Suggested by: Jack Edmonston and Jim Pierce
Prepared in 2016
Introduction: This is an idea, a suggestion, not completely formed, which we understand needs work. The comprehensive Long Range Capital Plan (LRCP) submitted to the Board of Selectmen (BoS) by the Capital Improvement Planning Committee (CIPC) on November 19, 2012 includes five recommendations. The intent of the authors is to build on that plan. They are paraphrased below with comments on current status.
1. The BoS should proceed as soon as possible to address public safety and paved infrastructure
- Joint Public safety Debt exclusion debt exclusion defeated in May 2013
- $1.3M of projected $6.5M need appropriated toward roads
2. The BoS should fund a study for potential re-use of H.T.Wing School
– This study is nearing completion.
3. The BoS should plan on issuing new debt to match FY07 levels
– Major projects listed on pg 7 of November 2012 LRCP from CIPC
4. As required by MGL c. 44 s. 63 funds from sale of assets to be spent on new debt.
– Sale of SSVC land pending
5. BoS should establish a policy allocating new growth above a threshold to capital
– SSVC and power plant upgrades may provide needed new growth
As the CPIC report indicates, Sandwich’s infrastructure needs significant investment. Attempts at investment have been met by resistance from overburdened taxpayers. In the following report, the authors summarize the factors that make Sandwich’s situation unique among Cape Cod towns and suggest a process that might allow us to move forward with the CIPC recommendations.
The crux of our proposal is as follows.
A. Establish a capital investment funding mechanism that is acceptable to voters
B. Divide some of the larger items in the LRCP into manageable segments
C. Propose a plan for sequencing project segments over the next 10 years
D. Quantify any borrowing necessary and the consequent tax impact
We know that that we do not have all the information or necessary skills to fully address a problem of this magnitude, but we offer our ideas in hopes they will become the basis for further action by the CIPC.
Sandwich is unique among Cape Cod towns.
The population of Sandwich grew from 8,700 in 1980 to 20,000 in 2000. That explosive growth led to some unique challenges.
Our growth was not fueled by second homeowners or retirees. It came from full-time residents, mostly younger, still working and with school-age children. This has given Sandwich the highest concentration of the most expensive citizens, school-age children, among all 15 Cape towns. More than one in six Sandwich residents (17%) is between ages 5 and 18. The next closest towns, Mashpee and Bourne, are tied with one in eight (12%) residents being school-aged. The Cape average is just over 10%.
Educating children is the most costly function of town government. Consequently, 57% of the Sandwich budget supports the local school district with another 6% allocated to charter school tuition and Upper Cape regional Technical High School.
According to a 2013 study by the Chesapeake Group funded by the Cape Cod Commission, 83% of Sandwich residents live here year-round. Sandwich has not only the lowest percentage, but also, the lowest absolute number of seasonal homes among Cape towns. Sandwich is accurately described as a year-round community where working parents live in very nice, but modest homes and send lots of children to school. Other Barnstable County towns do not fit that description.
Schools are financed largely with property taxes, and property taxes are based on property values. According to Mass Department of Revenue At-A-Glance community comparison data, Sandwich’s total taxable property value is $3.7 billion or roughly $180,000 per person. Compare that to our neighbor Mashpee, which has fewer residents and fewer school-age children. Mashpee’s total property value is $4.6 billion, about $330,000 per person. As if that were not enough, Mashpee gets almost $2 million more in state aid (Chapter 70) based on a formula we have long tried to change.
The conventional wisdom that Mashpee’s higher valuation comes from commercial real estate is not correct. Mashpee’s residential tax base ($4.2B) compared to Sandwich ($3.2B) is where the difference lies. The major difference between the two towns is the nature of the coastline. Mashpee has 30-40 miles on warm water. Sandwich has about 7 miles on Cape Cod Bay. As a result Mashpee (according to the Chesapeake Group study) has 3,435 seasonal home to 1,255 for Sandwich.
Thus, for the past two decades, Sandwich has been squeezed between the need to provide quality education and the lowest tax base per person on Cape Cod from which to draw revenue. Town leaders have responded by drastically tightening down on capital spending requiring new debt. As a result Sandwich is not leveraging its credit position, a AA+ bond rating with interest rates at all time lows.
Sandwich government is efficient.
