether free cash numbers are going to continue to be as strong. So we drop down to 750,000 and then inch our way back up, as you can see here in the table. ARPA. Oh, and one note about the free cash investment. So that amount is not inclusive of the $2.9 million that's already been appropriated. That you'll see up at the top of the chart. And then ARPA. is limited to 23, 24, 25 because of those deadlines that the federal government included. So we've got that $10.4 million number in FY23. That includes the $9.9 million that has already been identified and approved for ARPA funds for capital projects. Not all of those projects have been started by department heads. um you know those that can take time procurement of vehicles etc can take time but it's already been committed through the process that the city's developed so that um so really what we're talking about in terms of new ARPA spending for FY23 there's a half a million dollars which i think is all dedicated to road work in the plan. And then in 24 and 25, we have a million dollars that we're saying is our target spending. So in total, that bottom line there tells us how much money we have for cash capital or PAYGO capital. I just wanna mention, I see a notification that there's someone in the waiting room. I don't know if you all are seeing that.

[Nicole Morell]: Thank you.

[Richard Caraviello]: Thank you. Do you know if we're figuring in the school reimbursement in this plan.

[SPEAKER_03]: some MSBA monies. There is a project for roof work district-wide, and I believe the total was $8.4 million, so it's spread across multiple school buildings, and we estimated a 50% MSBA portion. So that is one spot where we did use MSBA We did not yet include MSBA monies for the high school project, because my understanding is that there's still some work being done around what that project is going to be, and we're still waiting to hear from MSBA. So we took a conservative approach and did not include MSBA monies, but obviously that's something that would be wonderful to have and would significantly improve the finances, especially when it comes to that major building project at the high school.

[Zac Bears]: Thank you. Just a question. I really like targets. I think targets are super helpful. So I like seeing that our target for capital investment is that our debt services stick around at 3% of our net general fund budget. My question is, is it, you know, the free cash target, obviously the ARPA target is, is short run. So, you know, that money's going away, but the free cash target, it seems ad hoc. And I heard you say, you know, we're not sure 2025, fiscal 25 free cash is going to be as strong, et cetera. Do you think it's possible to set like a percentage target for how much of free cash we should be allocating towards capital expenditures every year, rather than just kind of saying, well we think free cash isn't going to be great so we'll use 750,000 or is that just not something that you guys do have seen in other communities.

[SPEAKER_03]: It is something that some communities do. What I have seen in terms of financial policies around free cash use is something along the lines of, we are going to appropriate no less than 25% of free cash into a capital stabilization fund. We are going to appropriate no less than 25% of free cash into a general stabilization fund. And then the rest is left to be available for various uses that the city should decide upon. So that is actually a really appropriate approach. Setting a free cash dollar target is one way to do it, but using a capital stabilization fund and committing to a percentage of free cash allows you to be flexible. So you don't know if your free cash is gonna come in up here or down here, but no matter where it comes in, you're committing a certain percentage of that right to your capital stabilization fund. And that capital stabilization fund then becomes the source of pay-go capital. So rather than using free cash directly, you have it sort of passed through the capital stabilization fund in a way that gives you consistent funding for capital, commits the city or town by policy to funding that, and it just kind of creates a more consistent resource for cash capital. So it's something that I would absolutely recommend the city consider.

[Zac Bears]: Yeah, that's really helpful. I think that's the way we need to, or you know that direction is a direction we really should move in because I think it helps for planning purposes and, you know, we say free cash and Councilor Caraviello was talking about it last night. It's really our annual surplus and then the retained surplus over time right so that's one question I have when we're talking about this is like, we have, you know, we talked earlier in the meeting about operating budget needs and, you know, we have operating budget needs and we have, you know, used one time funds in the recent years from ARPA. and free cash to cover structural deficits on the operating side. And it just is on this free cash question. It's we're all thinking on the city council about how better to account for and plan for our, you know, the surplus revenue we bring in and what it should be used for. So I would do a put forward a motion, Mr. Clerk to request the potential inclusion of a capital stabilization fund funded by a percentage of annual free cash be established. Funded by a fixed percentage of annual free cash surplus. Free cash or general fund surplus. Maybe we should start calling it the general fund surplus. I know I like I like free cash, but then, then, then people. Yeah, thank you. That's the motion.

