Overtaxing, Overspending: 2009 Archives

One who read the Cape Cod Times article on December 28th about oppostion rising to the huge centralized sewer systems being proposed for several towns on Cape Cod, including Chatham, emails his comments to Chatham Concerned Taxpayers. He aptly describes how town officials typically try to sneak these big projects past taxpayers with low ball numbers or not using any numbers at all for property taxpayers. Essentially, the writer says these projects are just unaffordable.

This is what he had to say:

To whom it may concern:

I read with interest now that the good taxpayers of Chatham have finally arose to the fact of the astronomical cost to each and every taxpayer.

Let me first say, that three years ago the town was proposing this sewer system at the same $300 million price tag. I wrote several responses to newspapers with the true cost estimates and why sewers were totally cost prohibitive.

I worked with a friend who worked for Ernst & Young as a municipal capital investment expert in long range municipal public works projects in cost analysis, budgeting and funding.

He explained to me three years ago why NO MUNICIPAL AGENCY could fund such a project such as this.

He explained that municipalities will give the taxpayer a totally untrue low ball figure that can't be sustained in the past or present future due to the year to year increase in cost of materials, change order cost, labor increases, police road work costs, new paving costs and on, and on.

He had worked on many of these projects for municipalities while working with one of the largest and respected Accounting Firms in the country as an actuary and accountant. He explained to me that the increase from which the town will try and sell to its taxpayers, which is basically the start up cost if the project is to start today and finish tomorrow.

He pointed out that the largest public works project in the Commonwealth of MA is the CENTRAL ARTERY TUNNEL PROJECT, better known as the 'BIG DIG'.

The BIG DIG was estimated that it would cost taxpayers $2.3 Billion started in 1985 and would take 20 years to complete. Well, here we are 25 years later and the costs of increased to over $22 Billion OR and INCREASE OF 1,000 % in true cost.

So with that in mind, consider the potential cost of a sewer system in Chatham most likely easily NOT costing $300 million but closer to $3 BILLION . You now can do the fifth grade math that the town fathers were not capable of expressing to the taxpayers in SELLING them some ridiculous cost estimates. Remember your talking about 6,300 residential property's paying in reality $3 BILLION DOLLARS over 20 years.

Take that figure I read in a recent article that indicated it would cost $44 thousand per property and MULTIPLY by the INCREASE IN REAL COST OF 1,000% higher and your group can truly get a grasp of this most outrageous project which truly is beyond the taxpayers ability to fund.

My friend at Ernst & Young has said this truly presents a true idea of costs. One thing the news article's hasn't presented is the additional costs of a Sewer Disposal Plant, the amount of new town employees with salary and benefits, new town vehicles to operate the plant and system, and anticipated repair and replacement of such a plant and vehicles to operate.

I hope this has been some value to your group, as you can see this would drive everyone out of town, reduce property values to the point the town cease to exist after thousands stop paying their tax bills to support such a TOTALLY OUTRAGEOUS PROPOSAL.

Your group should also involve itself with looking at other major municipal public works projects and their start and finish costs and you'll be so enlightened to how this town is trying to push a project that is totally unsustainable through taxation.

Now the writer is somewhat off here and there. The "$300 million" does include the sewer plant.

But his main point is correct: The record of staggering escalation in the costs of large municipal projects is well-known. The Big Dig is indeed an excellent example, though the original $2-$3 billion estimate has after 18 years of construction "only" risen, we believe, to $16 billion or so, not $22 billion. Still, that's up five times over the original estimate.

CCT's estimates were done very modestly, adding no cost escalation, just normal inflation. Nonetheless, the total for the $240 million project comes out to be close to half a billion dollars, almost certainly more if cost escalation is taken into account.

Whether it's twice the stated cost, five times or ten times, there's more than sufficient reason to search out the most cost effective ways to attack the nitrogen problem.

Chatham’s town officials, despite repeated requests, have not published detailed information about the cost of the centralized sewer system they are proposing, although Dr. Robert Duncanson, who is in charge of the project under Town Manager William Hinchey, told a Cape Cod Times reporter this past week (Cape Cod Times, December 7, 2009) that over 20 years it would only cost the average homeowner $3,500 or $175 a year on average.

For a $200-$300 million project, that is an unbelievable statement. It is a shame that town officials have not published detailed information to substantiate that claim -- but then, they could not. They should publish the real information in full detail so taxpayers will know what town officials are planning for them to pay. The financial information about taxpayer costs in the Comprehensive Wastewater Management Plan posted on the town's website is also inaccurate, incomplete and not credible.

