[RP TownTalk] Town's Financial Situation/Executive Order Freezing Hires/Expenditures

Sat Apr 23 19:13:32 UTC 2016

All -

The agenda was re-posted late yesterday with an item under the Mayor's report that deserves some clarification in advance of the Worksession.
In response to the Mayor issuing an executive order this week freezing all hiring and all spending requiring direct authorization unless it directly impacts the health, safety, and welfare of the town, a request was made and honored to modify the agenda so that the public was made aware of what will be discussed at Monday's meeting.

In 2010 GSA indicated that the lease-purchase option they had on the USDA building on River Road made economic sense to purchase.  Their current lease was at ~$8.5mil/year with anticipated increases of an additional ~$2.5mil.  They had an option to purchase upon the lease expiration in February 2015 for ~$30.6mil.  Clearly it shouldn't surprise anyone that the federal government realized that they would break even in 3 years on a building that has a Fair Market Value of $60-75mil.

The 112th Congresses in 2012/13 authorized the appropriation for the purchase.  In 2015 the GSA purchase of the USDA facility was the single largest real estate acquisition (as measured by money) the agency did all year.

The original Purchase and Sales Agreement dated June 14, 2010 between Hub Realty College Park I, LLC and Government Properties Income Trust (GSA) was duly filed and public via the Securities and Exchange Commission (SEC) Form 8-K filed June 18, 2010.

The sale of property from a non-government entity to a government entity takes the property off the tax rolls.  The potential impact of the sale was effective 2015 so it impacts our current fiscal year with a little over 2 months left and in perpetuity.  This equates to an approximate $400,000 shortfall this year and going forward.  On our current budget that is roughly 5.7%.

I do not have additional information to report and requests for current up-to-date income/expense/budget statements have not been provided so I and the rest of Council are left looking at the information provided as of a month ago.  The town uses Quickbooks for accounting and the requested reports take a few minutes to produce; I am unsure as to why the request to see updated financial information in advance of Monday's meeting has not been satisfied.  I fully realize the reports may not be reconciled or balanced but having to look a month back to make choices is frustrating and counterproductive.

In looking at the FY16 budget I am confused why a 5.7% shortfall that is normally a non-event for any business or organization has a significant enough impact that an Executive Order was issued freezing all hiring and signifying mayoral pre-approval over all expenditures.  This year's budget did include balancing the revenue with $552,055 (to be offset with capital costs of constructing a new town hall for $5.5+million). This isn't the first time the town has had lost revenue issues.  In my time on Council the town additionally lost a six-figure Community Development Block Grant and also a $500,000 state grant towards the construction of the new town hall due to non-performance and forgetting monies have expiration dates and time out back to the state coffers.

I am personally upset by the recent turn of events because I have been working almost a year on Economic Development projects that have come to fruition (dependent upon having Committee money for town grants remain unencumbered).  We currently have 4 requests by local businesses equating to around $1mil in new and expanded development projects.  I sincerely hope this does not impact any of those:
-Ernie's Lock façade improvements (unsolicited request from the owner aware of our grant program)
-Bikram Yoga 2nd Floor Expansion to offer a new Wellness Center (so happy to see new businesses doing well enough to expand within a couple years of opening)
-Town Center Market Patio Expansion (they are bursting at the seams Th/Fri nights)
-New Beverage/Food establishment at the corner and second bay of the first floor at Town Center (this is almost a year in the making)

The issue to be discussed on Monday has a very real, and very immediate impact to every constituent in town and I hope everyone understands the seriousness of the issue and the community comes out to ask some tough questions.  The Mayor and Council have direct  accountability (at least under our current structure and form of government) on financial matters to the residents and we owe a complete and clear explanation of what happened, what impacts there will be in the immediate and projected future, what mitigation will be done now and in the future.

In any organization things happen, but when they do, I believe it imperative that screw-ups aren't swept under the rug, or otherwise hidden or obfuscated, and problems get discussed and solved rather than focusing on finger pointing.  Please come out Monday night at 8PM to Town Hall to listen, opine, and question the financial health and stability of our town.

Respectfully

Jonathan

Jonathan W. Ebbeler
Councilman - Ward 1
Chair, Economic Development Committee

Actual vs. Budget Prorated as of 2/29/2016
https://www.dropbox.com/sh/inrbh8tw0kdwdqb/AACMuhlBfclEuRQTJ1oYZ15Ga/FINAL%20Budget%20vs%20Actual%202-29-16.pdf?dl=0

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