Major investments in infrastructure such as buildings, streetscapes, parks and equipment for the next five years were included in planning released Thursday by the city of Somerville, but with a focus on avoiding borrowing money and the interest payments that result.
“Borrowing creates principal and interest payments, and those payments impact budgets for five 10, 20, 30, maybe sometimes 40 years,” said budget director Michael Mastrobuoni in a presentation to the City Council.
In the updated five-year capital investment plan, which staff called a companion to the city’s annual budget, tables put the use of existing city cash in the current fiscal year at $7 million, representing 32 percent of the money requested to pay for the capital projects. Next year, the tables say, that plummets to $300,000.
That’s because the spending is project by project, avoiding the mingling of borrowing and the spending of free cash reserves – the West Somerville Neighborhood School roof gets $3 million from free cash and nothing from borrowing, for instance, while the same school’s chiller costs $2 million this fiscal year from borrowing and $5 million in the next, with no money from free cash.
Each project not underway will need “a financing strategy before we make a commitment to start,” Mastrobuoni said.
“We’ve got a lot of potential opportunities to identify alternative funding sources,” though the city will keep taking from its free cash to “really leverage our reserve position where it helps us to avoid future borrowing,” Mastrobuoni said. The search for ways to avoid borrowing includes such sources as grants, developer contributions and state aid, and if that alternative money can’t be found for projects on the city’s to-do list, “it might mean scope updates, phasing or deferring for a year.”
Because of this approach, the presentation came with a warning: A project being listed does not mean its investment is fully funded “or that construction is going to play out exactly as we estimate it right now,” Mastrobuoni said.
The plan is also not a full inventory, as “we could fill this room with that list, for better or for worse.”
Still, city staff highlighted that the updated capital investment plan includes $60 million in street and sidewalk improvements, more than $25 million in repairs and modernization of school buildings (including an Argenziano boiler; Healey cafeteria, heating and air conditioning and roof repairs; and East Somerville Community School facade) and more than $16 million to replace aging vehicles such as snowplows and firetrucks. (The average vehicle in the city’s fleet is 13 years old, Mastrobuoni said.
Solar, electric and in-house repairs
Purchases for the city’s fleet of vehicles will include plug-in electric hybrids and fully electric vehicles, and all construction projects at schools and DPW are being done to prepare them for solar panels, said Rich Raiche, director of infrastructure and asset management for the city. More sidewalk and street repairs are being done by Public Works staff instead of by hired contractors.
While sidewalk and road repair continued a 10 percent year-over-year leap in spending, items such as Highland Avenue bike lanes were included in the presentation as expected projects but not named as priorities. Councilor Ben Ewen-Campen noted that the list was almost exclusively maintenance on existing buildings.
“There’s not items on this list that are big and showy,” Ewen-Campen said. “From my point of view and I think from the public’s point of view, we can understand why making sure that a school does not fall apart might be a higher priority” than the bike lanes.
Budget is “not great, Bob”
The current budget entered planning more than $5 million in the red, according to city officials, and mayor Jake Wilson warned councilors on Thursday that the fiscal year 2028 budget will have “those same constraints.”
Mastrobuoni quoted the television show “Mad Men” to explain how he felt about the financial forecast: “Not great, Bob.” Uncertainty in the bond market – there’s been a significant rise in cost on a 20-year note over just the past several weeks, for instance – explained why the city was doing what it could to avoid borrowing until things stabilized. The city’s current debt service is manageable, he said, but “We have a cash flow issue … and really, that is based on fixed costs.”
Still, Wilson said Friday, “it’s absolutely critical that we do this long-range planning for investing in our municipal infrastructure,” and that it be done “despite the fiscal constraints of the financial moment.”
The last CIP with 50 requests totaling roughly $740 million was three years ago, and the update to the annual budget is required by the city’s newly adopted charter. “Even if that weren’t the case, we’d be right here presenting this to you, because it’s so important,” Wilson told councilors at their meeting, noting that the city would dig into its reserves as needed “to continue and finish the projects that are underway, obviously, and we’re going to take on new projects that we’ve identified as having the the highest potential risk and the greatest urgency.”
