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Public Hearings On Town Plan

The Norwich Planning Commission will hold hearings on its proposed Town Plan on January 9, 2020, at 6:30 PM and on January 13, 2020, at 6:30PM in the Multipurpose Room of Tracy Hall. Copies of Public Hearing Draft are available here.

Norwich 'Working Group' Fails In Transparency

A Working Group of public officials, formed in November by the Norwich Selectboard, is apparently not giving public notice of its meetings or posting meeting minutes. This failure seemingly violates Vermont's Open Meeting Law.
The group, known as the the Town Facilities Working Group, is to make recommendations to the Selectboard later this month regarding $4 million in improvements to Town buildings to reduce their carbon footprint. The ambitious goal is to have an Article on the ballot at Town Meeting in March. 

At $4 million, the project is likely the largest public works project ever undertaken by the Town. In comparison, the contract to construct the Public Safety Building had a price of nearly $1.3 million.

The Open Meeting Law applies to any "public body." The statute gives that term a broad definition at 1 V.S.A § 310(4):

"Public body" means any board, council, or commission of the State or one or more of its political subdivisions, any board, council, or commission of any agency, authority, or instrumentality of the State or one or more of its political subdivisions, or any committee of any of the foregoing boards, councils, or commissions, except that "public body" does not include councils or similar groups established by the Governor for the sole purpose of advising the Governor with respect to policy.

The Town Facilities Working Group was created by the Selectboard at its November 20th meeting and includes two Selectboard members, three Energy Committee members, two Finance Committee members, and the Town Manager, all elected or appointed public officials.  

How is this not a public body?  Even if arguably not a public body, the better practice, to me at least, is to err in favor of transparency. Openness is fundamentals to good government.

I doubt there's any nefarious motive involved. However, it is important that small town government not get indifferent or careless in its approach to public notice.
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UPDATE. The meeting "notes" for two meetings of the Town Facilities Working Group are now posted on the Norwich website under the Town Manager’s Office section. http://norwich.vt.us/town-managers-office/

HereCast is shutting down

HereCast, the website dedicated to content 'by locals for locals', is going on hiatus at year-end. No return date is set and the website will go dark. This blog posted 427 times on HereCast over a two year period.

In an email to casters (bloggers) on November 29, 2019, the White River Junction, VT startup said:

We started HereCast 6 years ago to help fill a void we saw in our local communities. Your efforts have far exceeded our expectations; however, we’ve fallen short of other goals, so we are shutting down the site while we reassess our future. 

This is big loss for residents of and visitors to the Upper Valley specifically and for hyperlocal coverage in rural communities in general. HereCast's content came from locals who were paid from a pool funded from advertising revenue. The site was popular in the region, "reaching more than half of Upper Valley residents month-in, month-out," said the HereCast website. "HereCast showed that — given the opportunity — people from all walks of life will step up to inform and engage their communities."

Growth was a problem.The company "overestimated how quickly we could expand our readership beyond the Upper Valley. We’re growing, but not quickly enough to support the cost of continuing to develop and maintain our platform."

"Second, we underestimated the hostility of traditional media." As reported elsewhere, the regional newspaper Valley News, based in Lebanon,NH viewed HereCast as a competitor and refused to let company advertise in its paper. In the six year history of the local startup, the only news story that I recall Valley News writing about HereCast was to report its shutdown.

As the Valley News and other newspapers fight to survive in the internet era, it was "naive to think they could risk exploring a different future with us under those circumstances," said HereCast.

See also, Site dedicated to content 'by locals for locals' announces shutdown in the Eagle Times on December 3, 2019.

Comment: Two important items missing from the Selectboard packet

I am going to whine. Two important items are missing from the Selectboard packet for the meeting on Wednesday evening, December 4th.

1. Proposed budget for FYE 2021. Budget discussions kick off on Wednesday, with a presentation by the DPW, followed by "Board Discussion/Possible Action".  No budget numbers are in the Selectboard packet or on the Town's website. The Selectboard had the budget proposal two weeks ago, but the public does not.
2. Town Manager's written report for November. I thought a written report of the Town Manager's activities for the prior month was "expected" at the first Selectboard meeting of the following month. The last report I located was for August, 2019, buried in the Selectboard packet for September 11.  My modest review indicates that since March, written reports were also not in the Selectboard packets for March 13, June 12 or July 10. (My count is six months of nine.) The last Town Manager report on the Town's website is for July 2016. Not a typo ... over three years ago. The public should not be in the dark.

