Finance Committee: Town Has $9.19 Million in Free Cash.  Residential Registration Fees Still Not Finalized


Photo: Israel Patterson /istock

Report on the Meeting of the Amherst Finance Committee, November 3, 2023

This meeting was held over Zoom and was recorded.

Andy Steinberg (Chair, at large), Cathy Schoen (District 1), Lynn Griesemer (District 2), Ana Devlin Gauthier (District 5), Ellisha Walker (at large). Nonvoting members: Matt Holloway, Bernie Kubiak, and Bob Hegner

Staff: Paul Bockelman (Town Manager), Holly Drake (Comptroller), and Rob Morra (Building Commissioner)

Public Comment: Careful Consideration Urged Before Disposing of Surplus Town Property
The Finance Committee had considered revising the 2018 town policy on the disposition of surplus town property. However, after considering what the committee needs to accomplish before the end of its term in December, Chair Andy Steinberg suggested that this task be delayed until the next council is seated in January, because there is no pressing need for deciding about the town-owned properties at this time.

Because the item was on the agenda, Toni Cunningham, urged caution when deciding to dispose of unneeded town property. She was thinking about Wildwood School, which will be vacant when the new elementary school opens in late 2026. She worried that the cost of repairing the property will be overestimated to tip the scales toward selling it to a private developer, when it could provide needed space for town programs. She advocated for doing a survey of town programs that need space prior to the building becoming vacant, and doing extensive public outreach before making a decision on the disposition of the school.

FY 2023 Free Cash Certified by the State
Comptroller Holly Drake said that the free cash remaining from the 2023 budget was $9.19 million. This includes money carried over from the previous year. She stressed that the figures she is giving are not yet final, but are close to the actual amount.

Of the total, about $318,000 is earmarked for specific uses. About $50,000 must be used for cannabis impact programs, and $162,000 in opioid settlement fees must be used for opioid treatment and prevention programs. Drake was not sure what programs satisfied these requirements. The $105,000 that the town received in cannabis tax revenue is slated to go to the reparations stabilization fund.

The town policy is to keep five percent of the operations budget of $93 million, or $4.7 million in general reserves. Drake estimated that $1 million would be devoted to roads and sidewalks, which would leave $2.4 million for the capital stabilization fund. Former Finance Director Sean Mangano had targeted the capital stabilization fund to grow so as to enable the town to build a new fire station without the need to borrow funds.

Council President Lynn Griesemer asked Drake to provide the total amount in each of the three funds, reparations, general, and capital stabilization. Each of the funds is earning interest, with the reparations stabilization funds earning over $7,200 last year. Bob Hegner asked what amount would be needed for a new DPW and fire station, but Drake did not know. Steinberg clarified that the $1 million gift to the Jones from Amherst College went to the private fundraising side of the renovation and expansion, and does not lower the town’s obligation of $15.8 million for the project.

The Town Manager will submit a set of financial orders for the use of the free cash at the November 13 Town Council meeting. The Finance Committee will then need to hold a public hearing and send its recommendations back to the full council for approval.

Cannabis Tax Revenue Recommended to Be Added to Reparations Fund
Town Manager Paul Bockelman said the town finance department has not had a chance to work on the funding options for reparations suggested in the African Heritage Reparations Assembly (AHRA) report. The report strongly recommended an alternative  mechanism to accelerate the ability to use reparations funds sooner than the 10 or more years needed to accumulate a $2 million endowment, instead of the current policy of adding to the fund every year an amount equivalent to the year’s cannabis tax revenues. Bockelman said that AHRA Chair Michele Miller gave him a list of legal questions about distributing reparations funding, and he will submit them to the town council.

Ellisha Walker made a motion that the committee recommend that an amount equivalent to the annual cannabis tax revenue be added to the reparations stabilization fund. There was some confusion about whether the Finance Committee could recommend this, when it was usually the Town Manager who brought it to the council before it was referred to the Finance Committee. However, the Finance Committee does not have another meeting before the November 13 Council meeting, so the recommendation was passed unanimously.

Should this council or a future council want to enable reparations programs to utilize the money in the stabilization fund, it would require a two-thirds vote of the council. Bernie Kubiak recommended that the successor committee to the AHRA should have a discussion about what its priorities for the funds are. He noted that using a $2 million fund as an endowment would only yield about $67,000 annually in interest, which is not enough to run a youth program, for example. He added that the town does not necessarily need to treat the fund as an endowment, but the uses need to be determined in order to choose an optimal funding plan.

