CHATHAM — The obvious take-away from a consultant’s report last week is that Chatham could face more than $37 million in capital projects in the next five years. But the more subtle message is that the town should think about big-ticket purchases as a yearly expense, rather than items on a finite to-do list.
Selectmen last Monday received an interim report from Monica Lamboy of the Edward J. Collins Center for Public Management at UMass Boston. Using funds from a state grant, the town has contracted with the Collins Center to review its five-year capital planning procedure.
The study considered projects over $10,000 that were non-recurring expenses on equipment, property or improvements expected to last five years or longer. By planning those expenses over five years or longer, “you can really start to level out that financial investment so you don’t have those major peaks and valleys” in cost projections, Lamboy said.
In its message before this year’s town meeting, the finance committee opined that “thoughtful decisions around the prioritization of capital projects need to be made by town leadership.” For years, the finance committee has criticized the lack of a framework for assessing capital projects and said it supports the Collins Center review as a means of helping the town better understand and analyze its capital needs.
The review is still underway, but Lamboy said department heads submitted $37,183,949 in capital requests for fiscal years 2020 to 2024. Almost $19 million of that figure comes from water and sewer projects, with another $7.5 million in public works equipment and projects. The various projects are sorted by possible funding sources, with items over $100,000 to be bonded, and the rest coming from the general fund, water and sewer revenues, state highway funds or other grants.
The process acknowledges that some of the capital requests won’t make the cut, Lamboy said.
“The hard part is making hard choices,” she said. “There are never enough dollars available for capital needs.”
The Collins report recommends that town officials grade each capital request based on six criteria, using a numerical score. The highest-scoring capital requests will have a long useful life or are mandated by the state or federal government. Points are also awarded to projects that increase the effectiveness of government by improving efficiency and customer service or reduce the town’s potential legal liability. Projects get points for increasing revenues or grant opportunities, or reduce operating costs over time.
Working with town staff, the consultants included two other criteria unique to Chatham. The first judges “community utilization,” or whether a project is used seasonally or year-round, and how many members of the public benefit. The second criteria is “community values,” which awards points for requests that encourage “Chatham-scale, balanced economic opportunity,” cultural and recreational opportunities, youth and families, environmental sustainability, and other priorities.
The scoring system is “a way to identify those projects that are maybe not yet ready to be moving forward,” Lamboy said.
Next, the Collins report will identify the best funding sources for the projects to be included in the first five years of the plan. Lamboy said the review included an examination of the growth prospects for the town’s general fund, and here the news is good. The consultants projected robust growth of new revenue, which comes mostly from new construction or renovations that require building permits.
“People are investing in their property in Chatham, particularly in the last years, and that’s a positive trend to provide revenues for you, to not only capital but also for programmatic needs,” she said. The review also examined the town’s free cash and stabilization accounts.
“We can see how this is growing. The pattern shows us that you are investing, you are saving those dollars for rainy days or for initiatives going forward,” Lamboy said.
The consultants will also be helping the town finalize the schedule, working toward an annual financial target for capital spending, and then scheduling projects to best meet that target.
“By using a percentage of budget, your capital investment will grow just by an increment each year, as your operating budget grows by a little increment each year,” she said.
Town Manager Jill Goldsmith said the local criteria are particularly beneficial. Beach nourishment projects, for instance, scored high among capital projects because of the local benefit they provide. The full list of capital requests will be reviewed through early fall in time for the first budget summit. “This will be a rolling document,” with a new fiscal year added each year to replace the current one. Department heads will be encouraged to submit their requests in July, “to give us plenty of time to run through the rating criteria,” Goldsmith said.
“This is going to be very beneficial for us, collectively, moving forward,” Selectman Cory Metters said.
Board member Jeffrey Dykens agreed, but admitted that it’s tough to acknowledge that the town will be called on to spend another $38 million on capital items in the next five years, when many of the big-ticket items – a new fire station, the police station and town hall annex, and water and sewer improvements – have just been completed.
“I can’t imagine us needing to invest in more infrastructure in this town,” he said.