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BOS Hears Road And Bridges Update, Acts On Pension Changes

Published: December 9, 2016

The Board of Selectmen received an update on a number of town road and bridge projects during its regular meeting December 5, before hearing briefly from a representative of the Newtown Pension Commission and approving two key changes related to pension business.

The meeting began with Public Works Director Fred Hurley reviewing a raft of major projects either in progress or poised to begin in the coming weeks and months. His first focus was on the narrow bridge just below the intersection of Glen and Walnut Tree Hill Roads.

Mr Hurley said that project, which will replace the existing bridge with a wider structure, will also include some work to adjust the approach to both ends to improve safety. That additional work will require the permanent relocation of several utility poles owned by Frontier Communications.

The public works chief explained that he would be meeting with Frontier representatives in the coming days to facilitate permanently relocating those poles just once — instead of temporarily relocating them, and permanently reinstalling them once the project is complete. Mr Hurley said that bridge project should only take about six months to finish, could begin before the first of the New Year, and would at all times provide at least one lane of access to adjacent neighborhoods in the area along the Pootatuck and Housatonic Rivers, including the Shady Rest subdivision.

Mr Hurley told selectmen that while the department at Frontier charged with handling pole work has exhausted its budget for the year, the town is positioned to cover that cost and eventually get reimbursed, versus putting the job on hold until Frontier receives new funding to underwrite pole installation and relocation work next year.

Moving on to another high-profile project, Mr Hurley updated selectmen on the Toddy Hill Road bridge replacement, just below its intersection with Berkshire Road/Route 34. He said that the state DOT continues to work with potential design tweaks, as a result of work on and around that project dovetailing with improvements to, and a new on/off ramp configuration of Exit 11 from Interstate 84.

“We may have to end up raising the elevation of the bridge” from what was originally planned, he said. “But there won’t be any substantial change to the actual bridge design.” He said that any added costs to the town for extra and unanticipated site and adjacent construction work would eventually be reimbursed by the state.

The public works official then briefed selectmen on road and bridge work that will be incorporating property along Main Street, to the intersection of Sugar Street/Route 302, and another bridge replacement on Sugar Street just west of the Main Street intersection. He said that project will involve noticeable encroachment onto private property on the corner known as The Pleasance, which is owned by the Scudder Smith Family Association, LLC. (See related story.)

Other projects that were briefly reviewed included the realignment of Edmond Road to create an intersection with Church Hill and Commerce Roads adjacent to the new Wheels minimart, and a reconfiguration of the “upper” Pecks Lane/South Main Street intersection. Mr Hurley said negotiations with property owners in the area of that second project are nearly complete.

Once that accident-plagued intersection project is complete, he said Pecks Lane will have a completely separate curb cut onto South Main Street, versus sharing an awkward three-way configuration with Prospect Drive that offers “terrible sight lines” for drivers pulling into and out onto the state roadway.

Mr Hurley said some areas of deterioration or “delamination” of approximately seven-year-old asphalt that is occurring on Riverside Road would be spot patched on or before December 10, and reviewed a punch list of road projects that are being carried into 2017. Those carried over projects are scheduled for Crestwood Drive, Oakview Road, Washington Avenue, Monitor Hill, Park Lane, Keating Farm, and Dinglebrook Roads.

The public works director closed his presentation hinting that Newtown could soon qualify for a grant to site an electric car charging station that would be available for both public and municipal vehicles planned for purchase in 2017.

Pension Changes

Following a brief presentation by Pension Commission Chair Ellen Whalen and Finance Director Robert Tait, selectmen voted unanimously to change the town employee pension discount rate from 7.5 to seven percent, and the funding method to Entry Age Normal with a three-year adoption, effective for the 2017-2018 budget year.

In documentation provided by the finance office, pension actuary David Leonard explained that because of the trust asset losses, and other increases in liabilities above expected levels, he hoped to see Newtown commit to a significant additional amount of funding to the plan. Along with that, the actuary advised the Pension Commission that the longtime rate assumption of 7.5 was regarded as “too high or too optimistic.”

“The historical returns for this trust fund have not lived up to that mark,” he wrote. “The net annualized yield over the last ten years is 3.86 percent. The lower the interest rate assumption, the higher the current cost is to the town to pay for the plan’s benefits.

“We have chosen [seven percent] to study and recommend because we feel it is attainable over the long term — and the plan is certainly a long-term obligation even though it is currently closed, or being closed to new members,” the actuary continued. “We have also chosen [seven percent] because it puts Newtown in a range that your auditors, and the financial statement-reading segment of the public, can be comfortable with. Part of the reason this is true is that a [seven percent] assumption puts you in line with most municipal plans of your size.”

Regarding the funding method, the town’s pension actuaries have used the Projected Unit Credit (PUC) method for more than 20 years. However, based on changes in accounting standards and recommendations from actuarial governing bodies, the PUC method is considered barely “acceptable” — while the Entry Age Normal (EAN) funding method is considered a “best practice.”

Mr Leonard reported that the PUC produces lower normal costs and liabilities in the early years of a participant’s career than the EAN does, and conversely backloads more of the costs into the later years. He said if there are higher contributions sooner, not only will later contributions naturally be lower, but it also gives the trust assets a chance to earn more income to help fund the plan.

The actuary recognized that Newtown is already looking at a pretty steep increase in the recommended contribution for 2017-18 based on the current methods and assumptions — almost a $200,000 increase due mainly to trust asset losses and salary increases.

Taken all at once, the change to seven percent would add $416,668 to the recommendation, the report states. But the CCA best practices allows for a transition period such that only a portion of the increase would be considered “required” in the first year, with a three-year phase-in.

If this policy was followed, for 2017-18 an additional $138,889 could be added to the valuation contribution, Mr Leonard wrote. It would be understood that the “add on” amount would double in 2018-19, and for 2019-20 the full impact of the change would be felt.

Adding a change in funding method would also increase the recommendation another $147,691 on a one year basis, or $49,230 if phased in over three years.

Both the pension board and selectmen took the actuary’s advice to initiate the approved changes sooner than later, if all parties were in agreement.

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