HADLEY — Growing the tax base and increasing the water and sewer rates may be necessary to ensure Hadley’s capital plan can adequately maintain municipal services, buildings and assets, according to Town Administrator Nate Malloy.
At a Bi Board meeting of the Select Board and Finance Committee last Wednesday, Malloy said the capital plan is a “pillar of budgeting for a local community” and should be done every year.
While Malloy said the town has good capital planning policies in place, as well as a good structure and appropriate way to rate requests, its officials are not always following this guidance.
Malloy said he is also concerned that a spreadsheet isn’t immediately available with all the vehicles, roads, buildings and other capital-funded items.
This year, Malloy is proposing that the Finance Committee and Capital Planning Committee have joint meetings to hear departmental requests for capital items, which would then come before the Select Board.
“The idea is to have everyone understand what are the requests, how can we fund them and where are the priorities,” Malloy said.
Capital requests were recently submitted by departments, and staff is meeting with department heads this month to review requests and begin prioritizing what moves forward to the Capital Planning Committee.
Malloy said this is being done in advance of the special Town Meeting that will be held Oct. 22.
Hadley currently spends a little more than $200,000 for debt and capital each month.
Items in the capital plan, Malloy said, can be paid for from free cash, from the stabilization account, through one-year borrowing and 30-year debt exclusions, as well as within the tax levy.
Hadley already has the highest level bond rating, a AAA from S&P Global Ratings, which lowers the costs of borrowing. But this will be difficult to maintain due to the overall economic outlook and challenges of having consistent new growth, Malloy said.
For now, though, the town can borrow money at relatively low cost. “We actually want banks to be lending to the town,” Malloy said.
The town’s capital plan is also tied into the implementation of the community’s goals, he said.
Malloy said officials could see if there is an opportunity to bundle to save money, such as if several departments are requesting computers.
Water and sewer rates will need to increase to fund projects. The rates have been mostly stagnant for about 20 years.
“There’s big expenses on the horizon for Hadley, and a lot of them are with water and sewer,” Malloy said.
For big-ticket items, some will be done via debt exclusion, like $9 million for refurbishing the municipal water tanks at Mount Warner and Mount Holyoke.
The town also has to figure out how to build a new Department of Public Works headquarters, with uncertainty about when that will happen due to the anticipated $20 million or so cost projections unveiled last year. That, too, would be done through 30-year borrowing.
Finance Committee member Amy Fyden said the committee has tried to get money into a reserve fund, and building up this account would allow the town to borrow against it for the more expensive items. When part of the Proposition 2½ tax-cap override last September was to fund capital needs, though, that was rejected by voters.
“We need to start building those buckets back up,” Fyden said.
Malloy said one untapped area for funding is the Community Preservation Act account. To that end he submitted two proposals prior to that committee’s Aug. 10 deadline, both of which depend on grants.
The first is for $30,000 to update the Open Space and Recreation Plan, which would make the town eligible for additional grants. The second is for $180,000 to design multiuse paths on Middle and East streets, implementing priorities identified in the Complete Streets Plan.