[Nicole Morell]: We can wait till the end, we can do them all at once. Do you have a second for that we can take it at the end but we'll just take the second second by Councilor Collins, and then we'll go to Councilor Collins.

[Kit Collins]: Thank you, President Merlin. Thank you so much, Sarah, for this very thorough presentation. It's really helpful. I was gonna bring up a similar question to what Vice President Bears just touched on. I was looking at the free cash investment target and seeing that step down and step up and just looking for kind of a question of where specifically do those steps come from, which I think is not that we, not that I'm looking for a specific answer in this meeting for why Why 1,500,000 specifically? And then why that number specifically? And then why 1 million specifically? But rather, where are these, what are the theories behind these numbers? Why are we picking the numbers that we're picking? But I think to me, it's more of a point around, I think the capital improvement plan is like kind of going back to a previous going back to a previous topic I think that this is sort of one ingredient in like the comprehensive picture that we are trying to paint together. Part of that being. specific projects that we're seeking to allocate capital to part of that is understanding you know what fraction of our overall capital needs is encompassed within the capital improvements plan. I really like the suggestion that was just made that you kind of elaborated on after Vice President beers this question. around kind of institutionalizing these free cash investment targets by percentage available free cash at the end of the year I think to me that gets to the kind of consistency and predictability that we're looking for across the board. You know, I hear you that like a workable shorter term capital improvement plan like a five year one that we update every five years. That's sort of the the manageable list of, you know, short term financially viable projects and I think that a question on my mind that certainly goes beyond the scope of your assignment here is okay that list of projects is extensive but still what fraction is a is it of our overall capital needs and also the resources taken. Also the resources required to undertake those projects. the strategy of at least trying to have sort of percentage targets around, okay, we're going to put this percentage of our free cash into a capital stabilization fund, not just the projects selected for the capital improvement projects, but sort of our overall needs. To me, this is sort of an avenue that we can take to try to knit together our total comprehensive scope of capital needs over time with a sense of how our capital stabilization fund might grow over time because I think what we're concerned with I think what residents are concerned with our, you know, when will these two things intersect like at what point in our future will our capital capacity, and our total capital needs intersect when will we be able to pay for what and I think, you know, we often go back to the pavement management survey as an example or even like a metaphor for what this could look like, because that's I think our best example of a truly comprehensive scope, and then a real forecast on we will need this much from x source to execute this tier of project will need this much from y source to execute this tier of project. So, sorry to expound on that a little bit but I think, to me this gets at, I think in general, our curiosity around the capital improvement project is trying to get at, you know, the comprehensive information for what are our total needs. and what is the total package of information that we need to be able to forecast for residents, what we'll be able to pay for an online timescale. Thank you.

[Unidentified]: Absolutely.

[Richard Caraviello]: Thank you. Before we move money from the stabilization, is that a two third vote or just a small majority. What Sarah know.

[Nicole Morell]: Sarah, do you know.

[SPEAKER_03]: I think that it's two-thirds. I think that, you know, I don't wanna misspeak. I could find that out for you though.

[Nicole Morell]: Go ahead, Kim. We have a, Councilor Caraviello, do we know if the vote to move money to stabilization at that simple majority or two-thirds, do you know? let's say. Yes, I don't know if you happen to know. Okay. Okay.

[Richard Caraviello]: That's where we can find out that we can find that out, please.

[Nicole Morell]: Yep. We can. Okay. Okay. Can you add that to a question for the report? Thank you. We'll ask someone. Is that your, your question for now? Okay, so thank you, sir. Back to you.

