City Council divided on public works garage vote

Monday's decision pulls $500,000 from surplus to seed $18 million facility

SOUTH PORTLAND — The South Portland City Council in a split 4-2 vote on Monday to use $500,000 to set up a reserve account for the eventual construction of a new $18 million public works garage on 15 acres off Highland Avenue.

The new complex would combine parks and recreation and transportation departments under one 97,800-square-foot roof with pubic works in a building designed by Sebago Technics. That would allow the city to mothball the “limited” highway garage on O’Neil Street that is outdated, undersized and encroached on all sides by residential neighborhoods built in the decades since it went up in 1930.

In July, the council decided to punt a referendum on bonding the project to November 2013, citing concern that taxpayers could not shoulder that burden on top of a $47.26 million high school renovation. However, with “very strong revenues” for the fiscal year that closed June 30, City Manager Jim Gailey called on the council to appropriate $500,000 from undesignated surplus to seed a reserve account. Setting some money aside now will lower that amount that will need to be borrowed next year, he said.

Mayor Patti Smith favored that idea, as did councilors Maxine Beecher, Tom Coward and Jerry Jalbert. Beecher and Coward will both be off the council in less than 30 days, following Tuesday’s general election results. Beecher was term limited from running again, while Coward ran an uncontested race for a county commission seat. 

“This will be a controversial item," said Jalbert, predicting a tough sell to the public next fall. “We don’t know if it’ll come to pass. It’s up to the voters. But if it does not come to pass, we can always turn the money back to the fund balance.”

“Some of our employees are working in a less than desirable space,” said Smith. “I think the prudent thing to do is to set this money aside. It’s a positive, proactive measure that does not bind us to anything. We can always abort mission. But we should have at least a little pot of savings to begin this project.”

Meanwhile, councilors Alan Livingston and Rosemarie De Angelis voted against the appropriation.  

De Angelis seemed particularly concerned that, as late as last spring, the price tag often bandied about was $10 million. Then, at a July workshop, Sebago unveiled an $18 million number, which is expected to cost taxpayers $23 million with interest.

“I feel like we haven’t had a workshop to really, fully vet that issue and to talk about that number, and if it really needs to be at $18 million,” she said. “It’s not that I’m for or against the project, it just feels a little but to me like putting the cart before the horse.

“I understand that we have to do something, but I would like for us to get a little more public input first,” said De Angelis.

“We do need the facility,” said Livingston, “But I think I need to look more at the numbers. I’d like to have a little more time to do that before I can vote for this.”

De Angelis also questioned why money had to be set aside at all.

“I don’t know why we have to earmark it,” she said. “We can’t we just leave it in our fund balance?”

Gailey reminded De Angelis that South Portland has a fund balance policy that calls on keeping no more than 8.3 percent of its general fund budget in undesignated surplus. Anything over that should be funneled into capital projects. The current budget, including the county tax but not public education, is $30.66 million. Meanwhile, South Portland has “about $9.3 million” in its undesignated surplus account, according to Finance Director Greg L’Heureux. That equates to 12.75 percent of the annual spending, when adding the $39.9 million school budget.

“It’s essentially just a savings account for that project,” said L.Heureux, of the proposed reserve account, noting that because of greater-than-expected income this year from excise tax collections and state revenue sharing, the $500,000 will not affect the bottom line in either the fund balance or the tax rate.

Although not mentioned Monday, L’Heureux has previously recommended that the council take $100,000 in taxation as part of next year’s budget, and $400,000 in the following year. That, he said, would give the city a $1 million nest egg, further reducing the amount that will eventually need to be borrowed to build the new garage.

Councilor Tom Blake was absent from Monday’s meeting but declared himself “elated” in July when the project was put off another year. At that time, it was projected that if a highway garage bond had been added to the impact of $41.5 million borrowed for the new high school, it would have drive property taxes up $150.15 over three years on the average home valued at $195,000.

In 2005 voters narrowly rejected a $4.8 proposal to house public works in the former DuraStone building on Washington Avenue. If voters do give a collective nod to the new project, the 6-acre O’Neil Street complex would be razed and redeveloped. Gailey said.