I.                   OPEN SESSION

II.                CALL TO ORDER

III.             SALUTE TO THE FLAG

IV.             NEW BUSINESS

A.    Discussion of strategy and plan for East Providence school buildings and borrowing capacity and related issues

B.     Discussion of budgetary matters including current status and regarding next budget

Mayor Briden calls Mr. Luba to the podium to provide an update on the information provided to the City Council at the last council meeting.

Mr. Luba provides information regarding the City’s total debt capacity, the state law limit of 3% of the total assessed value, the City and Schools current debt and borrowing abilities.  He discusses how much bonding should be issued at any given time and the debts as they relate to bonding and amortization.  He provides an analysis with examples.  He discusses tax capacity and levy.  He explains what requires voter and state approval. He discusses the synchronization options as well as the options if the City does not synchronize and Tax Anticipation Notes (TANS) are also discussed.  Mr. Luba discusses what happens when there is a perfect storm of items such as a recession and debt and downgrading by bonding agencies and what took place causing the City not to be able to borrow to meet payroll via TANS and the Budget Commission coming in.

Mayor Briden asks if the assumption is that a $1 million payment equals a 1% tax increase and asks if that is based on a budget where the City is contributing 2.3% to the synchronization fund and Mr. Luba states it is.

Mayor Briden notes that they have to be careful about how much they borrow because it impacts their ability to reveive the TANS because if banks feel they owe too much they cannot meet the City’s budget.  This is due to the City’s dependency on TANS and interferes over time with the City’s ability to borrow for its capital needs.

Mr. Luba states that is correct and that is always listed as a negative.

Mayor Briden asks if they don't synchronize then 20 years from now would it still be an issue and Mr. Luba states yes and it will remain an issue forever.

School Committee Member Cahoon discusses TANS vs $120 million bond for a new school and the reimbursement rate for school construction which is 54%. He notes they do need to think of synchronization but so everyone understands there is a big bond coming for the high school sometime soon, to refurbish or to build a new one or to fix the emergency issues.  He feels they can either do it by way of a reasonable thoughtful process or do it when they don't have a choice.

Mr. Luba states if they don't synchronize they would essentially be freeing up $2.3 million.

Mayor Briden states that given the City’s limit on how much taxes can be raised if there are other factors such as new contracts then the City is already exceeding the 4%.

Mr. Luba notes they will have to get state approval to exceed a tax increase of more than 4%.  In order to borrow more than $50 million but not more than that.  In terms of $100 million that is a 6.25% tax increase and $75 million is a 4.7% tax increase.

Councilman Botelho states that it seems like a lot of this depends on money the City is going to get from the State and as of late they have only allocated $80 million for the whole State of Rhode Island so what is the likelihood of this happening?

School Committee Member Cahoon states he met with Joe Dasilva from RIDE and they discussed just this issue.  Every school district is competing for the same pot of money.  Providence which has not yet gotten off the ground is looking at $500-$800 million and has a 90% reimbursement rate so waiting to kick the can down the road doesn't help East Providence.

Councilman Botelho states that for a couple of years there was a moratorium on funds.  There is $80 million now and what if the Governor wants to give $20 million for free college what happens if they reduce it to $50 million and the City goes through this process and does all it can and the State says sorry they don't have the money.  There ought to be an alternate plan as the need is there. He adds he was amazed at how long the process takes and that the State requires this process and it is a four stage process which takes a very long time.

Mayor Briden states with a cost after the reimbursement of about $64 million does the City initially borrow twice and is that in the bond?

School Committee Member Cahoon states it occurs in progress payments.

Assistant Mayor Britto asks what the cost of the actual buildout for the schools is.  The SLAM report states $107 million for just the building not including furniture etc…

The Superintendent states that she understands what the State is actually allocating is going to be more than $80 million for the buildings.

Mayor Briden asks Mr. Luba with regards to what he said earlier, $50 million would be $3.2 million per year, for how many years?

