Officials Favor Bonding Vs Tapping

Reserve Fund for Oil Cleanup

By John Voket

Despite early attempts by Republican Joseph Kearney to convince fellow Board of Finance members to tap Newtown’s capital reserve fund for the cash, the board eventually voted to endorse a resolution to seek short-term bonding of up to $1 million to underwrite expenses related to an oil spill on the grounds of Reed Intermediate School.

The final decision to approve that initiative was approved by the Legislative Council Wednesday.

During the Monday evening Board of Finance meeting, members heard from Superintendent of Schools Evan Pitkoff and reviewed statements from his office showing more than $360,000 in invoices on hand and currently due or past due, for services ranging from Fleet Environmental Services emergency response beginning December 31, the day after the spill was discovered, to almost $5,000 in legal bills to Cohen and Wolf and more than $43,000 in environmental consulting fees to R.W. Bartley and Associates.

Adding to that figure are anticipated bills amounting to another $43,115 for services rendered to date and not yet billed, with an anticipated $288,000 in additional services expected to be provided by month’s end.

Dr Pitkoff told the board the total estimated project costs related to the spill will likely top $691,288 before remediation of up to 2,500 gallons of home heating oil yet to be recovered from beneath the school and adjacent properties. Since December 31, officials estimate that about 2,500 gallons have been recovered, or flowed to the Long Island Sound via Deep Brook, the Pootatuck River, and the Housatonic River.

“What we’re doing now gets us cleaned up, but does not include long-term remediation plans,” Dr Pitkoff said. “We’re still not 100 percent sure what the grand totals will be.”

On February 7, the Board of Selectmen approved a resolution of intent to bond for expenses related to the spill and passed the initiative to the Board of Finance to review. Nearly an hour of Monday’s three-hour-plus meeting was spent hearing from Dr Pitkoff and discussing options for covering immediate costs related to the incident.

While First Selectman Herb Rosenthal reiterated to the finance board that he expects to recover a portion of the expenses through insurance claims and possible legal actions, he remained adamant that anyone tendering invoices should be paid on time.

“I told Evan and Ron [Bienkowski, school finance director] if they could come up with a rough estimate of costs to present to you tonight, I would support a special appropriation to cover the costs,” Mr Rosenthal told the board. “My suggestion was $1.2 million.”

Dr Pitkoff said that after the anticipated $691,288 was covered, additional remediation and monitoring might account for an additional $50,000 to $100,000 each year for up to the next five years, bringing the total in line with the suggested $1.2 million in bonding.

The other caveat in the agreement, Mr Rosenthal explained, would be that upon the approval of the bonding, the town would take over financial management of the remaining activities related to the spill.

“That way any subsequent claims or settlements paid to the town would be used to pay off or pay down the accrued debt,” Mr Rosenthal said.

Dr Pitkoff presented the board with a spreadsheet showing numerous areas of the Board of Education’s current budget, where planned cuts or freezes would yield savings. However, he said, some of those savings would have to be reapplied to areas of the budget that were running, or expected to run, at a deficit before the end of the current fiscal year.

According to Dr Pitkoff’s report, the Board of Education made the following cuts to generate revenue:

$50,000 in staff and program development

$35,000 in professional educational services

$113,000 in anticipated building and site improvements

$13,000 in equipment repairs

$30,000 in contract services

$25,000 in travel, mileage, and accommodations reimbursements

$75,000 in instructional and library supplies

$20,000 in software, medical, and office supplies

$30,500 in technology and other equipment purchases

Following Dr Pitkoff’s report, Mr Kearney suggested that the board should consider tapping the town’s capital reserve fund for the expenses rather than incur further bonding costs.

“After all, isn’t this the ultimate definition of a nonrecurring event?” he asked.

But his suggestion was met with opposition from Finance Board Chairman John Kortze, as well as the first selectman and town Finance Director Benjamin Spragg.

Mr Spragg told the board that despite its title, the nonrecurring fund is actually considered a capital reserve account in the eyes of the bond service that issues Newtown’s rapidly appreciating bond rating.

“This fund was always thought of as a reserve account because we can’t create one by charter,” he said. “Although we have funded capital projects from it, if you did [reimburse] these expenses from it, I don’t see us making up the difference very soon. It would likely create a substantial drain on the reserve for some time and that would not be favored by the bond rating company.”

Mr Rosenthal agreed.

“We sold this to Moody’s [Investment Service bond rating firm] as a mill rate stabilization fund. We’ve already gotten two bond rate upgrades in quick succession and we’re looking for a third,” he added. “If you’re thinking of going down that road you should have a joint meeting with the Legislative Council; they have final say.”

Chairman Kortze then asked Dr Pitkoff what the Board of Education determined it could afford to contribute to minimize the total bonding.

He responded that the school board could contribute $272,000.

Finance Board Vice Chair James Gaston told the panel that he would rather bond higher, and see the costs paid in full as they are incurred, than to have the Board of Education come back time for additional funds every time a new set of expenses comes due. He then moved to approve drafting the resolution to borrow up to $1 million to underwrite costs related to the oil release incident. The measure passed unanimously.

“I hope it will be just $1.2 million,” Mr Gaston said. “While we are basically taking some of the educational items people voted on in the last election, I would not be in favor of stopgap measures to deal with this.”