In the absence of any credible estimates of the true cost to taxpayers of the proposed centralized sewer, Chatham Concerned Taxpayers did its own calculation of costs based on publicly available information and common engineering assumptions and the best financing arrangements currently available from the state, e.g., 30 year terms, level payment, 2%.

For those getting sewers in so-called Phase 1 (about two-thirds of all residential properties) the average homeowner cost over 20 years will be about $52,000, not $3,500. Their average annual cost will be about $2,600 or $217 a month over a 20-year period. Payments will continue for 30 more years until all the debt incurred to finance the project is paid. The total financed cost of this property would be about $76,109.

Continue reading "CHATHAM TOWN OFFICIALS FAIL TO COME CLEAN ON SEWER COSTS: $2,600 OR $175 PER YEAR FOR AVERAGE HOMEOWNER?"

Despite the repeated urging, pleading even, of Chatham Concerned Taxpayers, Chatham town officials have to this point refused to even look at methods to clean up the coastal waters at far less cost to taxpayers than what they are planning.

Even though alternatives to the conventional, hugely expensive centralized sewer system used in densely populated big cities exist and can do the job just as well at far less cost, Chatham officials seem determined to spend at least $300 milliion of taxpayer money to install a townwide sewer system. For a town with about 6,500 residents, this has to be the most expensive sewer on Cape Cod.

It is not clear who decided to plan for a centralized sewer system that will cover the entire town when it isn't needed to solve the environmental problem that was the reason for starting the process in the first place.

There has been no town meeting vote to plan to spend $340 million to sewer the entire town.

There has been no town meeting vote to plan to spend $240 million to clean up the coastal waters rather than spend far less to solve the problem.

Surveys indicate Chatham taxpayers could save as much as $100 million (of the $240 million) in cleaning up their coastal waters, but the selectmen and town manager refuse to even consider these cost effective alternatives.

Whaat about the fiduciary duty to spend taxpayer money wisely?

Michael Barone comments today on the manipulation of the little people practiced by the insiders in the Chicago political machinery.

But his commentary is relevant to small towns such as Chatham as well. Consider this paragraph -- and use your imagination.

That's governance, Chicago style. The head of government is friends with the heads of every big business, lobby and union, and together they make decisions on how everyone else will live. Those on the inside get what they want. Those on the outside -- well, they get what the big guys want them to have. That's life in the big city.

In a small Cape Cod town such as Chatham, do insiders work with the town manager or administrator, who really controls the levers of power, to get what they want? Summer residents who pay most of the taxes but don't have the vote, no problem, they're insiders. They want a big sewer, bigger than needed to solve the nitrogen problem in the water? No problem, will the town manager see that they get it? Prominent organizations who benefit from appointments to important town commitees and have their own wish lists play ball in return.

Is there a need to squeeze taxpayer complaints out of air time at selectmen's meetings? No problem, a prominent organization which also wants a sewer and doesn't care about the cost agrees with the town manager/administrator to schedule an hour and 15 minute conversation with the selectmen for one of the other organizations they control that could happen anytime, but it's needed to run the clock against the taxpayers. No problem, they are there to back up the town manager. And the golf or the archery committee is ready to discuss its desire for more power at the drop of a hat. They're good for an hour, too.

So, the biggest decision of the century for Chatham is to be discussed -- a $340 million centralized sewer system. But, what do you know, there's only 20 to 25 minutes left before the hall has to be vacated for another meeting to begin.

Hundreds of millions of dollars in taxpayer property taxes are at stake. Taxpayers point out opportunities for cutting perhaps as much as half the cost of the big city sewer system the town manager wants to give to the summer residents. They think the selectmen ought to look into it.

Time's up. No, we can't bother looking into that, say the selectmen. We don't care that some other town is doing what we won't do, giving careful consideration to saving $300 million for their taxpayers. Our taxpayers won't mind paying twice what they should. They've almost always done what we've told them to do. Why should this be different just because the possible savings are more than $100 million? They'll still trust us.

Fantasy? Conspiracy?

Mayor Daley must be smiling proudly.

And the little people who live in Chatham? They'll pay.

The best news for all Chatham taxpayers is the extraordinary presentation made this past Saturday, September 12th, by CCT’s panel of experts on the alternatives that can help staunch the flow of septic nitrogen into our embayments. These alternatives are real, currently available, vastly less costly than just a centralized sewer system and – what a bonus! – are better for the environment and use less in the way of natural resources. The Cape Cod Chronicle and Cape Codder both provided straightforward coverage of the event, which should be read.

