Marblehead has a history of exercising fiscal prudence within the Proposition 2 1/2 framework to finance capital projects.
The process usually unfolds with town officials or a group of citizens identifying a capital need, developing a budget and timeline, and embarking on a campaign to garner community support. Debate plays out in the lead-up to Town Meeting. If the project secures a two-thirds vote on the Town Meeting floor, it heads for a town-wide referendum.
If the project captures a simple majority in that second vote, the town then takes on debt — usually in the next fiscal year — to finance the capital need through the issuance of bonds. Taxpayers pay back the borrowed money — typically at very low interest rates due to Marblehead’s AAA bond rating — in installments over a set period of time.
It’s a well-established process that Marblehead has executed since Proposition 2 1/2 became law in 1982. Projects completed in the past two decades include the restoration of the Abbot Hall clock tower project, accessibility upgrades at the Old Town House, and Marblehead and Salem’s joint acquisition of the Lead Mills property.
The same process was used to build the Brown and Glover elementary schools, restore Fort Sewall and construction for the forthcoming an addition at Abbot Public Library, those last two capital projects notably financed through public-private partnerships.
Now, on Tuesday, June 21 town, voters will weigh in on Question 1, seeking authorization of $24.3 million in debt exclusions.
The town-wide referendum comes after May’s Town Meeting approved through Article 11 a bevy of small and large capital projects that Question 1’s approval would help finance.
What makes Question 1 unique? The town seeks approval to issue most of the $24.3 million debt not in one fell swoop, as Marblehead has historically done, but over multiple years, which former Marblehead finance director and town administrator John McGinn acknowledged on the Town Meeting floor.
“What’s being proposed here is something we’ve kind of never done before,” McGinn said.
The purpose, explained Marblehead Finance Committee Chairman Alec Goolby, is to allow the town to address significant infrastructure, building and capital needs over the next five years, while spreading the debt out over that span.
Question 1 is the linchpin in the town’s larger strategy to marry debt and money available from other sources, including Chapter 90 funds from the state, sales of lots in the town cemetery, revolving funds, fees and state grants, along with regular taxation.
As McGinn noted, Article 11 — now Question 1 — should be thought of as containing four pieces.
Sidewalk and road improvements
The $12.5 million that would be spent for this purpose represents the largest chunk of Question 1. It would finance a five-year pavement and sidewalk program, putting a dent in an $18.75 million backlog of street paving and sidewalk reconstruction needed across Marblehead’s 62 miles of public roadways.
The town has historically spent $605,000 annually on such work, but that falls $2.595 million short of the $3.1 million required annually to address the townwide capital-improvement need, according to an assessment of Marblehead public ways.
Townwide roof repairs represent the second largest debt-exclusion request at $8.997 million.
“Most of the major roofs of town buildings are reaching their life expectancy in the next five to six years,” McGinn explained.
The full amount may not be needed as officials hope the Massachusetts School Building Authority will subsidize work on the high school and Marblehead Veterans Middle School roofs.
“Participation in [the MSBA] process will take some time,” McGinn said.
But if the appeal to the MSBA is successful, 30 percent of the total cost will be covered, McGinn added.
“What’s being proposed here is something we’ve kind of never done before.”– John McGinn, former Mablehead town administrator and finance director
To participate, the MSBA requires voters to authorize a project’s entire cost, which is why the full amount is incorporated into Question 1, McGinn explained.
Marblehead Water and Sewer Superintendent Amy McHugh said the multi-year approach would buy time to properly coordinate and plan.
“Water and sewer is all about planning and being proactive rather than reactive and this will be a similar process,” said McHugh.
McHugh, who was recently given oversight of the Department of Public Works by the Marblehead Select Board, has executed, coordinated and planned multiyear infrastructure projects, including a $1 million sewer pump replacement and a $5 million drainage project, among others. She also noted she would oversee some of the roof work in combination with the Marblehead Building Department.
Building improvements, technology upgrades
Meanwhile, the town would use $1.4 million to pay for a salt shed estimated to cost $975,000 to replace the 26-year-old one at Tower Way and $220,000 to replace Marblehead High School boilers.
“Our salt shed is in pretty bad shape,” said McGinn. “If we don’t replace it, we risk environmental problems, given the nature of salt that’s stored there.”
A $1.7 million request would finance technology upgrades in the following ways:
- $740,000 for HVAC computer control systems in three school buildings;
- $665,000 for SmartPanels in the high school, middle school and Marblehead Village School and;
- $312,000 in hardware and software upgrades in town buildings.
Marblehead officials characterized items packaged under Question 1 as a directive from residents. In Mabrlehead’s 2020 resident survey, 420 out of 1,272 respondents — or 38.9 percent -— picked “maintenance of infrastructure, roads and sidewalks” as “the single biggest issue facing Marblehead.”
McGinn underscored Marblehead’s long-standing approach to debt service.
“We try to maintain debt that goes on the tax rate as a percentage of the overall levy with a range of approximately 12 to 14 percent,” he said. “We are at approximately 12 percent.”
Question 1 is coming before voters as previously issued debt for large projects, including the construction of Marblehead High School, is rolling off.
“This will allow us to manage new debt in a way that, as debt comes off, we can replace it with some of these initiatives,” McGinn told Town Meeting.