If the sky is falling, why do we keep getting upgrades?

Here's some edifying reading, from an 11/12 Standard and Poor's bond rating note raising our rating up to A+ (we were at A- eight years ago), noting our many fiscal strengths and a caution on pensions.  This is worth considering, in an election season when you'd think we were about to declare bankruptcy and 'go over the cliff', from what some are saying.  Could not be more wrong and further from the truth. 

The liability noted - unfunded pensions - is an issue for most municipalities across the country, arising from a change some years ago in how generally accepted accounting practices required government entities to book pensions.  MA has basically put all municipalities, including Amesbury, on a multi-decade payment plan to get them fully funded.

[Highlights mine] 

+++++++++++++++++++ 

"BOSTON (Standard & Poor's) Nov. 30, 2012--Standard & Poor's Ratings Services 
has raised its long-term rating and underlying rating (SPUR) on Amesbury, 
Mass.' general obligation (GO) debt to 'A+' from 'A'. The outlook is stable. 
The upgrade reflects our view of the city's progress in improving reserves and 
the city's long-term projections of structural budget balance. At the same 
time, Standard & Poor's assigned its 'SP-1+' short-term rating to Amesbury's 
GO bond anticipation notes (BANs).

In our view, the city maintains a strong capacity to pay principal and 
interest when the BANs come due. Standard & Poor's has determined that the 
city maintains a low market risk profile. The long-term debt to retire the 
notes has been authorized and the city provides ongoing disclosure to market 
participants.

The long-term rating reflects our assessment of the city's:

Good access to job centers along Interstates 95 and 495 in northern 
Massachusetts;
Extremely strong tax base and strong median household income measures;
Good financial position; and
Low debt burden with modest future capital needs.

Somewhat offsetting these strengths are the city's significant unfunded 
pension and other postemployment benefit (OPEB) liabilities.

The BANs and bonds are general obligations of the city, for which its full 
faith and credit are pledged. The city will use BAN proceeds to retire BANs 
outstanding that were issued primarily for sewer upgrades and other capital 
projects. 

The stable outlook reflects Amesbury's sound economic measures and recent 
general fund improvements. We could raise the rating further if the city were 
to further strengthen its financial position while improving its funding of 
pension and OPEB liabilities. While we do not expect to lower the rating 
within the two-year outlook horizon, significant declines in the city's 
financial position, due to demands from long-term liabilities or other areas, 
could pressure the rating."

Source: www.standardandpoors.com

Let's Talk Taxes

I see lots of smoke but little fire when it comes to talking about Amesbury's taxes and finances.  So, let me take some time to explain how they look from where I stand. 

For as long as I have lived in Amesbury, there has been a dedicated and vocal group of residents that have cried that Amesbury's finances are on the edge of disaster!  Headed for bankruptcy! And that our financial situation is unique in all the Commonwealth, in terms of how dire it is and what is going on here.  We heard it with the Split Tax debates in 2006 and 2008 and we heard it with the Under-Ride vote in 2007 (http://nounderride.blogspot.com/).  So, let's look at what the claims are and what the data says.

• Amesbury has the highest taxes in Massachusetts.

Not quite true.  In 2013, our average single family residential tax bill ($5,984) was the 65th highest in the Commonwealth, which is up there.  Our tax rate is in the top ten, at $20.24 per $1,000 of value.  So, yes, we pay a lot of property tax here in Amesbury.  We live in Essex County, one of the most expensive counties in one of the most expensive states in the country.  In fact, 25 out of the 39 cities and towns in Essex County are in the top 1/3 in terms of average residential bill (including Amesbury).  And Amesbury sits just above the middle of the pack for the county, with 14 communities having higher average tax bills and 20, having lower.  Looking at our peers (and who we compete with to hire our employees), we're not that out of line.

• Amesbury's high tax rate is ruining our home values and keeping them low.  

This fits in the 'pants on fire' category, though you will hear it repeated very often.  It is no secret that Amesbury homeowners have lost literally millions of dollars in the value of their homes since housing market bubble burst last decade.  But so did virtually any American who owned real estate.  In fact, an estimated $6.5 to 7.5 TRILLION dollars in equity was wiped out in the crash.  But maybe there is something to this claim, maybe we are even worse off then our fellow citizens beyond the walls of our castle here.  Fortunately, the facts don't bear this out.  If you plot the rise, fall, and recovery of assessed value in Amesbury from 2006 to 2013, it tracks the fate of Essex County and of the Commonwealth as a whole almost to the percentage point.  In fact, the Warren Group recently reported that Amesbury was among the 25 'hottest real estate towns' in the Commonwealth (http://bit.ly/16AIMsT).