Based on per pupil net school spending data available on line at the Mass DOE website, Sandwich spent less per pupil in 2014 fiscal year than any other Cape Town, $13,348.
(Above towns have very low enrollment, so no economies of scale.)
*Barnstable and Plymouth have much higher enrollments, so enjoy some economies of scale. Our population is similar to that of Bourne, but less than that of Yarmouth.
Even with this relatively low level of expenditure Sandwich has managed to create a first class school system as evidenced by our test scores, national rankings by Newsweek and Niche.com, college admissions rates, admissions to top level colleges and very low drop-out rate.
The rest of Sandwich government is also efficient. Sandwich spends less per capita on municipal services than any other Cape town, only $3,478.
Sandwich government overall (including school spending) is also efficient, according to the Mass Department if Revenue (DOR) At-A-Glance data. The total budget and the population of each city or town in the Commonwealth is shown at this site, and Sandwich, at $3,478 per citizen (budget divided by population), is the lowest in Barnstable County.
Despite our efficiencies, Sandwich has the highest tax rate on the Cape.
Our low tax base and high concentration of students are a tough combination, and even with all of our efficiencies, the Sandwich tax rate is $14.82, about 40% higher than the next highest town, Bourne at $10.07, and almost triple that of the lowest town, Chatham, at $4.99. Taxes on a $300,000 home would be almost $4,500 in Sandwich, about $4,000 in Bourne and roughly $1,500 in Chatham.
Chatham, with less than one-third the population of Sandwich has a tax base that is almost 70% higher than Sandwich’s, much of which is comprised of second homes, many on the water. Its average per capita
income is roughly $10,000 more than that of Sandwich ($42,083 versus $32,341).
This comparison would be very different if Sandwich were not on the Cape. If we compared ourselves to the towns in Plymouth County instead of Barnstable County, our tax rate would be below average for the county.
The fact is that Sandwich has a population that is more like one of Boston’s “exurban” towns than the other towns on the Cape, which look much more like vacation and retirement communities.
It is understandable, nevertheless, that we compare ourselves to the other Cape towns and come to the conclusion that our taxes are just too high.
With taxes so high, Sandwich taxpayers have been reluctant to pass overrides or debt exclusions.
With the image of the highest rate on the Cape staring us in the face, taxpayers in Sandwich are reluctant to vote to increase taxes above the 2-1/2% allowed by law. Items related to schools do relatively better at Town Meeting, but other large budget items generally fare poorly. “Debt exclusions” (permission to borrow money without having the payments count in the 2-1/2%) are generally voted down when more than $1 million.
This rejection of tax increases shows up most clearly in our municipal buildings. The last major building project for which a tax increase was approved by the town was the high school in 1998.
This has meant that Sandwich’s police, fire, library and administrative buildings have had no major upgrades in decades. When you look at similar facilities in neighboring towns, like Mashpee, you can see the differences.
The question then becomes what to do about this slow deterioration of our infrastructure?
The answer may lie in the last major renovation to a town building — the restoration and upgrade of town hall. This was easily approved by voters because servicing the debt out of an earmarked fund accumulated under the Community Preservation Act (CPA) required no tax increase. Sandwich voters adopted the CPA in 2000. Over the last five years revenue from the 3% surtax plus state matching funds has averaged $1.8M per year. The balance in 2023 is conservatively projected to be almost $10M.
The CPA has worked very well for the town, and with that example in mind, we recommend that a similar earmarked fund (state law requires that it be called a “sinking” fund) be set up for the exclusive use of maintaining and upgrading the town’s infrastructure. This fund could be spent with one-time cash payments on infrastructure or to pay off bonds used to fund construction.
We suggest calling it the “Rebuild Sandwich Fund.”
The question is how do we get money into the fund?
One way is through sales of town assets, tax-taken properties, excess buildings etc..
State law requires that money from sales of town assets be put into a “sinking fund” (a poor name, we think, but that’s the law) for use in reducing debt. So there would not be much change there.
We have at least 12 buildings right now that might come up for sale, including:
Wing School (all or parts thereof)
Current police headquarters
Current fire/rescue headquarters and
E. Sandwich fire station.
Current human services building
Town Hall annex
Jan Sebastian Way town offices
But the more important source of funds would be taxes from newdevelopments.
This is new money, so putting some of it aside would not add to our taxes. And right now is a good time to do this as there are several new developments in the consideration or approval stages.