I am disappointed, even though the omissions are very likely oversights due to the press of other business. Yes, the website and packet materials are primarily the responsibility of the the Town Manager. But the Selectboard is the boss. If the website is out of date, if materials do not make it to the packet, or if reports are not being written, that's a shortcoming of the Selectboard as well.
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Posted on HereCast on: 12.04.2019.

Agenda item #7c: Resolution for municipal authority to regulate retail pot sales

On tap for the Selectboard meeting on Wednesday is a resolution sponsored by the Vermont League of Cities and Towns (VLCT) regarding municipal authority over retail cannabis sales. The Selectboard agenda and packet were released Monday afternoon because of the Thanksgiving holiday.

Coming to Vermont?

I'm not sure this is a end-of-the-meeting, rubber stamp type resolution. My quick turn through the internet says the resolution has stirred Board debate at least at Selectboard meetings in Barre, Chester, and Springfield, the occurred before Thanksgiving. The website Vermontijuana labels the VLCT as an anti-cannabis lobbying group.

The retail sale of pot presents a unique situation for Norwich as it is adjacent to Dartmouth College in New Hampshire, where cannabis is not legal. In addition, the Village Business area includes the Marion Cross School, grades pre-K to 6th.

Legislation to permit the retail sale of marijuana is expected to be proposed in Montpelier in January. The anticipated bill would allow "local municipalities to ban sales by a vote of those present at an annual or special meeting but not by an ordinance," according to the story in the Chester Telegraph. "The bill allows for local cannabis control commissions to handle permitting and local regulations and a 2 percent local option tax collected on sales."

In contrast, the VLCT resolution allows towns to "opt-in" and calls for a 5 percent local tax, with 70% of revenues being retained by the host community of the retail establishment. Towns would also apparently need to opt-in for farmers to grow marijuana ("cultivate, process, manufacture, or sell cannabis"). The remaining 30% goes to other municipalities, "hosting growing or manufacturing marijuana businesses," says the Time Argus report of the VLCT presentation to the Barre Board, although the proportions of the split are not stated. The implications is that is if a town is not a host, it gets nothing.

The Selectboard in Springfield modified the resolution. According to the Eagle Times report:

The Springfield Selectboard objected, however, to two parts of the VLCT provision. In the board’s amended version, the resolution changes the “opt-in” for municipalities to an “opt-out” and removes the language which would distribute 30% of the collected tax revenues to municipalities that don’t host commercial cannabis.

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Originally posted on HereCast on:12.02.2019.

From the Archives: What’s an "Undesignated Fund Balance"?

With the budget season upon us, I thought I would re-post this explanation of the Undesignated Fund Balance. Originally posted on HereCast on September 10, 2018.

The Undesignated Fund Balance (UFB) is an important measure of the financial health of a municipality. 

In Norwich, the UFB is or will be underfunded by the end of the fiscal year, according to Selectboard Financial Policy #2.  That introduces an element of financial risk for the Town, though there is no immediate crisis. In a later post, I plan to ask why this happened without public discussion. First, as a warmup, I thought I would provide my layman's (not an accountant's) understanding of the purposes of the UFB.

The Undesignated Fund Balance is an amount the Selectboard holds in reserve to cover cash flow needs and emergency expenses. An earlier blog post of mine referred to the UFB as a 'rainy day fund' but that term understates its purpose. 

The  Selectboard Financial Policy #2, Undesignated Fund Balance describes its purposes as follows*:

1.1.1    To fund operations by providing sufficient working capital for adequate cash flow, tax rate stabilization and as protection against uncollected taxes, economic downturns, or shortfalls of revenues, imposition of additional costs by other governmental agencies including courts, errors in financial forecasting, natural disasters and cutbacks in distributions from the state government.
1.1.2     To reduce the cost of long-term borrowing by maintaining an appropriate level of undesignated general fund balance, which is reviewed as part of the evaluation of a municipality's creditworthiness by bond-rating agencies.