• Amesbury's taxes make it a bad value to buy into.

Remarkably, this claim is being made by at least one person who is actually a realtor here in town (note to self, don't hire them to sell my home).  This is an easy one.  Amesbury is an excellent community to buy into.   Let's look at a simple comparison: Newburyport. We have almost the exact same population (about 17,000) and almost the exact same average residential tax bill.  That should come as no surprise, since we are providing services to roughly the same size population (buyer beware: I've posted previously about how shaky these town-to-town comparisons can be).  The average single family home value in Amesbury in 2013 is $265; in Newburyport, it is $435,000.  You would pay basically the same tax bill on each home.  And on a 30 year mortgage at the current rate of 4.5%, you will pay over $256,000 more in principal and interest (about 50/50) to have the privilege of paying the same taxes as Amesbury.  Is living 10 minutes closer to Plum Island and having a Starbucks in your downtown worth $256,000 more?  The affordability of Amesbury was the very thing that brought my wife and I to Amesbury.  We lived in a tiny condo in Newburyport, in fact, and could not afford to buy a home there.  We found a lovely house in Amesbury and haven't looked back since. I can't tell you how many people I've met here had that same experience - what brought them here was the value they could get for their money.  And maybe, if someone bought here at the top of the market and hoped to flip a home for a gain, then yes, Amesbury may not have worked out for you as planned, but that happened most everywhere in the last decade.  But if you are here for the long haul, then Amesbury is an excellent value.

So, every conversation about TAXES is really a conversation about SPENDING and FINANCES.  And every conversation about SPENDING is one about VALUES and PRIORITIES.  I am of the conviction that our fiscal record has been pretty solid in the last years, especially during the tough ones in the last 5 years.  During the worst economy since the Great Depression, our:

• bond rating has gone up, saving us big on interest payments (bond rating is basically our municipal 'credit' rating)
• our reserve account has soared from next to nothing to north of $1M
• our stabilization funds have grown
• our 'excess capacity' under the Proposition 2 1/2 Levy Limit has grown, meaning we have more room for absorbing future spending needs without resorting to an over-ride
• non-school costs have been tightly contained, if not reduced

But all that is material for another post, coming soon.

VIEW SLIDES W/ DETAIL HERE
 

How Can Taxes Go Up If Spending Goes Down?

I posted some comments on the 'Ken Gray for Amesbury Mayor' Facebook page recently. Evidently, they were all removed on the morning of the Preliminary Election. Mr. Gray can do what he wants with his campaign page, that's fine, but I find myself perplexed and put off by this. Here is my best recollection/recreation of my last deleted post. I was responding to a comment from a Gray supporter (Dave Haraske, my opponent in District 6), who was asking how, if we see new revenues from projects like the Upper Millyard renovation, the residential tax rate has still gone up and was also asserting that Mayor Kezer has done nothing to control spending. Here it is:

"As you know, Dave, from the data that we looked at when we were both on the 2010 Ad-Hoc Citizen's Committee, Amesbury was the only community out of the 13 comparison communities that we looked at that had *negative* budget growth between the years 2008 and 2010. And yet, in those same years and even as our operating budget decreased, our tax rate and average residential property tax bill went up. How could that possibly be? Simple. The operating budget has a stew of revenues, including property tax. During those same years and following the global market crash, we saw reductions in Local Aid and excise tax receipts (as folks held off on buying new cars or a boat, etc). So, even as our spending decreased, our property tax increased, in order to maintain the level of services that we want as a town. And looking at 2008 - 2012, the operating budget only increased by 4.1% over 5 years, or 0.8% a year. US inflation across those same years was 6.6%, so in real dollars, our budget grew slower than inflation, even as inflation drove up our operating costs, such as health care benefits, increased cost of goods, etc. At the same time, between 2010 and 2013, the portion of our budget that goes to schools increased from 49% to 55%. Our bond rating has gone up two notches (thus lowering our interest costs on capital debt service). Our reserves have increased from next to nothing to over a million dollars. And we have retained a gap under our Prop 2 1/2 levy limit that gives us future budgetary flexibility without resorting to an over-ride. That sounds like good fiscal management and good priorities to me."