[SPEAKER_03]: Okay. I will just say that, you know, certainly establishing a capital stabilization fund is a, you know, you're committing to using that money for capital. So it's certainly, in a way, It's different from using just straight free cash, because free cash, when it comes up, there's always a conversation. There's always a pull between multiple needs, whereas a capital stabilization fund is designated for capital and restricted to capital. And so it does kind of create a nice, dedicated funding source rather than having a fight each time if there are multiple needs that are pulling at your free cash. You can also create more targeted stabilization funds. The town where I live here in the state has a specific stabilization fund for fire department asset depreciation. So we fund that every year so that when it comes time to replace a fire engine, we don't have to go for debt. We actually have cash. There are other strategies, and I'm sure that the finance team can kind of provide more information about that. And of course, Collin Center is obviously happy to try to find some sample policies and that sort of thing that might be of interest and of use. All right, so I'm going to go on to the next slide here. So what I've done today is just give you a couple of slides that summarize the projects. Certainly, I have the full table of all 217 projects and the project plan with the detail about where those are funded and what the description of the project is and how the department's justified it, all of that. can be made available. I'm not going to talk about specific projects, though, today, because I don't think anybody wants to spend that much time in the meeting with me. But we do have 217 projects in the plan, totaling more than $170.8 million. So there's a lot of projects and a lot of money. So this pie chart just simply shows of all of those projects and the project costs, how are they going to be funded? And this is, I think, an important slide to share, really important for residents to understand kind of where money might be coming from. So we'll look at 12 o'clock here. That blue pie slice is free cash. So that's 4%. Then we've got ARPA, which is 7%. Again, a pretty significant, unique, one-time situation that we're in with ARPA. Then we have the green chunk, which is funded through general fund debt. So that is that 57% of the project costs are general fund debt projects, over $98 million. That does include $50.6 million for the Medford High project. Again, to the councilor's point, at this point, not including any MSBA dollars, which is obviously a very conservative approach, better to have that number come in lower for the city side. But nonetheless, that $50 million is in there. And then we've got $21 million for fire department stations, training facility construction. So those two projects are obviously a significant portion of that $98 million, that $71 million for those two projects. The purple pie slice, the 3%, is Enterprise Fund PAYGO projects. And then the light blue slice, that 2%, is Enterprise Fund debt projects. The Enterprise Fund debt projects are, by and large, funded through a privileged MWRA, Mass Water Resources Authority loan program. And so there are certain benefits to using debt in it through that program, because you get, you know, kind of special interest and interest rates and all that. The 27%, which again, I want to make sure people are really listening, because I think that this is really impressive. And again, it goes back to all of the work that the departments are doing to identify grants and really pursue them in particular, you know, your planning, development and sustainability department that pursues all sorts of state and federal grants to really invest in the recreation and cultural assets that you have here in the city. So that orange slice is 27%, it's $45 million, and it represents all of the other non-general fund dollars. So it includes Chapter 90, which is obviously the road funding from the state. It includes CPA, linkage, state and federal earmarks, which is something that is obviously really great for the administration to pursue. It includes all sorts of state and federal grants like park grants, CDBG, complete streets. I can't even name all of the different grants that are in there. But I just want to make sure that folks understand, you know, any residents who are listening, the departments are really working hard to access those grants and really leverage the dollars that taxpayers contribute to maximize how much money they can bring to the city from the state and federal government.

[Richard Caraviello]: Thank you, Madam President. Do we have a list of those 217 projects?

[SPEAKER_03]: I do have that list and it will be shared. I don't have it. You're not gonna see it on the screen, but it does exist, of course.

[Richard Caraviello]: If the council could be provided a copy of those projects, it would be helpful.

[SPEAKER_03]: Yeah, absolutely.

[Nicole Morell]: Thank you, Councilor Caraviello. You can go ahead, Sarah.

