Capital Finance Committee's Role Is Better Defined

With the Capital Finance Committee's role initiallly scheduled to be discussed at Monday night's township council meeting, the committee released a statement as a preemptive strike on Monday afternoon.

The CFC was supposed to make a presentation to the council on Monday night, but pulled out after Township Manager Marc Dashield failed to attend a committee meeting scheduled last Wednesday.

According to the Montclair Times, three CFC members—chairman John Reichman, Joan Zief and Brian Clarkson—showed up at the council's 7 p.m. conference meeting Monday night, and seemed to begin opening new lines of communication with the township.

During that 7 p.m. meeting, Dashield presented the council with a "Framework For a Successful Capital Finance Committee."

That plan has four parts:

• The need to align the CFC's actions with the township's policy-making role

• For the CFC to provide policy makers, the council, with analysis necessary to assist them in integrating debt policy into decision-making

• To make the CFC an integral part of the annual review of debt-management policy

• To better use the CFC by only requiring it to evaluate non-routine capital improvement items at the request of the council.

"All of these fit into the parameters of the already established Capital Finance Committee," Dashield said. "What it does, it takes it in a fashion that will make it a lot easier for all of us to deal with it ... Let's walk away with a framework."

He has requested the CFC to go over the township's debt annually so that it might give big picture advice. Dashield balked when the CFC asked for data regarding a $3.4 million capital bonding ordinance, which includes the purchase of two recycling/garbage trucks, that is pending before the council.

Meanwhile, here is the CFC statement (below) released Monday afternoon:

The Capital Finance Committee (CFC) writes in response to suggestions made by the Town Manager and certain Council members that the role of the CFC must be changed so that it only advises the Council on "policy" and does not review and make recommendations with respect to any specific spending, unless so directed by the Council. The proposed changes to CFC's mandate would render the CFC ineffective.

When the CFC was reconstituted in 2008, its mission was not limited to making recommendations on policy. Persuant to the Council's July 22, 2008 resolution, the CFC's "duties and functions" include, among other things, to (i) "review outstanding capital debt in relation to capital projects needs"; (ii) "review capital projects and make recommendations thereto"; (iii) and "review and analyze capital budgets." The CFC's role also is not limited to advising the Council. Our functions and duties include providing analyses to assist Township taxpayers to better understand capital spending issues.

The CFC has successfully performed its duties. We have provided the Council and the public with important information, which had not been previously compiled or analyzed with respect to the Township's debt; we successfully recommended that Montclair needed to convert much of its short-term notes to bonds in order to take advantage of low interest rates and to remove the risk of future rate increases; and we gave thorough and reasoned reports on specific projects, such as the Senior Care center.

It is now important for the CFC to review the new bonding ordinance of more than $3 million proposed by the Town Manager. The proposed spending appears to be inconsistent with both our recommendations and the recommendations of the financial consultant the Township hired, Robert Benecke. Benecke's report states that the Township's level of capital spending is "not sustainable" and that combined town and school spending should not exceed $4 million annually. The CFC's recommendation was that no new capital spending be approved unless it is necessary to preserve the Township's existing infrastructure or would pay for itself through decreased operating expenses or increased revenue.

Our concern is that the capital spending currently proposed by the Town Manager does not follow Benecke's recommendations or our recommendations, and continues the Township's practice of unsustainable capital spending. With the addition of $5 million to bond tax appeals, the Town's capital spending alone will be approximately $10 million in 2011. While one Council member has questioned in the media whether the CFC should be looking at items such as garbage trucks, the Town Manager's six year capital Budget calls for almost $3 million on spending for garbage and recycling trucks over the next six years. We have asked the Town Manager for information about all of the new capital spending he has proposed, whether he has considered alternatives and whether he has prioritized the projects he wants to fund. The questions we have proposed are annexed.

It would be a mistake for the Council to change the role of the CFC, just as substantial, new capital spending is being proposed. We urge the Council to direct the Town Manager to provide us with the information we have sought, so that we can provide reasoned recommendations to the Council at its December 6th meeting and give the Township's taxpayers the benefit of our analysis. The Council is, of course, free to accept or reject any recommendation the CFC makes, but it should at least have the benefit of independent third party analysis.

Signed,

John H. Reichman, Chairman CFC

Questions for Town Manager

General Questions related to managing the budget

1. In proposing capital expenditures, what consideration, if any, has been given to the need of the Town to bond $5 million to pay for tax appeals?

2. Have projects been delayed or cancelled tied to this recent financial change to funding needs.

3. Why is "pool maintenance" treated as a capital expense?

4. What standards are applied in determining what projects to fund? How are the recommendations of the town's financial advisor, Benecke (do no additional spending) and of council's advisory committee, CFC (only projects that are necessary for public safety or that pay for themselves), incorporated in the funding decisions?

5. How have the items and projects in your capital budget seen prioritized?

Specific Questions regarding Ordinance 0 11 073

Re: $2.1 million for "street projects, drainage projects and improvements to safety, traffic calming, pedestrian walkways and bicycle lanes"

1. What are the specific projects funded with this ordinance? Which, if any, of the street projects are needed to protect the health and safety of town residents? What can be deferred?

2. Why isn't the South Park Street streetscape work included within the more than $2 million for "street projects?"

3. What will the increased debt service costs be if the ordinance is approved?

4. The approved capital budget calls for $225,000 to be used to purchase one garbage truck. Why does the ordinance include $450,000 for two trucks? Is the need for two trucks a change in thinking, has the cost been researched, has the alternative of buying used equipment been considered? Does the projected funding for trucks in each of the next six years need to be reviewed?

5. Have the items for expenditures within this Ordinance prioritized? Why, for example, are bike lanes funded rather than the refurbishing of the tennis courts at Mountainside? Should new projects have a higher priority than the upkeep of existing infrastructure?

Review of Long Term Capital Budget Issues

1. Current estimates of outstanding debt range from $240 to $265 million (including the almost 16 million of Parking Authority debt). What debt, if any, will be retired this year and what is the plan for paying down debt in the future?

2. What is the plan for future issuance? How will it be paid for? What are the sources of revenue?

Review of South Park Project

1. What work is included in the $250,000 recently approved for South Park Street?

2. What is the difference between the $750,000 projected cost and the bids that have come in between $1 million and $1.4 million? Should cost estimating be done differently in the future that can improve the accuracy of the cost information provided to the Council?