The following letter was published in this week’s issue of the Gazette and is reprinted here with the permission of the author.
To the editor,
I had the pleasure of serving as Chair of the Village of Croton-on-Hudson Financial Sustainability Committee (FSC) from July 2016 through April 2019. Through its first three years, the FSC interviewed, researched, investigated and reported to the Village our primary conclusions. These were:
Village debt levels are among the highest in the state and the Village Board should focus on ways to lower our debt burden. Stemming from that analysis the Village Debt Policy was unanimously voted on by the Board. The Debt Policy mandated the Village make best efforts to borrow less than what bonds get paid off each year. Over time, our debt burden would become more manageable. Since being enacted in 2017 the Village adhered to the Debt Policy the next two budgets but breached the debt policy this year.
Village Fees (Parking, Water) are among the highest in the region and the Board should do its best to maintain service levels while keeping costs to Village residents down. Last year the Village increased parking fees.
Village budget expenditures are growing faster than what should be considered sustainable and the Board needs to undertake a Village-wide review of its operations and capital plan. I don’t believe the Village has undertaken this review yet, though they may have a plan to do so in the future.
Our reports are on the Village website under Boards and Committees, Financial Sustainability Committee. Please have a look! FSC members took time away from family to create these reports. I’m very proud of my FSC colleagues and neighbors and I admire them greatly. We came from all sides of the political spectrum and while we may have disagreed on various issues but we worked well together. Most important, we were in lock-step on what the Village needed to do financially. Once examined the numbers don’t lie.
After the passage of the 2019-20 Village budget and subsequent breach of the Debt Policy I and several other members of the FSC resigned from the Committee. Prior to that we had minimal communication with the Mayor and Trustees, which is perfectly fine! The Mayor and Trustees can utilize our committee and take or leave our advice as they see fit. But the financial problems facing our Village persist and we just didn’t think there was enough focus on addressing the core problem of overspending.
One issue you may not be aware of has been cost overrun with the DPW Relocation and Remediation project. In May 2017, the Village Manager and Trustees requested FSC opinion on the financial impact of the DPW Project on the Village budget. Our committee was given an estimate of the total cost of the project of $3.5 million without taking debt financing into consideration. That included $2.6 million for the purchase of the two abutting properties on RT. 129 and $900 thousand for retrofit of the purchased property and demolition/paving over of the existing Train Station DPW facility to make additional parking. At the time, the FSC commended the Village for making a very large infrastructure investment on a core service while staying within the limits of the Debt and Reserve policies. Our letter of recommendation is on the Village website as well.
A few weeks ago after reviewing the latest budget and the proposed Village Capital Plan I contacted Village Manager King to get her best estimate of the total cost of the DPW Project to-date. After filing a FOIL request, I received a report from the Village that shows the cost of the DPW project currently stands at nearly $5.2 million, which is $1.7 million over the cost estimate used to vote on the project. The $5.2 million does not include finance costs which will add an additional 30%.
“A few weeks ago after reviewing the latest budget and the proposed Village Capital Plan I contacted Village Manager King to get her best estimate of the total cost of the DPW Project to-date. After filing a FOIL request, I received a report from the Village that shows the cost of the DPW project currently stands at nearly $5.2 million, which is $1.7 million over the cost estimate used to vote on the project. The $5.2 million does not include finance costs which will add an additional 30%....Have you heard of any major issues or stumbling blocks that ramped up the cost of the DPW project above initial estimate by $1.7 million? Neither have I. And that’s the problem as it seems like business as usual. How did this DPW project overshoot initial cost estimates by nearly 50%?”
So far, $3.4 million has been spent for the purchase of the Route 129 properties, renovation of the new DPW building and remediation and engineering design. In its 2019-20 capital budget, the Village projects an additional spend of $1.6 million to demolish the old DPW facility and make it additional parking spaces. The project concludes in 2021 with an additional $120,000 to update an oil tank.
Have you heard of any major issues or stumbling blocks that ramped up the cost of the DPW project above initial estimate by $1.7 million? Neither have I. And that’s the problem as it seems like business as usual. How did this DPW project overshoot initial cost estimates by nearly 50%?
Once I found out this detail I understood clearly why the Village Board voted to breach the debt limit. It seems they really didn’t have a choice. If the Village was more accurate in estimating the cost of the project in 2017, would the 2017 Board have voted for the project or instead asked the Village Manager to come up with something more cost effective? From our perspective, the FSC anticipated some cost overrun and felt that the estimate provided was a bit low, but we would have raised red-flags on the project if we were given a $5.2 million estimate.
Is this difference in actual vs. projected costs of capital projects common? Looking at the numbers for recent projects like Gouveia and the Grand Street Firehouse renovation I believe its more common than it should be. But as far as I’m aware, the Village doesn’t report on this or establish any benchmarks or procedures to ensure the estimates they bring to the Board for vote are accurate and take into consideration worst case contingencies. If my calculations are wrong or I missed something, I’m happy to be corrected. But if I’m right the Village needs to provide an explanation.
Currently the Village is planning over $6 million in additional capital improvements to the Municipal Building and Croton Point Avenue, if the cost estimates are accurate. The Village Board needs to be more critical of cost estimates of these capital projects going forward.
Respectfully,
Dan Osborne