Summary
Some have said that the Cold
Spring Road water main project will be “free” to taxpayers. However, based on
figures from the town’s documents, the water main would be far from free.
According to the town’s numbers, the total cost to the town of building and
operating the water line for the next 20 years would be $1,848,000. The town projects water revenues from the
new users over the same period at $979,000. This would leave a shortfall of $869,000.
Cost of Loan The town has estimated that debt service on a bond
issue at a 5% interest rate would total $57,000 annually for the first four
years, and would jump to $75,000 annually for the following 16 years. This leaves the town $8,000
short each year for the first four years, and $26,000 short each year after
that, for a total of $448,000 over the
life of the bond. Over 20 years, the total cost of this debt service would be $1,428,000.
Cost of Water Delivery The town has
estimated that labor and service costs associated with the water line extension
would be $17,600 in 2005. The town projects small increases in these expenses
every year, reaching $24,900 in 2024. Over 20 years, these costs are projected
to add up to $420,000.
Income from New Users The town has said it “intends” to pay the debt
service on the bonds with water fees from the Clark, Northern Berkshire Health
Systems, and Mount Greylock Regional High School. These revenues are expected
to be about $49,000 per year. Over 20
years, these revenues are projected to add up to $979,000.
Total Shortfall for Williamstown
The difference between the
total projected costs and the total projected income over a 20-year period,
using a 5% municipal bond, would leave
Williamstown with a shortfall of $869,000. If the town is instead able to
obtain a loan at a very low 2% rate from the state “revolving fund,” the
shortfall over this period would still amount to $500,000.
This shortfall would have the effect of a “back door” tax on the
citizens of Williamstown. The town has
not identified how it would make up this shortfall: the only possible sources
would be water fees and/or our taxes. This money would not be available for
other important public services, such as schools, police, and fire protection.
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Two
possibilities for financing the Cold Spring Road water system
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Conservative Case |
Optimistic Case |
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Municipal bond 20 years at 5% |
Low-cost loan 20 years at 2% |
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Cost of loan
(interest plus principal) |
$1,428,000 |
$1,059,000 |
|
Cost of 20 years of water delivery |
$420,000 |
$420,000 |
|
Total
cost of new water system during the first 20 years |
$1,848,000 |
$1,479,000 |
|
Projected income from new water fees from
new water line |
$979,000 |
$979,000 |
Total
shortfall for Williamstown
|
$869,000 |
$500,000 |
Sources: 1. Figures on
projected income from fees and cost of water delivery are from the Town of
Williamstown’s document entitled “Operating Expense and Debt Repayment
Analysis” 2.chedules of loan repayment courtesy of Peter Fohlin
1.
This is a general
obligation bond. This means that the ultimate revenue stream pledged to repay
it is town taxes. The liability falls
on all taxpayers.
2.
The town is assuming the
risk of the entire water main project. In public-private partnerships, it is
customary to have legally binding risk-sharing contracts in place. But as we
vote tonight, we have none. We do not
know who will pay for cost overruns or other unanticipated expenses.
3.
There are no written
agreements to ensure that the Clark or Northern Berkshire Health Systems will
purchase the amount of water the town has projected over the next 20 years. For
example, what if Sweetwood doesn’t build all of the projected units? What if the Clark café closes? Any reduction in water use would mean a reduction
in water fees.
4.
The limited-capacity
Cold Spring Road sewer line may fail as a result of the increased flow from the
16” water main. But the town has no
contracts with the Clark or Northern Berkshire Health Systems for repair and maintenance
to the sewer line. A new sewer line is
a multi-million dollar expense: this cost would fall to the residents of
Wiliamstown.
EIGHT REASONS TO VOTE “NO” ON THE WATERLINE BOND ISSUE
The Williamstown Citizens for Informed Decisions,
an informal study group concerned about Williamstown’s future, urges a NO vote
on the proposed bond issue at Town Meeting on December 2nd. After extensive
research and analysis, this group has concluded:
1. This
project is not free: According to the town’s own documents, the
proposed bond issue would leave the town with a shortfall of $869,000 over the
next 20 years. If the town is able to
obtain a 2% loan from the state revolving fund (instead of the 5% bond that forms
the basis of the town’s cost projections) we would still be left with a
$500,000 shortfall. This money would not be available for other important
public services.
2. This
project invites more questions than it answers: Why are we
rushing into this? How would we pay for
repairs to our unusual pressurized sewer line in the event it fails? What would
we do in the event of delays, cost overruns, or other problems associated with
the project? Would our zoning by-law withstand challenges to our 2.5-acre zoning
by those proposing to develop along the line or beyond, perhaps offering to
extend the water line for “free”? We
might not know the answers to these questions until it is too late.
3. We
don’t need this project: As a town, we have
repeatedly determined that, as a matter of sound planning and economic
analysis, we should maintain the rural quality of the Cold Spring Road
corridor. This 16” water main would run contrary to our careful master planning
over the last decade, which advises us to concentrate new development in the
town center and to leave the outlying areas as our scenic currency, an asset to
the town for generations to come.
4. This
bond issue creates an obligation of all taxpayers in Williamstown: While the town has stated its intention that all
of our borrowing costs will be covered by water receipts from the new users,
this is not guaranteed. We would face financial risk in the event these water
revenues are lower than anticipated, are postponed by construction delays, or
are more than offset by steep labor and service costs associated with the new
line.
5. Mt.
Greylock’s water issues can be addressed in the short-term: The students are safely drinking bottled water at
a modest cost. An important, and belated, first step is a careful investigation
of the source of perchlorate. Three
Williams scientists have volunteered to conduct this analysis for the
school. Continuing with bottled water,
and/or using proven filtration technology, are viable short-term solutions.
6. Mt.
Greylock’s water issues can be addressed in the long-term: Several
options exist for replacing the school’s two wells should that become necessary
in the future. One of the wells drilled
15 months ago on Mt. Greylock property was deemed insufficient for the combined
uses of Mt. Greylock/Clark/NBHS, but it may have sufficient water for the high
school alone. This well (located 1500 feet from the school and at a depth of
690 feet) should be carefully analyzed for output and water quality. This study
has never been done. Other public water supplies exist locally which have been
offered to Mt. Greylock.
7. The
water main will not change fire suppression techniques at Mt. Greylock for at
least two years: The school does not currently have any
sprinklers, and when the water main would be completed in about two years, that
fact would not change. The only trigger for sprinklers, with or without a water
main, would be new construction or a “substantial renovation” of the existing
facility, which would occur only after years of careful planning. Such a
project would include significant state funding (under a moratorium until 2007)
and a Lanesboro share. In the meantime, the school is adequately meeting its
fire safety obligations by means of fire extinguishers, fire doors, fire exits,
and - most importantly - fire drills.
8. This is a huge project which should not be undertaken in
haste: In the last several weeks, many new issues
have arisen as to the financial and other risks entailed with a project of this
magnitude, as well as the potential unintended consequences for further
development in South Williamstown. Our town is meeting on Dec. 2 only because
the Clark’s Board is meeting on Dec. 3.
It’s time to step back, take a deep breath, and figure out just where we
are and where we want to go as a town, before rushing into a decision we may
regret.