It was a standing-room-only crowd, about 120 to 125, for the workshop "Cleaning the Waters and Saving Taxpayer Money, Too." Every seat was filled. People who came late and couldn’t do without a seat left, which we understand. The audience followed carefully the detailed presentations that were made, which took about two hours. After a coffee break, the question period went on until 12:30. At the very end of the 3½ session half the crowd was still there.

CCT members are as fully committed to the goal of clean water for Chatham as the Friends of Chatham Waterways, which organization encouraged CCT to hold this informational forum.

As the staggering scope and cost of what town officials are proposing sunk in, there was shock and dismay. But, as the presentations moved forward, there was hope and excitement in the air.

Many in attendance had no idea of the size and expense of the sewering plan town officials are proposing since they hadn’t heard much – which is why CCT held the wastewater forum.

It’s no wonder officials have been quiet about it, because the figure of $340,000,000 is so outlandish for a town with just 6500 residences that it’s difficult to comprehend. That’s almost ten percent of the cost of cleaning up Boston Harbor for more than 2 million people.

First thing to understand is this: This hugely expensive sewer system will do the job. The citizen committees that met periodically with town officials and their sewer consultant Stearns & Wheler were correctly satisfied that the traditional centralized sewer system would do the job. What was missing throughout the process, particularly as the cost estimates mounted from $20 million to $60 million and $120 million, was a focused attention on whether there was a less expensive way to address the nitrogen problem.

As recently as a year ago, even Stearns & Wheler admitted that the town could do what is necessary to solve the septic nitrogen problem at much less than two-thirds the cost of what town officials are proposing be charged to the property tax. Right there, that’s over $100 million in savings and alternatives that are available today haven’t even been factored in. It’s clear that somewhere along the line (some eight to ten years in the planning) somebody decided that Chatham would have a centralized sewer system no matter what the cost turned out to be.

Chatham Concerned Taxpayers is pleased to have had as a co-sponsor the national environmental organization Clean Water Action. Some might find it strange that an aggressive environmental group would team up with taxpayers looking to save money on property taxes. But Clean Water Action is looking at wastewater problems practically and holistically. They recognize that if costs skyrocket out of reasonable range, as in Chatham, hard opposition to spending money is likely to develop. Better to work with groups such as ours to find acceptable environmental answers at less cost. Not only that, Clean Water Action believes it is a terrible mistake to collect a city or town’s wastewater and just dump it into the ocean – thus depleting the water table.

Consider, if every town on the Cape built a sewer system such as Chatham town officials are proposing, how much water would be diverted from our aquifers. Yes, many say the Cape’s fresh water aquifers are inexhaustible, but very few things in life don’t run out sometime.

For example, the centralized system in Boston collects water from all over Greater Boston, feeds it into Deer Island treatment facilities and then pushes it down and through a tunnel beneath the seabed 9.5 miles out into Cape Cod Bay. As a consequence, fresh water reservoirs are suffering and stream flows are down because so much water is being sucked from the land and pumped into the Bay.

So the alternatives presented at the forum met the dual test for Clean Water Action as well as CCT – environmentally better and much less expensive. There’s nothing wrong with stretching environmental dollars as far as they will go.

The event was widely advertised and Chatham Selectmen Len Sussman attended and stayed through the major presentations. Audience members did ask where the other town officials were. Mr. Meaney noted that Mr. Duncanson, the principal official responsible under the town manager for the proposal, was in California and could not be present.

CCT’s position is simple: There is so much money at stake it is irresponsible not to look at alternatives that can bring the cost down substantially. Similar demands are being made in Orleans (over 1,000 have petitioned the Board of Selectmen to included alternative systems in their plan, which now, like Chatham, incorporates only a very large treatment plant and sewer pipes running out from that to cover the entire affected area).

In Falmouth, leadership for alternative solutions is being provided by State Representative Matt Patrick, an environmental activist before he entered the legislature. Rep. Patrick joined our panel in explaining how alternatives could work in Falmouth. As CCT fights for the taxpayers of Chatham, we will be working closely with those in Orleans and Falmouth and in other towns who are demanding that the full range of possibilities be examined for a combination solution that will do the job much less expensively and just as well if not better environmentally. Officials for Harwich, Orleans and Dennis were in attendance as were concerned citizens from those towns and Brewster and Barnstable.