Tax rate stabilization in the quote above was a new concept to me. When the Undesignated Fund Balance is used to make a 'tax stabilization payment', the Selectboard takes money from the UFB, instead of raising it through property taxes.  Not uncommon in Norwich. This year the Selectboard specifically earmarked $264,290 in setting the property tax rate at its meeting on July 11. The $264,290 reduced the property tax rate by over three cents.

 

How much money should the Undesignated Fund Balance hold?  The recommended level of reserves is often expressed as a percentage of the annual budget, rather than a dollar amount. For example, the Government Finance Officers Association thinks that at a minimum, general-purpose governments should keep in reserve  two months of expenses. That equates to 16.67% of the annual budget. At the July 11 Selectboard meeting, the Town Manager expressed a preference for an UFB of 17%. 

Selectboard Financial Policy #2 at section 4.2 says the UFB should be "between 10 and 20 percent" of the annual budget. The Town’s budget for this fiscal year is $4,502,386, making 10% equal to $450,238. However, by using $264,290 as a tax stabilization payment, the UFB is closer to 9% than 10%. 

 

Going below the minimum was not discussed by the Selectboard. The lack of transparency regarding that situation is troubling and will be the subject of  a later blog post. 

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*  All Selectboard policies are not currently online. I located what appears to be a copy of Selectboard Financial Policy #2, Undesignated Fund Balance in the Selectboard packet of October 11, 2017

POSTED: 09.10.2018 

CORRECTION: In Norwich, the UFB is or will be underfunded by the end of the fiscal year .... 

Without Inquiry, Selectboard Approves Use Of 'Designated' Funds For Non-designated Purpose

When can designated funds be used for non-designated purposes? To my consternation, no public official gave the question much thought, at least publicly at the [Norwich, VT] Selectboard meeting on November 20, as seen on CATV.  I was hoping for somewhat better oversight of taxpayer money.

Police Chief Frank at Norwich Selectboard meeting on November 20. Source: CATV screen shot.

At the meeting, Police Chief Jennifer Frank made a compelling case for the Police Department to purchase new computers for the station and for the four police cruisers, without waiting for the next budget cycle.

The expense is not the issue, but rather the funding source. The Police Chief sought, and the Selectboard okayed, funding for the purchase from the remaining balance in the "Communication Study Designated Fund", about $16,000. Not a peep from any Selectboard member, Treasurer, or Town Manager about whether this was an appropriate use of that Designated Fund.
Residents may recall that the Communication Study Designated Fund was established to study options for building the emergency communication tower. After the tower was built, a balance of over $28,000 remained in Communication Study Fund.  At Town Meeting in 2018, voters approved using the balance in that fund to pay down bond debt regarding the tower.

Excerpt from Minutes of the Annual Meeting, March 5, 2018 Town of Norwich, Vermont, 2018 Norwich Town Report at I-6.

I wish a town official had asked these three questions at the November 20 Selectboard meeting, even if just to keep the public informed.

1. Isn't voter approval required to use 'designated' funds for non-designated purposes? The Selectboard thought so in 2018. Then, the Board asked voters for approval to use the Communication Study Designated Fund to pay bond debt. See Article 10 above. Three Selectboard members as well as the current Town Manager held office at the time the Article was placed on the ballot. Prior practice in Norwich is to the same effect. Voter approval was sought at Town Meeting in 2009 to move money from the Fire Training Facility Designated Fund to the Tracy Hall Designated Fund. See 2009 Town Report at I-5 (Minutes of Annual Meeting). I don't know the answer to this question but past practice indicates voter approval is the preferred course. I also don't know if the Selectboard even considered the issue before approving the Police Chief's request.
2. Why not use money in designated funds earmarked for the police department? The Town has at least three designated funds set aside for police department expenditures. According to information in the Selectboard packet for that meeting, they are (and the balances in each): Police Cruiser ($80,754), Police Special Equipment ($12,385), and Police Station ($10,630). No Selectboard member asked why those designated funds were not being used to fund these police department purchases.
3. Isn't the money in the Communication Study Fund already spoken for? As noted in Article 10, voters approved the speeding of "any remaining" funds in the Communication Study Designated Fund to "reduce" Communication Tower Bond debt. Apparently, that debt has not yet been retired. A preliminary iteration of next year's proposed budget has $30,738 allocated for "DEBT SERVICE ON TOWER BOND". If the debt is outstanding, it would seem the voter mandate is not satisfied.