[SPEAKER_03]: And so this next summary table just shows the same breakdown by department. So I wanted to just make the point here that all departments were included in the process. Everyone was asked. And obviously, you can see. And if there are departments where my abbreviation doesn't make sense to you, feel free to ask. I think most are pretty self-explanatory. Parking is on here. That's the PRK and so on. There are obviously a lot of variation across departments in terms of how many projects and how expensive those projects are. That really has to do with not only the kind of scope of work of the departments, but really what capital assets they have custody of. And so you can see DPW and engineering have many, many projects, more than 50% of the projects. are attributed to DPW and engineering. Of course, that relates to the fact that they cover all the roads and the sidewalks and the water and the sewer systems, and they have many vehicles, et cetera. So, but every department is included here. We have a few smaller departments that have just, you know, one or two or three different projects, but they're laid out here.

[Nicole Morell]: Oh, yep.

[Zac Bears]: Thank you, and thank you, Sarah. This is helpful just for getting some, quantifying the plan. And this isn't really a question, more of just something to add for the record. I believe the pavement improvement study talked about about 100 million plus in need. Are the road and sidewalk projects split between engineering and DPW in this chart?

[SPEAKER_03]: I think those would have been all engineering. But what I will say is that certainly this is not an exhaustive list of all the projects that the city should be doing. Again, it only covers those 23 through 28. it would not include every single thing that was identified by the, I forget what you call it, I always call it a PCI, so excuse me that I'm not using the right terminology for you guys, but whatever was in that road assessment, certainly that is the basis though for what they identified as the top priorities for this five-year cycle.

[Zac Bears]: Right. Yeah. And that's helpful. It's just, you know, I'm pretty sure that that recommended us going up to about almost $10 million a year in investments. And if we took the, and again, this isn't a criticism of, it's just a comment because I think it goes back to the, you know, here's what we're putting in, but what is our actual need, you know, engineering over six fiscal years, let's call it 18 million. Let's call it like 3. Something million a year. Let's assume all those engineering projects or roads and sidewalk projects. We're doing about 3 million year which is great and it's more than we were doing before. And I think it might be like the maintenance level recommendation in the, in the payment plan or the PCI assessment, but to actually start bringing down and that are bringing up the PCI numbers and bringing down the number of streets that are in poor condition, it really was recommending closer to 10 million a year and, and that's just why, you know, that that piece that I was talking about earlier I think is so helpful to gauge benchmarks like, you know, I'm really glad we're spending 170 million over six years on capital I think that's really good. I think these are all probably great projects, I trust our department heads, but is 170 million absentee contact sounds good. 170 million if our need is a billion, not so good. But yeah, it's really just more of a comment and I really appreciate this chart and thank you for answering my question.

[SPEAKER_03]: Yeah, Councilor, I mean, it's a great point. You know, the one thing that I would remind you, which I know you know, is what can the city afford? So that's really the trick. You know, it would be great if we had $100 million to spend on the roads to make them perfect. The reality is that the money is just not there for that level of investment without, you know, significantly burdening taxpayers and pursuing overrides and things like that. So there's a little bit.

[Zac Bears]: I just want to push back. I mean, I think that's an ideological frame. It's not. It's a choice. We have a choice. We have a set of needs. We can choose to raise the revenue to meet those needs, or we can choose not to. But saying we have to accept poor conditioned roads because it's a burden on the taxpayers otherwise, I just think that's an ideological frame, and I don't think it should be part of the conversation here.

[Nicole Morell]: Fair. Thank you, Vice Chair Bears. Sarah, you can proceed. OK.