Orleans selectmen have agreed to a Saturday forum on wastewater, which is scheduled for October 24th. State officials met this past Monday with Rep. Patrick in Falmouth and agreed to the installation of an alternative septic reduction facility. So there is movement. In our next report, we will recount what state and county officials are saying as they adjust their thinking to the new reality of centralized sewer systems being outmoded, too expensive and environmentally damaging.

Thanks to all who emailed and called afterwards to express their appreciation for the superbly qualified panel and their excellent presentations. As stated earlier, there is hope and excitement.

This is a reprise of just a few of the messages CCT received by email from residents and
nonresidents. With "summer" (where is it?) beginning, we thought this entry deserved a second airing.

Some messages from residents and nonresidents concerned with Chatham’s extravagant spending:

Being a nonresident taxpayer I have no vote but have been a taxpayer for [many] years and my parents...before that. I feel that it is the nonresident taxpayers that have enabled the town to spend as much as they want for years.

Unfortunately, that spending attitude impacts those of you who live there and are voters as well. . . . we have been the source that has provided a warped sense of reality when it comes to town spending.

Just for the record, I am not a trophy home owner but a person whose ancestors came from Chatham and still own the family homestead. I'm just barely able to hold on to the place with the ever rising tax burden.

I just read the page 3 summary in the May 4,2009 Cape Cod Times comparing spending in the 15 towns across the Cape. It is pretty basic information, but it still raises some interesting questions.

Across the 15 towns Chatham spends more to service its debt than any other town on the Cape as a percent of its total spending. In fact we spend 47% more on a percent of total spending basis than the next highest, i.e., Harwich.

Chatham’s total spending per capita population is $4748. Only Truro and P Town spend more, and those are towns where lack of size and extreme seasonality impacts those numbers. In fact the only other town of any size that spends more than $4000 per capita is Orleans and we still spend 14% more than they do. So for a town on the Cape of any size Chatham’s spending number stands out. Of course from the information in the paper one of the points you could make is it is because we have more debt! I would agree and I think that is a problem, not a reason.

Lastly, our tax relative to valuation is shown as the lowest on the Cape by a wide margin. Why doesn’t that make me feel better? Dollar value of houses don’t require town services, people require town services. The ability to raise taxes shouldn’t define the budget, the services required should define the budget and the taxes should be the result. None of us in Chatham can live on the value of our house, unless we sell it, remortgage it or rent it.

Chatham is discussing a budget that ignores the economic reality of its taxpayers, it provides pay raises when other towns on the Cape deferring them, it spends windfall savings from lower energy costs, and it uses reserves meant for other contingencies to make the math work and package it for our voters to buy.

Many of us our tired of hearing about our low tax rate and feel the focus needs to be on our very high cost structure. I feel the constant reference to the low tax rate is just a way to not engage the real issue of cost control in the worst recession most of us have seen in our lifetime.

Just as we were shocked into reality watching our investments crumble, we may just have to accept that we can no longer spend money we don't have. . . .The mentality of buying on credit got our entire country into very big trouble so I don't understand why we want to continue to do it on any scale... individually, community- wise or nation- wise.

May I suggest to this group that not all non-resident tax payers should be lumped into a rich or very rich category. People have second homes for various reasons and in Chatham have modest homes. The tax bill is of significant concern to us as well as to resident taxpayers. Yet we have no voice. You voters have my support in your effort to control the level of spending in the town as well as to eliminate the poor decisions such as mentioned [by my fellow homeowner]..

iF YOU FEEL THAT THE 58% PLUS INCREASE IN TOWN SPENDING OVER THE PAST NINE YEARS IS TOO MUCH -- MORE THAN TWICE INFLATION AND TWICE WHAT PROPOSITION 2 1/2 ALLOWS, HELP MAKE IT STOP.

THE FISCAL 2010 BUDGET IS SO FAT IT SPILLED OVER INTO SIX ARTICLES (6, 7, 8 , 10, 11 AND 12) IN THE TOWN MEETING WARRANT. NOT ONLY SPENDING AS USUAL, IT RAIDED EMERGENCY SAVINGS ACCOUNTS ($605,000) TO COVER THE $2 MILLION IN RED INK. AND THE PROPERTY TAX LEVY WAS PUSHED HIGHER AGAIN, THIS TIME BY $770,000. IN THE END, TAXPAYERS PAY FOR OVERSPENDING LIKE THIS.