NORTHBOROUGH – One of the greatest challenges for Northborough’s finances for the next five years is how the town will meet its capital needs.
That’s according to Town Administrator John Coderre, who discussed the capital projects on the horizon — including the new Northborough fire station and an athletic complex — during the Financial Trend Monitoring Report on Dec. 15.
“One of the big things folks are going to take away from this presentation this year is that we have building up some significant capital projects that are stacking up on us,” Coderre said. “And we need to do a good job of planning these out because they’re going to have some significant impacts.”
Some of this was due to the pandemic or circumstances beyond Northborough’s control, Coderre said. For example, Coderre noted that the Northborough fire station project had been delayed. Town leaders have said there was contamination on the property of the future station, which used to be a gas station.
For its debt service model, Northborough is taking into consideration the Northborough fire station project, Proctor Elementary School’s roof, a fire engine, a Department of Public Works tight tank, the athletic complex project at Algonquin Regional High School and a Peaslee School feasibility study. The debt service projection does not cover the construction of Peaslee.
For some of the projects — like Proctor’s roof, fire engine and tight tank — debt will have to be issued if American Rescue Plan Act funds are not released for the project, Coderre said.
Projects that are not on this list include the town offices, downtown master plan projects, projects as part of a sidewalk plan and Complete Streets and White Cliffs.
“These things are now bunching up, and I’d say our biggest job over the next year or so is going to be coming up with a realistic plan for how we’re going to pay for these, spread them out and determine as a policy group what’s an acceptable tax impact – how fast can we do these in terms what would be reasonable to the tax payers,” Coderre said.
The town is projecting that the average single-family tax bill would increase by $459 for fiscal 2024, and it would increase by $993 in fiscal 2025, which is when Coderre said the fire station debt would kick in.
Coderre cautioned that these figures were preliminary and assumed that the Proctor roof would be bonded, the athletic complex was approved and the fire engine would be purchased among other items — which are subject to approval by either the selectmen or Town Meeting.
Northborough’s financial condition
The report is designed to objectively measure Northborough’s financial condition, according to Coderre.
He presented on Northborough’s status in regards to 14 financial indicators. Of these indicators, all of them besides two were categorized as either favorable or stable.
“Overall, I would say based on these objective measures, Northborough is in good financial condition,” Coderre said.
The trend of state aid was categorized as “unfavorable,” and the town’s other post employment benefits (OPEB) liability was categorized as unfavorable but improving.
However, some of Northborough’s financial indicators have improved.
Economic growth revenues — which Coderre described as elastic revenues that move with the economy such as building permits and motor vehicle excise tax — went from stable to unfavorable due to the impact of the pandemic. This year, this indicator has been categorized as stable/ uncertain.
“The good news is, as far as the pandemic is concerned, that impact — we’re mostly back from that,” Coderre said.
For fiscal year 2023, Northborough budgeted receiving $4.2 million in local receipts. According to Coderre’s presentation, the town decreased that to $4 million for 2024.
That’s in part because the legal settlement from Southborough over the Algonquin Regional High School building project ended in fiscal 2023.
In terms of other local receipt revenues, Northborough’s revenue from building permits had been above target in recent years, though Coderre said the revenues have now dropped down to more normal figures. Coderre said Motel 6 is still offline, and he doesn’t envision that the motel would come back online. However, Northborough’s meals tax revenues are back to pre-pandemic levels.
“Thank you for going out to eat,” he said.
Half of the local receipt revenue is generated from motor vehicle excise tax, but Coderre said Northborough won’t know what these numbers will be until February when the town receives a major commitment.