Rental Registration Fees
Steinberg pointed out that the Rental Registration bylaw and fee schedule needs to be approved by this council if they are to go into effect for the next fiscal year. The Community Resources Committee approved the draft bylaw at its October 19 meeting, and the Governance, Organization, and Legislation Committee will be reviewing it at its meeting next week. The Finance Committee must approve the proposed fee schedule before the full council can discuss and approve the bylaw. The fee schedule proposed by the CRC recommends a registration fee of $100 for owner-occupied properties of up to six units. Nonowner-occupied properties will pay $250 for a permit with an extra $50 for each additional unit up to a total of $700. Inspections will cost $150.

In public comment, Renata Shepard urged that the fees be fair for small landlords and that there be a discount for low-income property owners. But Building Commissioner Rob Morra said that the town does not have an accurate record of how many bedrooms are in each rental and probably won’t have accurate data until all properties are inspected over the next five years, even though that information is requested on the rental application form.

Hegner asked why the registration fee is largely property based, rather than on the number of units rented. Morra replied that the town wants the permit fee to reflect the amount of paperwork needed. He said it didn’t seem fair to charge large developments $10,000 or more for the permit, so the cap of $700 was proposed.

Steinberg worried that the fees collected would not cover the cost of inspecting most rental units every five years, and that the difference would come out of the general operating funds, although he conceded that the town needs the inspection program. Morra felt that his budget was sufficient, even with paying salaries at the top of the scale to hire additional inspectors. He said that with the current complaint-based inspections, the inspectors always find violations, so he thinks there are many more properties with problems. “We just don’t know,” he said.

CRC Chair Mandi Jo Hanneke (at large) said that the council decided that once the bylaw and fee structure had been approved by the Town Council, they would become the purview of Board of License Commissioners who could adjust the fees as needed to cover the costs of the program.

After an extensive discussion, Kubiak felt the committee was “getting hung up on the few small landlords who are fortunate to own three properties in town and live in one of them.” Because several committee members and Bockelman had to leave due to previous commitments, the committee delayed a decision on the fee schedule until its November 17 meeting. The council will probably have its first reading of the bylaw on November 20.


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1 thought on “Finance Committee: Town Has $9.19 Million in Free Cash.  Residential Registration Fees Still Not Finalized

  1. The Town’s Financial Management Policies & Objectives state to maintain a certified Free Cash balance equal to at least 5% of the operating budget, and anything beyond 5% may be appropriated to the Stabilization Fund(s).
    It seems to me like good budgeting would mean you spend a little less than you expect to each year, with some money leftover unspent but not too much. Per the data available on the DOR’s Municipal Databank, from Fiscal Year 2003 until FY 2019, Amherst’s Certified Free Cash averaged 5.54% of the prior year’s operating budget, which was plus/minus $1.4 million or less of what would have been 5%.
    Since 2020 however, the pattern has changed, with the amount of Free Cash higher than before, averaging 8.73% of the operating budget (if my calculations are correct):
    FY 2020 $2.7 million beyond 5%
    FY 2021 $1.3 m beyond 5%
    FY 2022 $4.7m beyond 5%
    FY 2023 $3.7m beyond 5%
    FY 2024 $4.15m beyond 5%

    Has this been intentional, overbudgeting / underspending so that the excess monies leftover can be allocated to the Town Manager/Council’s priorities outside of the budget cycle or put into the Stabilization fund accounts to ready the town to pay for major capital projects?

    On the Council’s agenda for 11/13 are a few requests from the Town Manager for ways to spend / allocate this leftover “free cash”. I wonder are interested residents plugged in at this time to advocate for their priorities before decisions are made and funds are allocated.

    According to figures in the municipal databank, in addition to Free Cash it appears that there is $8.6 million in the General Stabilization Fund and $4.9m in Special Purpose Stabilization Fund(s), for a Total Reserves of $22,645,181. Last year, the total was $25 million, some of which was presumably encumbered/spent.

    For argument’s sake, say $5m (5%) is kept in Free Cash per the financial guidelines, and another $5m kept in General Stabilization for a total of 10%* reserves put aside, that leaves $12.6 million available. What are the highest priorities of town residents at this time? A new fire station? Reducing the borrowing of the override for the elementary school project? Making a proper dent in the huge backlog of road and sidewalk repairs? Building new sidewalks/bike lanes to better link village centers? Staffing for the Sustainability department? Funding climate change initiatives like getting municipal buildings off fossil fuels?
    Now is a good time to weigh in as what to do with the Free Cash is on the Council’s agenda this Monday 11/13 and the Finance Committee’s on Tuesday 11/14.

    [*From the Financial Management Policies: “Reserves, including the combined balance of Free Cash and Stabilization Fund, should be maintained at 5 – 15% of general fund operating revenues. The primary objective of the Town’s reserve policy is to provide the Town the flexibility to sustain service levels despite the adverse financial impacts of economic downturns and unforeseen and extraordinary expenses.”

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