Finance Committee - 3/21/2018 Page 13
bring in be directed into CERF and the answer is yes. These new assessments will be reflected in next year’s
budget really not the one we are considering now. Is that correct? That’s not really correct is it? Considered
in next year’s budget. No that’s not really correct, but we would have passed the budget and we could, the
next time the budget comes around, we could certainly use the additional tax base to increase the amount
going into CERF.
Alderman O’Brien
Thank you Mr. Mayor. | do have a follow up. | think what you’re asking is basically we are making a loan onto
ourselves to compensate for this and yet we could have the possibility of replenishing in the future. The
possibility.
Mayor Donchess
Yes. Now let’s just say this is the kind of impact it could have. Let’s say that just we know that ballpark large
residential properties have an assessed value of $440 million dollar at their current assessments. If that’s at
93% that climbs $30 million dollars. On the other hand if through the income approach and through a more
expert analysis market based of a broader market of those commercial properties, the sale that took place out
on Somerset Parkway is more reflective of their value, then those values might go up, not $30 million dollars
but $250 million dollars or $300 million dollars. Because remember that sale took place at about 180% of
assessed value. So by doing this re-evaluation we capture even an additional $50 million dollars, that’s a $1
million and a quarter a year, it’s a six month pay back. If we were to capture $100 million dollars, now we are
talking $25 million dollars or something like that. So now we’ve got a three month payback. So the payback on
the money invested if we capture anything additional as a result of using KRT over and above what is just a
simple statistical upgrade would do, will much more than pay for the cost of engaging KRT. If that’s clear, |
don’t know if | was really clear there. Every million dollars bring in $25 thousand dollars of tax revenue. So
another $10 million in value brings in $250,000. Another $50 million brings in $1 million and a quarter.
Another $100 million brings in $2.5 million dollars each for the next five years. To leave value on the table for
any reason would be a serious error, in my opinion.
John Griffin
| just wanted to go back. Treasurer Fredette did a great job on explaining CERF but in 2010 the City did an
exhaustive vehicle analysis where they identified each and every vehicle by VIN number and by value and
determined the life of each vehicle. In addition to that, they eliminated several vehicles that were on the rolls
that were no longer used or useful. So in 2010 was kind of a juncture where we were trying to put in a program
that had some sustainability and we funded it fairly effectively. Now we are the point where, and David was
actually correct with the directors, they don’t necessarily want to or feel comfortable sticking with that original
schedule. So that’s why as he mentioned they might not need the refuse truck after five years, just because it
says five years life. As a matter of fact, Director Fauteux came to the Mayor and said we could probably get
away with pushing that out a year. So a living document, that’s really what this is. And it’s just like what we do
at our homes, we decide do we need a car this year, next year, what have you. So we are very sensitive. The
Mayor organized a meeting of the two Chiefs and the DPW Director and a few other directors and they really
rallied to the cause. They looked at mileage on vehicles, especially Police and Fire, possibly coming up with a
grant that can repair three vehicles with one. So everybody has kind of bought into this.
With regard to the funding, | think we are at the perfect opportunity, and | mentioned that to Mr. Fredette today
to go around in our annual visit, to the different departments to get a real clear picture, to take a real
assessment of all these vehicles and then over the next several years, map out the cost. This is a case where
we take the vehicle, we project what the cost is going to be several years out, we put that number in there. It’s
not a depreciation type model, where you are funding the depreciation every year, this is a replacement
vehicle. So if we bought something today for $20,000.00 five years from now it’s going to be $20,000.00 plus
an inflation factor. And the decision we made at that time, do we want to replace it or not. So we do have a
tight budget, you'll learn that when you attend the budget meetings that as the Mayor said, if we had more
