ORLEANS — Selectmen Chairman Alan McClennen had a message for last week's Orleans Citizens Forum about the principal wastewater article on the May 13 annual town meeting warrant.
“Being incredibly conservative,” he told about 80 listeners at the senior center April 25, “I think there's a possibility we could end up with a situation where the taxpayers don't have to pay a penny for this $47 million project.” That prompted applause from the audience.
McClennen's remark about the implementation phase of the town's water resources management plan, which includes construction of a treatment plant and effluent disposal site as well as a collection system, came at the end of his financial analysis of alternatives to funding the work on the town's tax rate. The work would be paid for over 30 years.
Twenty-five percent of the town's $47 million investment, according to McClennen, will be paid with money from the Cape Cod and Islands Clean Water Trust, created as part of the recent legislation to tax short-term rentals. “It's projected that, over 40 years, that fund will (bring in) close to $1 billion,” McClennen said.
If voters approve the project at town meeting and at the May 21 town election, the town will borrow money from the state revolving fund at zero percent interest. McClennen noted that, due to the efforts of former state Sen. Rob O'Leary, the SRF program includes a 10 percent capital forgiveness factor, which could knock $4.7 million off the total cost.
Selectmen have decided that, though the town will pay for the treatment plant and disposal site, property owners in the collection area will pay a betterment for the pipes, an amount that should cover 19 percent of the total.
Two other warrant articles offer another opportunity to take the pressure off the tax rate, according to McClennen. One would raise the town's hotel/motel tax from 4 percent to 6 percent, and another would place those receipts in a stabilization fund specifically for wastewater projects.
“Most communities on Cape Cod are not doing this,” McClennen said. “The money just goes to the general fund and it disappears.”
The final piece of the puzzle is how far money from the new short-term rental tax will go in reducing the project's burden on the tax rate. In a handout at the meeting, McClennen wrote that, “If 25 percent of seasonal homes in Orleans are rented short-term for four weeks/year at an average rent of $3,000/week, then annual revenue to the town = $396,000/year (or $11,880,000 over 30 years), resulting in little need to increase property taxes to finance this project.”
The selectmen and the finance committee are unanimous in supporting Article 16, which would fund construction under the comprehensive water resources management plan. At last week's forum, committee chair Lynn Bruneau said, “You want to vote for this $47 million. We have to vote for this in order to tell the state we want this. It's a signal to the state that we're ready for this and SRF funding.”
Bruneau's committee was deadlocked 3-3 on Article 18, which would create a stabilization fund dedicated to wastewater projects. “It's not because we don't want wastewater funded but because other good things,” such as affordable housing and tourism, need support, she said. She acknowledged that Town Administrator John Kelly said the purpose of the fund could be changed in future years.
An audience member said the committee's split vote “was likely to dissuade people from voting for that article at all.” He asked her to “work on the members” because “if you lose this, you're not going to get the benefits of the pros and cons you're debating.”
The finance committee voted 5-2 to support increasing the rooms excise tax from 4 to 6 percent; Bruneau said the minority was “worrying about a big jump for those who own short-term rentals... some of whom have never had any tax at all.”
A woman who said she rents out her primary residence for a few weeks every summer asked if the town “was doing all you could do without raising this by (another) 2 percent.”
“If you don't raise it by 2 percent,” McClennen said, “the difference goes on your tax bill. You want your tenants to pay it, or you?”
“Will I get tenants?” the woman asked. “It's already declined a lot.” McClennen said the Cape Cod Chamber of Commerce “looked at this very carefully. The industry said that as long as you keep the total tax below 15 percent, you're competitive. Less than 15 percent is less than most of the other states in New England.”
A man in the audience said that “those of us renting know the new laws have tremendously impacted those rentals. The impact on home values will go down. Revenues go up because people can generate some income.” If they can't do that, he said, “they may have to sell. Why not leave it at 4 percent rather than put it up to 6 percent, and see what happens.”
If the wastewater project moves forward, bid documents could be submitted to the state Department of Environmental Protection by October, with bidding open between January and April. Construction would begin next spring and continue through the fall of 2023.
“When the pipeline will be ready for people to hook up will vary,” Tom Parece of AECOM told the forum. “We anticipate that by fall 2021 we'll have the plant up and running. We'll be phasing some construction downtown so we can get wastewater hooked up and get revenue coming in to the town.”