2010 Ad-Hoc Committee: What It Was and What It Wasn't

In early 2010, the Amesbury Municipal Council established a temporary 'ad-hoc' committee of nine Amesbury residents for the purpose of "discussing among themselves, and providing the opportunity for other residents of Amesbury to communicate information and ideas relative to the manner in which excellent municipal services could best be provided in a cost-effective manner at an expense level affordable to the residents of Amesbury...and to issue a report to the Municipal Council as soon as possible prior to April 1, 2010."

I chaired the Committee. Information produced by the Committee can be found here:

https://sites.google.com/site/2010amesburyadvisorygroup/

The Committee did a lot of work in that short period and everyone involved pitched in.  It was a great example of engaged residents citizens responding to a specific and limited task.  

Our report still gets mentioned and I am asked about it, so here's my point of view.

We focused on the question of 'affordability.'  We quickly settled on a basic method: we looked at data from the MA Department of Revenue for twelve communities - the next six larger in population from Amesbury, and the next six smaller.  

While this was one way to look at it, it is a flat view of a very complex picture. Making apt comparisons among disparate communities is challenging.  Comparing communities based solely on population is a bit like comparing houses solely on the basis of square footage.  Is it near the ocean?  Does it have a failing septic system? Or does it have a pool?  Is it 150 years old or brand new? Is it in a safe neighborhood, etc.  You get the point.  There is no such thing as a generic 1,500 sq/ft house and there is no such thing as a generic town with generic needs.  Our comparative data was helpful, but limited in what it can reveal.

We came to a handful of conclusions, which can be read in the report.  And while it was a great exercise, it was limited in scope and I do not agree with some of the broad assertions some are making about its results. 

At least one of the recommendations has been implemented (regionalizing emergency dispatch) and two more, I am particularly interested in pursuing, if elected: exploring with the School Committee more cost-effective ways of providing services to special needs students in our schools and re-invigorating the Master Plan committee (if not updating the Plan itself).  I will be posting more about those issues in the future.

"Where's The Fire?"

Last Sunday, the Boston Globe ran an article in its Ideas section that raised the question: in an era when fire responses by the Boston Fire Department have gone down by 90% in the last 40 years, what is the purpose of municipal fire departments?  Do modern personnel need different skills than they used to?  Should staffing patterns be changed?  Whither the modern fire department?

You can read the article HERE.

As anyone who has had a health emergency in recent years knows, you are very likely to have a fire truck arrive at your door, along with an ambulance and a police car.  In many ways, the contemporary fire department has become something more like an all-purpose emergency response department.  Indeed, in Amesbury, ambulance and fire functions are combined into a single personnel pool at a single facility (more or less).

One economist quoted at length in the article considers the modern American municipal fire department to be a relic of a bygone era, a hold-out of unionized employees whose mission has been rendered somewhat obsolete.  Not surprisingly, spokesmen for the National Fire Protection Association begged to differ, arguing that fire departments are well suited to the delivery of emergency care and respond to complex emergency situations.  An academic who specializes in the history of emergency response interviewed for the article argued that the model of 24 hour shifts traditional at fire houses is "ancient" and that staffing and equipment should be shifted towards emergency medicine.  She concludes: "Your so-called fire department - they respond to unexpected events.  That's actually what they do.  You can't know in advance what the needs of an emergency are - that's why they are called emergencies."

I think that Amesbury has been creative in modernizing its fire department, including the integration of emergency medicine into its services and the use of a 'chase' vehicle other than a fire truck for responding to some emergencies.  But this article raised interesting questions for me.  As we continue to feel budget constraints and watch our bottom line, looking at the fire department beyond the fire should be something that the Mayor and the Council do, which means understanding the demands and needs of our community for these services and thinking about how we can provide emergency services as effectively - and cost-effectively - as possible.

Town Park Playground Improvement Phase II Seeks Volunteers

On a very rainy weekend last year, a whole host of volunteers from Amesbury gathered to install new playground equipment in the Town Park.  The Park Renovation Committee, hosted by the Amesbury Improvement Association, has led the effort to raise money for the new playground and organized the all-volunteer effort to build it.  The build last year was Phase I.

The PRC has raised more funds and the Town has also contributed some money, so Phase II is ready to build!

The big build is coming on October 5 - 7 and the PRC is looking for volunteers to help with food, labor and logistics.  You can find out more about the Phase II build here: http://amesburyimprovement.org/PRC.html. 

You can still donate to the PRC and there are two days left to 'Buy A Brick' and leave a mark on the playground.  You can find information on buying a brick here: http://amesburyimprovement.org/Brick%20Form%20Phase%20II.pdf.

