Amherst may put $5M in reserves toward new elementary school

By SCOTT MERZBACH

Staff Writer

Published: 03-16-2023 7:25 PM

AMHERST — Amherst’s Finance Committee is recommending that up to $5 million from the capital stabilization fund be directed toward the $98 million elementary school project to pay the initial costs of installing geothermal and photovoltaic systems.

But a proposal to direct, either separately or in combination, $10 million from the town’s other reserve funds toward the project, as a way to reduce the overall burden to taxpayers, is being rejected by the finance panel.

At the committee’s Feb. 28 meeting, members unanimously endorsed District 1 Councilor Cathy Schoen’s proposal to dip into reserves to cover expenses related to the green energy elements of the project.

Schoen said energy savings tax credits could yield a return of $5.4 million to $6 million as a quick payback, and that use of reserves in this manner would help reduce the added expenses for taxpayers.

“What I was looking for initially was softening, moderating, the impact,” she said.

Finance Director Sean Mangano said for every $1 million of reserves used it reduces by $9 the annual tax impact for the average single-family household. So the current $478.24 projected annual tax bill increase for the school project for an average home assessed at $446,953 would go down to $469 with use of $1 million in reserves, Mangano said.

That increase is based on the town being responsible for a projected $54 million of the total project, with much of the remainder coming from the Massachusetts School Building Authority.

The idea of building up the capital stabilization fund to $20 million has been to pay for the costs of a new South Amherst fire station in four to six years, Mangano said, and to have money available for a new Department of Public Works building.

“Anything you take out of capital stabilization will obviously impact our ability to build up that fund to the level it needs to be, which we estimate around $20 million to achieve the goal of building the fire station without incurring debt,” Mangano said.

He said the window, though, has gone away to do four building projects, including the addition and renovation of the Jones Library, in the manner town leaders had agreed on. Because of rising project costs and interest rates, “The ability to borrow for all of these projects has gone away,” Mangano said.

$10M idea rejected

At Large Councilor Ellisha Walker made a case for using $10 million from reserves. Her idea was rejected by the Finance Committee, with only Walker voting in favor of the concept.

District 5 Councilor Ana Devlin Gauthier said using reserves beyond the capital stabilization accounts would likely force a delay in the other projects, or more borrowing costs for those.

“I recognize the impact on taxpayers is significant. I will feel this personally,” Devlin Gauthier said.

Walker said sufficient reserves are available for her plan, with $24 million in all accounts, and would still leave a sufficient percentage intact and enough time to increase reserves before the next construction project is ready to go.

“Lowering the debt exclusion override from $55 million to $45 million represents an 18% lower impact to individuals and families,” Walker said.

Walker spoke about the extensive poverty in town, with people not having enough money for basic needs, such as 37% of youth not having enough money for food, clothing and shelter. Economic equity and discriminatory practices are causing a declining enrollment in public schools, she said, and that low-income people can’t talk about tax increases in the same way as other residents.

“Maybe for people who have enough privilege to measure the increase in the absence of a morning coffee or latte, but this is not the reality for many of our residents,” Walker said. “Without a substantial amount of relief for these residents, this is not a social justice project.”

Council President Lynn Griesemer said she appreciated Walker’s heartfelt comments and representing the voice of many residents who are asking for more reserves to be directed at the capital projects. But there are other demands for capital, such as a youth empowerment center, a new senior center and repair of roads and sidewalks.

“If we at this point make the decision to dip into our reserves for the school, we then just have to kiss those others goodbye,” Griesemer said.

As it stands, Griesemer said the fiscal plan may not be able to account for a DPW project in the next five to six years, even though the town has been planning for the four building projects for close to 20 years.

“Not only have we been planning for this by accumulating reserves, but we have been working hard to get as much other funding in as possible,” Griesemer said.

Inflation and rising interest rates, though, have affected the plans. “In this year alone the cost keeps going up, and we don’t have any control,” Griesemer said.

The building of reserves is also a slow process, Finance Committee Chairman Andy Steinberg said, and addressing the four building projects with that money can’t be done quickly if $10 million is removed.

Scott Merzbach can be reached at smerzbach@gazettenet.com.]]>