TO MS. KAMELA CHOUINARD:

Thank you for contacting me directly. If you recall, when we discussed this issue after the last finance committee meeting, I asked you to contact me directly if you had any more questions. I don't place second hand information or requests high on my priority list, especially at my busiest time of the year. I would have responded sooner, but this has taken a bit of time to research.

First of all, money was not transferred from any fund to the water fund. There is a loan on the books for this. The General Fund (which includes the highway department) has the same fund balances as before. Restricted/Reserve funds have not been taken from or altered in any way. Any claims of this are either intentionally false or clearly shows the inability by those making them, to understand how to interpret a balance sheet.

With the possible exception of an amortization schedule, (attached) information to answer these questions was and is available to the town manger or anyone else if they looked for it. The amortization is as simple as it gets. (one payment per year, simple interest). Anyone that can’t figure it out probably ought not to be in the finance business.

To be clear about the Highway department. I am well aware of the state statutes regarding the use highway fund surplus. Please note however, that under federal accounting standards outlined in GASB 34, highway departments are part of the General Fund. At our budget level we are required to follow these guidelines if we are to be eligible for any federal funding.

To the matter at hand. Although we discussed this publicly at the last finance committee meeting and you and I discussed it outside at some length, I will try to explain it once again.

To specifically answer your questions:

1 $337,743.12 is currently on the books as the total cost of the project. (this figure readily available)

2 Again, Money was not transferred. A loan was created for $330,000.

3 Redundant question. see answer 2

4 Some time before town meeting of March 6, 2007 the selectboard approved to submit an article for the Graniteville Road Project. (I don’t know the specific date, but it should be in the minutes) At that meeting, Article 12 was passed by voice vote authorizing the project and $344,000 to be financed for not more than 20 years. Unfortunately this was not the proper way to do this. It should have been done by Australian Ballot. Municipalities seeking financing for more than 5 years go through the Municipal Bond Bank which can only be applied for once a year in the spring and requires approval by Australian Ballot.

We missed that window and the project moved forward and was paid for from the General Fund checking account which includes Water fund cash. This is handled the same as we do all funds bills, with proper accounting of due/to due/from each fund, again, not affecting fund balances.

At the March 4, 2008 meeting, Article 3 was approved (by Australian ballot) authorizing financing of $330,000 for not more than 10 years. Again, this was approved by the board prior to town meeting.

We did not get the application in on time to bond that year and it was decided to book the amount properly as a loan until we could secure a bond if we decided to. Note, we can secure a bond for this specific project at any time without further town vote. This saved the water users between ? to 1% on the loan and the interest paid to the G/F was 1/2 to 1% higher than we could get at the time. (That is now about 2%)

This is a win for water users and a win for taxpayers. The water users have a lower rate and that interest is kept within the town and returned to the taxpayers (you and I) which reduces our taxes. Based on the original bond proposal of 10 years, this amounts to a savings of $64,556 and the 20 year bond being $133,310. These amounts would be paid to someone else if we use outside funding.

5. Amortization schedule enclosed.

Now, if the town wants to borrow the money elsewhere for more than 10 years we would have to vote again.

While I agree that a 15 year note would reduce payments, we would be paying $83,788 in interest. I feel we might as well light a match to that amount of interest which would be paid to someone outside the town.

Now if we really want to reduce water/sewer costs, we should look at the $93,000 a year we are paying Simon Operation. Surely we could find our own or shared operator for less than that. Even the manager, our highest paid employee, doesn’t earn that much.

Hope this answers your questions

BOB CLEAVES, TREASURER

Town of WIlliamstown