[SPEAKER_03]: All right, so this chart, this table shows the budgetary impact. So whereas before I was talking about project costs, now I'm showing you budgetary impact, which means rather than telling you you're going to spend $100 million on a building project, I'm going to tell you what the debt service is going to be each year. So you can think of this as how much money you're going to have to expend on an annual basis. So in terms of, and the other thing I should say is this chart compares each of those three-pronged targets to what's in the plan so that we can discover, do we have a surplus or do we have a deficit? So if I told you that you had a million dollars to spend in free cash after you listed all the projects that you wanted to actually spend and complete, I could then tell you, OK, you've got $50,000 left or you're over by $50,000. You need to cut a project that is about that amount. So that's what I mean when I say surplus or deficit compared to the target. So at the very top, you can see this is the free cash. So the first line is the total of free cash funded projects each year. And then the next line is comparing that number to the target and showing the surplus or deficit. So you can see in 23, there's a slight surplus. In 24, there's a slight deficit. $15,000 here or there in the grand scheme of things is not something that I would really push to resolve. We're never going to get perfect balance, but you can see that over the years, collectively, there is a surplus. And so it's interesting because this plan that we've developed shows a surplus from free cash, a pretty significant surplus in what I call the out years, especially 27 and 28. Why did we leave it like that? Sometimes it can be difficult to plan that far out. And so department heads use their best judgment with the full knowledge that on an annual basis, this plan needs to be re-examined and updated. And I would fully expect that those dollars would be attributed to projects that we don't know about right now, but will come up over the next couple of years. All right, so moving down to the next block there, the ARPA block, we've got the first line, which shows how much money the projects are costing us. And then we have the surplus deficit. So you can see, we brought it right up to the line there, funded all of the projects, used all of the money. We have a slight deficit totaling a little over 12,000, but that's not really material at this point. The third block covers debt service. So the annual general fund debt service projected for the projects that we've identified to be funded with general fund debt. And I should say using conservative assumptions around interest rates. is as follows. So you can see that in 2024 that number is 538,933 for all projects except for those two major building projects that I told you about, FHIR headquarters and MHS. I kept those separately because they're so significant and so impactful in terms of the budgetary impact that they really need to be considered kind of on their own line here. The reason that you see such small numbers for 24 and 25 and 26 and actually 27 too, is because when you do such a major building projects, you're issuing bans, bond anticipation notes, which means you're only paying a very small amount until you issue the full amount of the debt once the construction has gone forward.

[Nicole Morell]: So you can see that. Sorry, I have a question for Councilor Caraviello.

[Richard Caraviello]: Thank you, Madam President. So, I'm looking at the, maybe it's a little hard to hear some things you say, I'm looking at the fire headquarters in the high school. We have no money budgeted for that in 23. Is that correct?

[SPEAKER_03]: There is no debt service associated with projects in FY 23. So there's money spent. I believe there has been 150 already appropriated for design and feasibility work for one of those projects. But the reason that it looks so low, Councilor, is because it's debt service. And so the amount, you don't start paying the debt until the project is pretty far along.

[Richard Caraviello]: I don't see our library debt service here either.

[SPEAKER_03]: The library debt service is already, you've already issued that debt, so that would be included in the existing debt service. So this is just new projects on this table. The existing debt service inclusive of the library issuance was in the existing debt already committed. So that has been accounted for, absolutely.

[Richard Caraviello]: Thank you.