A partial list includes:
The athletic complex in South Sandwich.
Forestdale Village development
New development in the Industrial Park.
Merchants Square, Freezer Road and Marina area developments.
Recently announced power plant upgrade.
If part of these new tax revenues were set aside in a “Rebuild Sandwich Fund” to pay off the bonds we issue, we could avoid raising taxes every time we approve maintenance of, or additions to, our infrastructure.
We have a capital plan. We just need to fund it.
In 2012, the Long Range Capital Planning Committee issued a 47-page report on Sandwich’s capital needs. This is a good guide to the things that we need to fund with the Rebuild Sandwich Fund. The report gave details on twelve items, including:
Join Public Safety Facility
Wing School re-use
Beach Erosion Prevention
Water Resources Management
Municipal Offices Consolidation
Recreation Field Development
Pedestrian/Bike Path Improvements
We can do these things without raising taxes simply by using the model of the Community Redevelopment fund, with fixed sources of income allocated from new development. This “Rebuild Sandwich” fund will make no grants, just pay down borrowing for infrastructure.
As old debt gets paid off and new debt is paid for out of the fund, debt exclusions expire and taxes go down.
Town Meeting will approve infrastructure as it does now, with money coming from the new fund so taxes will not be affected.
The next step is to do the math.
The next step should be to put together some estimates.
What is the estimated cost of the capital improvement projects we wish to accomplish, over time. (See appendix for more detail.)
How much will it cost per year to pay the interest and principal on the bonds we float to do the capital improvements?
How will these payments vary over time as new projects are started and old ones completed?
How much might the town be able to put into the Rebuild Sandwich Fund from the sale of assets?
What are the additional tax revenues likely to accrue from each of the new developments coming on line in the next few years?
With all that in hand we can then decide which taxes to earmark for the Rebuild Sandwich Fund. From then on, this will happen seamlessly, as it does with the Community Preservation Act, and we can focus our attention on deciding what to build or renovate and how without worrying about raising our taxes.
Here is a very rough, back-of-the envelope, listing of items that might come under the Rebuild Sandwich Fund or the Community Preservation Act, along with a guess as to how much they might cost. A couple of things that have already been done are also listed.
- Public Safety Facilities $31.0M
a. – Fire/rescue Sub-station at Cotuit and QMHR $3.0M
b. – Emergency Management Center at Cotuit and QMHR 2.0
c. – E.Sandwich fire/rescue sub-station (location?) 3.0
d. – Police headquarters at Cotuit and QMHR 8.0
e. – Fire/rescue headquarters Cotuit and QMHR 12.0
f. – Invest for prolongued use of fire/rescue on 6A 3.0
2. Roads and other paved infrastructure
a. – Projected 10-year need 6.0
i. one $6M road bond
ii five $1.2M capital exclusions
3. Beach reconstruction
a. – Projected 10-year need 8.0
i. state environmental bond $5M
ii. federal Sandy, Nemo, Juno relief ($??)
iii. CPA ($??)
4. Water resource management
a. – Projected 10-year need 20.0
i. Popponesset Bay (with Mashpee)
Forestdale treatment facility upgrade
ii. Three Bays (with Barnstable)
Interim project proposed by TRT
Farmerville neighborhoods etc
iii. Old Harbor/Scorton
Not nitrogen impaired
Wastewater solution from CCC/Clark agreement
5. Consolidate municipal offices
(Wing addition) 8.0
a. – Projected 10-year need 25.0
i. tear down all but 1927 ($4.5M)
ii. restore exterior envelope and mechanicals($??) CPA?
iii. restore 1927 multipurpose as gym/performance arts
iv. reopen 1st floor as arts center
v. recondition old boiler room for archives ADA?
vi. reopen 2nd and 3rd floors town offices ADA?
7. School consolidation DONE
8. Senior/Community center 12.0
a. – separate Senior center 7.0
b. – separate Community center 7.0
9. Library Facilities
a.- True S. Sandwich branch branch 5.0
b. – recently abandoned plan 15.0
10. Recreation Field Development Plan
a.- fund with grants and “sweat equity” 0
11. Marina Office Building DONE
12. Pedestrian/Bike Path improvements
a. – Wait for committee recommendations
i – Fund with grants? 0
Total anticipated investment $115M