Please consider joining the team!  I plan on being there.  This is what makes a good community great!

My wife and I joined the crew last year and it was a lot of fun, though I managed to short out a phone in the process, with all the rain!  Here are some (misty) photos:

 Post-holes ready for installation and concrete.

 My son admiring the heavy equipment.

 Unpacking the playground 'furniture.'

Puzzling the pieces together.  Fortunately, we had some folks in construction and engineering on the teams.

 Hanging the bars for swings.

 Mining on 'Wood Chip Mountain.'

Fitting a double-slide together. 

What's So Great About Amesbury?

UPDATED Post 9/4/13, see below
++++++++++++++

You are going to hear from a lot of folks this election season in Amesbury about all of the things that they think are wrong with Amesbury.  I won’t be one of them.

Don’t get me wrong.  I think that our community faces plenty of challenges.  In fact, I plan on writing a series of blog posts about them: school funding, taxes and the budget, infrastructure maintenance, community development and planning our future. 

But here at the start of campaign season, I want to focus first on what makes Amesbury a fantastic place to live.

For starters, our extensive natural resources such as the lakes, ponds, rivers: Bailey’s, Gardner, Tuxbury, Attitash, Merrimack, and Powow. Our tremendous open space: Woodsom Farm and Battis Farm. Recreation areas: Town Park, Collins Street Playground, Camp Kent, and the Riverwalk Bike Trail.

My family loves kayaking on Tuxbury pond, swimming in Lake Gardner (who else can boast a beach in their downtown).  Snowshoeing in the woods behind Cashman School, over through to Woodsom Farm.  Walking the downtown.  I got myself back in shape pulling my son in our ‘bike taxi’ trailer on our regular commute to and from his day care via the Riverwalk Trail and then running the trails through Woodsom Farm.  

Our many ‘social’ assets, including an extremely active Town Library, a multitude of sports clubs and recreational opportunities for children, active communities of faith, lively neighborhoods, several active farms (such as Heron Pond, Middle Earth, Cider Hill), well-regarded schools and an artist community.

Our well-preserved downtown, with restaurants, living spaces, art galleries, bookstores, public library, a wide variety of businesses and more.  Keys to this have been the renovations of the Upper and Lower Millyards, Cedar Street, and Market Square, as well as the investment of many small business owners in our community. Ice cream stands and cider donuts! (This is why I have to pull that bike taxi around). A variety of historical assets, including Amesbury’s industrial past, Whittier’s legacy, the famous Lowell’s Boathouse, historical buildings, and old meeting places.

A well-articulated, thorough, and community-supported Master Plan.  Amesbury developed an extensive Master Plan document in 2004 (you can find a link to it on the left of this page) through an engaged public process.  As someone who has been active in the past on the Master Plan Implementation and Oversight Committee, I can report that Amesbury has done very well to follow the vision and take the actions laid out in the Plan.  A decade on, we can take real pride in the success we have had in making that plan a reality.

And, yes, Amesbury’s affordability. 

I have talked to many residents who have made the move to Amesbury because, in addition to the assets mentioned above, Amesbury was the place they could afford to buy a home.  When my wife and I were looking for a place to call home, we found that Amesbury beat other local cities and towns hands down (including Newburyport, where we were living in a teeny condo at the time) in terms of delivering a great place to live at an affordable price (at least for living in one of the most expensive counties and regions in the country). 

So, as my business friends might say, what is Amesbury’s value proposition?  That is, what is it that would make anyone want to ‘buy our product’?  It is that Amesbury is a community with lots to offer and at an accessible price.

I will be writing more about the challenges that we face to maintain our services: the high cost of providing quality public education, successfully planning economic and community development, preserving and enhancing natural assets and the tight straights of local and state finances over the past decade.  ‘Change is inevitable, but progress is optional.’  Only by deliberately and carefully planning our future together as a community will we make good on the proposition that is the city of Amesbury. 

++++++++++++++++++++++++++++

UPDATE:  

Regarding the question of affordability, the Newburyport Daily News reported in this 9/3/13 article ("Newburyport sees sharp increase in home sales") on that area real estate values and the overall housing market continue to improve and that Amesbury continues to be seen as an affordable option in the area.  Through the ups and downs of numerous real estate cycles, Amesbury has followed this trend and retained its attractiveness as a good and affordable option for families in this area.  A local realtor from an Amesbury firm hit the nail on the head: '"Newburyport is the blue chip, but not everyone can afford the blue chip,” said Lischke. “Amesbury is more affordable than Newburyport.”"