[SPEAKER_03]: Thank you. All right, so back to that debt service table that you see there sort of in the middle. I will point out that you can see that there are deficits. So what that is telling us is that starting in FY 25 and 26, we are spending more than that 3% target. Now, in 25 and 26, the numbers are not so bad. $50,000 over on a budget of $5.5 million is not very concerning, but once the construction of the, the potential construction of the fire project and the high school project kind of go forward, that's a pretty big number. That's not going to be ever feasible to accomplish within the 3% target. And so what I've already, you know, chatted with the mayor and the finance team about is the fact that we need to keep an eye on those projects and understand how are we moving forward. Are we going to get the MSBA loans or grants? Are we, you know, are we looking at a debt exclusion for one of these projects, which comes obviously with a dedicated funding source. So just so you know, that's why those deficits exist. They're driven largely by those major building projects. And it's not really going to be possible to do those projects and keep to the 3% target, even if you Issued no other debt, you would still be over the 3%. So it's just something to keep in mind and obviously spend a lot of time thinking and planning for as you get closer and closer to those projects kind of closer to reality in terms of construction. And then at the bottom, I have the proposed enterprise fund spending plan. And again, the I've broken it into PAYGO, which is the cash funded, typically from retained earnings, and then the debt service. So this is just for new debt associated with the Enterprise Fund. You can see that we've kind of kept it around $800 to $1.3 million. And we would anticipate that these would all be funded with Enterprise Fund dollars raised through the rates. All right, so just some final thoughts before I wrap up and I'm happy to take additional questions. So the CIP really is a living document. It does require ongoing review and it requires ongoing management. If you do a plan, and you know, this applies to any type of plan. do a plan and then let it live on the shelf or live in a folder and you never use it, manage it, then you've kind of missed an opportunity. So certainly I would encourage the city's administration to actively manage the capital improvement plan. Capital planning is an annual process. It has to be done every year to maintain a robust and accurate plan. We can expect, we should expect that sometimes the scope of a project changes or priorities can change or funding sources can change. We may have in the plan attributed a certain project to CPA funding, but you know what? They get to make their own decisions. The CPC is an independent body. They may say, no, thank you. And then we need to find a different source of funding for the project if we still want to fund it. So there are a lot of assumptions built in around grants, and if things don't work out the way we want them to, we need to find other funding sources. other city efforts really do have an impact on the CIP and can change it fairly significantly. The future of the high school is one prime example. It's such a significant and important project. And should it move forward? Depending on how that looks, it's going to impact the capital plan, absolutely. Just a note on the pandemic and sort of what's been going on over the last several years. As I think I said, it's kind of been whiplash. At first there were some real dire consequences and projected and some negative things happened as regard local government finances, but then we had ESSER funds and we had ARPA funds and we have federal legislation that's opening the door to all sorts of infrastructure funding. So there are some strange things going on in local government finance right now. And it has a particular impact on capital planning. So it's just something to really be mindful of. I know the finance team is mindful of that in the city as they kind of work through how are we going to maximize the opportunities to really get investment for the residents of Medford. you know, there are local and state ARPA funds, as well as those federal infrastructure dollars. And, you know, having a robust plan really sets you up for taking advantage of them. And I think you have the human resources to do so. And I just want to kind of end by saying I really applaud the department heads As they've kind of walked this process with me, I know it's challenging at times to pull yourself away from the day-to-day and think bigger picture. There was a lot of information that we requested from them, a lot of back and forth, a lot of questions, and I just want to thank them for all of the work that they did to get to this point. And that's it. I'm happy to take questions. As I had said, I will share the PowerPoint. I will share the list of the full project so that you can see it. And of course, I'm happy to answer questions now. And if there are follow-up questions at a later date, I will do so as well. I'm just going to turn my light on.

[Nicole Morell]: Thank you, sir. For that extensive presentation. I think we're all much more knowledgeable because of it. And I think we're all eager to get that list and the presentation as well. So thank you for that. And I will go first to Councilor Tseng.

[Justin Tseng]: Thank you. I know it's getting late, so I'll be extremely brief. And if you want to speak to any of it, you can, but I think it's just more general points. I think In this, this is for the budget as well as for the VIP but I think it'd be helpful for us to get an idea of, you know, what dollars are going to maintenance what dollars are going to improvements to see the delineation, I think would be helpful. I think in that kind of vein of things. For this is for all residents to, um, and to help us as policymakers, um, and as legislators, it would help us to have an idea of the impact of, um, deferred maintenance as well. And the, the, um, if we could get cost figures for that, just, you know, these are just general notes for the future. Um, and I, you know, I am excited for these projects, um, and excited for, for us to try to find a way to fund them. But I think in order to hold us accountable, it'd be great to have, and this is a note for the city, great to have some sort of reporting system, some software that we use, that we publish on our website as well, so that everyone can kind of keep track. And maybe there's some interdepartmental system that we can use to coordinate between departments on projects as well.

[Nicole Morell]: Thank you, Councilor Sen. Any other questions? Councilor Collins.