Mr. Luba explains it would be 25 years.  He adds the City definitely needs to work in there, according to the SLAM report some projects are more immediate than others.  They have the debt capacity to do so and if they do decide to do it it they will not synchronize ever and they will incur tax increases.

Councilwoman Sousa states that she knows the high school is in dire need and has been overlooked for some time.  However, she would also like to know about the rest of the schools.

School Committee Member Cahoon states that RIDE makes the City submit their 5 year plan for all the other schools.

The Superintendent states that 5 years ago the School Department borrowed $10 million which will go into 2018.

Councilman Botelho asks about a Plan B.

The Superintendent states that RIDE will let the City know what they are funding and not in the end but up front.  RIDE makes the decision as part of the plan and if a new school is needed and if not then they only allow funding for refurbishing.  Alternative financing would not get the 54% reimbursement and it would still have to go through the RIDE process.  In East Providence, they need to begin the process of design with the architect. They don't want to throw out numbers because they don't know what size a school they are going to build.

Mayor Briden states they if they have a 5 year plan and with a 5 year school plan with estimated amounts for what needs to be done, for all of the schools, he would think it would need to be lined this up after the contracts are negotiated.  A good 5 Year plan will tell the Council what to expect on tax increases for those 5 years.

Mr. Luba states this is a good idea.

Councilman Faria states a good question to ask is what the tax payer can afford.

Councilman Botelho asks if the City has a documented policy for an annual budget.

Mayor Briden states if they want to meet again in May that is a good idea.  It may be that at that meeting they start the meeting at this point.

School Committee Member Cahoon states that the next Building Committee will be held on May 1^st.

Councilman Botelho states that typically the school committee and city council would have a policy to develop a budget to follow.

Mr. Luba notes that as a part of the identification process a 5 year capital plan should be put together on both sides.  Perhaps the Council can do a 6 month review and set priorities.

The City Manager states it is in the Charter that they have monthly updates.

Councilman Botelho asks about the planning process.

The City Manager states they have the capital plan already going out to the departments and there is the variable of the contacts.

Councilman Faria asks how they measure the needs in the other schools and is this stretched out over a 5 year plan?

The Superintendent discusses the sprinklers at Riverside Middle School, new fire alarms and emergency lighting at Whitenect, new roof going in at Francis, a new fire alarm system at both auditoriums which are being redone, curbing completion at Riverside and they are 90% done with the interior.

The School Finance Director and the Superintendent state that they met with the principals in each school to review school based allocations.  These all need to be turned in by June 1st and they are meeting with them to review their requests. On July 25th the Superintendent is going to host the first of the budget workshops and the public is welcome to attend.  The second meeting is on August 1st and then again on August 15^th.  The School Committee will be holding a meeting and they will vote on the budget with the idea to accelerate the process in consideration of the City Council which has requested receiving their information sooner.  They note that every month the School Committee receives a line item budget and these go to the City Manager and he can forward these to the Council. They add they are on track and where they expect to be.

Councilman Botelho asks if they are in negotiations and the Superintendent responds they are and will have the negotiations cleaned up by August. They started meeting with the teachers.

Mayor Briden asks if they were to schedule a follow up meeting in May or in June would that work?

The Superintendent states they won't know that much in May but maybe a little more in June.  They are scheduled for completion of the budget by August and the Building Committee has a meeting each month.

Mayor Briden states that he was thinking more in terms of other issues they discussed and if they feel this meeting it is beneficial.

The Superintendent states the best time for a report on the building project would be the end of June.

Mayor Briden sets the next meeting for June 19th at 6:30PM.

V.                ADJOURNMENT

A motion to Adjourn at 8:29PM is made by Councilman Botelho seconded by Councilman Faria and on a roll call vote it is unanimous.

Approved the Council:  May 2, 2017

Attest: _______________

                City Clerk