Questions 1 and 3 go to the legitimacy of the Selectboard approval. Perhaps the Board will address the topics at its next meeting, before releasing the funds.

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Originally posted on HereCast on November 24, 2019.

Cyber Scam Questions: Why didn't anyone tell the Town Manager?

Norwich Town Manager Herb Durfee at recent Selectboard meeting. Source: CATV screen shot. 

One of a series of posts raising questions that occurred to me in reading the Burgess Report, the Selectboard commissioned report investigating the business email compromise (BEC) scam that saw $250,000 stolen from the Town. CAVEAT: Hindsight is 20/20.
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First, a brief recap. In response to urgent emails purporting to be from the Town Manager, Finance Director Donna Flies, two months on the job, made ACH (electronic) payments on the following dates and in the amounts indicated: August 6 for $35,820; August 12 for $38,740; August 19 for $88,680; and August 23, 2019 for $86,480. The recipient was Donald S. Jefford, Jr.  The payments were all fraudulent, part of a cyber scam.
The Finance Director knew each transfer violated a Selectboard policy requiring Board approval for the payments but said she took her orders from the Town Manager.
Even though several Town officials had concerns, Town Manager Herb Durfee was not informed about any problematic payments until the Selectboard met in executive session on August 28.

Why didn't the Finance Director ask the Town Manager about the payment requests?

Town Manager Durfee was away on vacation at the time of the first email but was back in the office on August 12.  Yet, the Finance Director never talked with him about the transfers. "[W]hen Flies made the last three payments to Jefford, she never discussed, nor mentioned anything to Durfee about the payments, the lack of invoices, the lack of purchase orders, or lack of Board approval," states the Burgess Report, observing that "regular personal interactions occurred between them daily."

An evil Town Manager could have embezzled a million dollars, seemingly without a peep from this Finance Director.  Was the Finance Director in on the scam? The Burgess Report says that she "believed that the emails were actually from her boss."

What about other Town officials?

By August 18, the day before the third transfer, five town officials, in addition to the Finance Director, knew that one ACH payment had been made in direct violation of Selectboard policy, according to the Burgess Report. These officials were the Town Treasurer, three Selectboard members including the Chair and Vice-Chair, and the Finance Committee Chair.

At that point, the Finance Director was on record as saying she would ignore Selectboard financial policies if the Town Manager told her to make a payment.

In addition, Jefford was not a familiar vendor. Neither the Selectboard Vice-Chair nor Treasurer "knew who Jefford was," says the Burgess Report. On August 16, while on the phone together, "both did a Google search, with no results."

The Treasurer was worried about embezzlement. Although concerned about the violation in policy, the Selectboard Chair, who was away on vacation and had talked with the Treasurer by phone, was "not concerned about embezzlement," says the Burgess Report. A cyber scam was not on anyone's mind. It was decided that the matter could wait until the Selectboard meeting on August 28.

Apparently, the Treasurer was reluctant to talk to the Town Manager by herself. The Burgess Report says the two do not have a good relationship.

Had someone talked to the Town Manager anytime before August 19, over $173,000 in financial loss could have been avoided. By August 23, about $86,000.

The Burgess Report's finding is that it "appears" that Town officials responded appropriately "based on the facts of what people knew, at the time they knew it."

At the Selectboard meeting on the 28th, the Town Manager learned of the embezzlement concerns and about Comerica Bank flagging as suspicious two payments from the Town.

However, the cyber scam implications only became clear after three officials met with the Finance Director the next morning. "[W]hen they first looked at the emails they knew it was a scam," says the Burgess Report. Later that day, the Finance Director received another email from the fraudster asking for two more payments be sent to Jefford that day. She did not reply.

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Originally posted on HereCast on 11.02.19.  Contact me at: norwichobserver@gmail.com