[Kit Collins]: Thank you, President Morell. Thank you again, sir. I think that was really, really helpful overview of kind of this, this slice of our capital improvements project and sort of overall forecasting. And I think just as a not as a question, but just as a note, you know that I sort of leave with this meeting with this on my mind is, I think that, you know, again to me this is sort of like one one chapter of the project of trying to get our as a city get our arms around. What are our total needs. And we've had discussions about this with our finance director Dickinson before as well and we know that some of those, some of some of what goes into that total need assessment is very difficult, like when it comes to the human resource capacity needs and carrying out all the projects that we could fit into an exhaustive list. But I think that, you know where this really comes into when we get beyond just the winnowed five year list I think that what the city really needs is the exhaustive look What has to be done overall? What's going to come online in five years? What's going to come online in 10 years? What's going to come online in 20 years? How are we selecting what we're selecting for this next five year period? And also like, what's the box that we're thinking inside of for what we can feasibly do? Because I think the residents deserve to know that criteria and we need to know, you know, if we're making selections based on certain constraints, you know, I think that we need to be evaluating those as well. So this is really, helpful presentation on part of this. And I think we'll all continue to continue to chew on this, you know, indefinitely going forward.

[Nicole Morell]: Thank you. Vice is embarrassed.

[Zac Bears]: Thank you, Madam President. Just want to say thank you to Sarah. Thank you to the call and center to Director Dickinson and our finance staff for pulling this together. I think it is a valuable document with a lot of information that can help inform future decision making around the city's financial plan. For me, I think the two takeaways that I have are one, executive Councilor Collins said how we can take the information we learned in this presentation to inform the work that we're currently doing to establish an ordinance to assess our overall needs for our operating budget and our capital budget. And to also better getting better acquainted with free cash and how we can manage it and how we can work on it. Um so I think those those are two great things, but I really just want to echo Councilor Collins point. Um, you know, we have we have a community. We have a city that city has capital assets that everybody uses the state of a good repair for those assets is a choice that we set democratically as a community and a choice that we've been for a very, very long time for decades in the city. some of it due to what the state says we can and can't do, have not been fulfilling. So we need to move forward and be honest with the community about the community community. I think everyone in the community agrees that they want good roads and safe parks and all of our city's capital assets to be in good repair and well maintained. The question is, is the city finally going to give the residents the choice to raise the money to make that happen? And I think that is the ultimate question here. So thank you for the presentation and I look forward to continuing the work.

[Nicole Morell]: Thank you. Any further discussion from the council? Seeing none, any members of the public wish to speak? Seeing none, we do have a motion from Vice President Bears. Mr. Clerk, if you could read it back. It was eons ago.

[Adam Hurtubise]: Vice President Bears requests a potential inclusion of a capital stabilization fund funded by a fixed percentage of annual free cash or general fund surplus. And it's a second from Councilor Collins.

[Nicole Morell]: Great, thank you. If you could please call the roll.

[Adam Hurtubise]: Mr. President Bears. Yes. That's carry on. Yes. That's a Collins. Yes. That's right. Councilor Kelly wraps. It's counter saying yes. President wrong.

[Nicole Morell]: Yes. Five in the affirmative. You're in the negative to absent motion passes. And then we do have I will find out about the vote for the stabilization fund. But I do believe we got something from the mayor when that first came through. So it's two thirds. Great. Thank you. Any further discussion, any? Do I have a motion from Councilor Collins to adjourn, seconded by Councilor Caraviello. Mr. Clerk, please call the roll. And thank you so much, sir. I really, really appreciated that. And I think eager to also just sit with the presentation myself and see that list. So very much appreciate all your time.

[SPEAKER_03]: Thank you for inviting me. You know, I've been very happy to work with the city, of course, and also very impressed with the discussion tonight, the questions. So thank you. If there's any follow-up, please don't hesitate to reach out to me or the call-in center. We're here to help, and we will be forever here to help. So have a good night. Wonderful, thank you as well.

[Adam Hurtubise]: Vice President Paris, Councilor Caraviello, Councilor Collins,

[Nicole Morell]: Yes. Yes, five in the affirmative zero negative two absent motion passes meeting it's adjourned.