Hampshire Council of Governments wants towns to cover $4.7M in liabilities

  • Todd Ford, executive director of the Hampshire Council of Governments, walks in the tower of the Hampshire County Courthouse during a tour he led in 2016. GAZETTE FILE PHOTO

@BeraDunau
Published: 4/24/2018 11:13:45 PM

NORTHAMPTON — The Hampshire Council of Governments is warning all county municipalities, including those who are not a part of it, that they could be held responsible for as much as $4.7 million in long-term liabilities if the council were to disappear.

“It’s a request for help,” said Russell Peotter, of Chesterfield, who chairs the strategic planning committee, which sent the letter.

Peotter and Executive Director Todd Ford say the council is in financial trouble, at least partly because of these continuing liabilities, and may not survive if it can’t find a way to deal with them.

Not everyone is buying the letter’s central premise, however.

“It’s a very provocative letter,” said Northampton Mayor David Narkewicz, who said that it’s unclear to him how the council’s liabilities would revert to cities and towns.

Northampton is not a member of HCG, a status that Easthampton also shares

“We opted out,” said Easthampton Mayor Nicole LaChapelle.

LaChapelle said that the letter seemed like a tactic to get the city to rejoin HCG, which it left in 2003. Northampton left the council in 2002.

The letter notes that HCG shoulders legacy costs from the Hampshire County Government, which was dissolved in 1999. Peotter said these costs include retirement expenses, health benefits, and a workers compensation claim.

According to the letter, the financial challenges surrounding these liabilities have become more acute recently. Conversations with lawmakers to explore a “legislative solution ... have been revealing but sobering,” the letter states.

Peotter said these conversations informed HCG that the state would not be taking on the liabilities.

‘A path forward’

The committee’s letter argues that the best solution is for the cities and towns of the county to “collectively work towards a path forward” to dealing with the legacy liability. The annual cost to the council is projected to be more than $300,000 in the next fiscal year, with the total unfunded liability pegged at $4.67 million.

“According to our analysis and discussions with the legislative delegation, in the absence of HCG, these costs would likely revert to the towns,” the letter states.

The letter says that HCG has paid more than $1.5 million to cover the continuing liabilities since county government was eliminated. But future payments are increasingly in doubt.

“Looking forward, HCG is concerned that the annual unfunded liability may prove too much under the current paradigm,” the letter states.

Peotter said the liability reversion wasn’t a legal opinion. The council got the current liability from its auditor, and then divided that figure among all the towns in Hampshire County based on population.

In the case of Northampton, those liability numbers are $822,722 in total, or $55,095 a year. In the case of Easthampton those numbers are $463,859 and $31,063 respectively. Hadley, which voted last year to withdraw from the council, would be billed $154,908 and $10,374 respectively. And in Belchertown, the figures are $434,223 and $29,078 respectively.

Peotter said the breakup of HCG would be unprecedented, and that what would happen after is currently unknown.

“The council of governments is not on a sustainable path,” Peotter said.

Communities respond

The council’s strategic planning committee will be reaching out to “continue this process in the weeks to come,” according to the letter.

“We just want to get people at the table,” Peotter said.

Narkewicz said he would be looking into the claims around liability made in the letter, and has instructed the city solicitor to do so as well.

LaChapelle also said her administration would be looking into the letter’s claims, and that she would be meeting with Ford.

One of the signatories on the letter is strategic planning committee member Gabriel Owen of Hadley. After Hadley Town Administrator David Nixon read the letter, he met with Owen and discussed the numbers behind it.

Nixon said he read the letter as an invitation, not a threat.

“That’s the spirit in which I took it,” he said.

He said he and Owen would discuss the letter with the town’s Finance Committee and Select Board after the May 3 Town Meeting. He said he would also investigate the claims of the liability reverting to the town by taking a look at the enabling legislation after Town Meeting.

“Right now it’s all town meeting all the time,” he said.

Nicholas O’Connor, vice chairman of the Belchertown Select Board, said board members discussed the letter Monday night.

“Generally we’re concerned,” said O’Connor.

He said the letter was “unforeseen,” and questioned whether it was produced in reaction to Belchertown’s decision to discuss withdrawing from HCG at its May 14 Town Meeting.

He said Town Administrator Gary Brougham had been instructed to engage the town’s attorneys, and lawmakers will be contacted.

Brougham had his own thoughts on the letter.

“I think it’s ridiculous,” he said. He said he has been advocating for Belchertown to leave HCG for years.

He also said that he’d been assured for some time that there was no liability for Belchertown staying a member of HCG.

“My worst fears have come to fruition,” he said.

He also voiced a fear of communities that are HCG members being solely responsible for the long-term liabilities.

Brougham characterized the letter as “threatening” and “poorly written,” and said that HCG is run with “less integrity than a popcorn stand.” He also said he hoped that the town would listen to him and vote to withdraw at Town Meeting.

Sobering numbers

HCG has 15 member communities. Hadley voted to initiate withdrawal at its last town meeting, a process that takes 18 months. In addition to serving its communities through bulk purchasing, HCG also runs an energy business that includes managing Hampshire Power, selling net metering credits and managing solar and other alternative renewable energy credits for private individuals and other organizations.

“I honestly don’t know,” said Peotter, when asked how long HCG would be able to continue on as it is currently.

However, Peotter, a member of the council’s finance committee, said that the numbers for the previous three quarters are “very, very sobering.”

The council had originally expected to lose more than $300,000 in fiscal 2018.

Ford confirmed that the loss was more than this currently, but said he expects HCG to make up some of it in the fourth quarter.

He said that HCG has seen a decrease in its Hampshire Power business, while also seeing a marked increase in its renewable energy credit managing business.

Asked how long he thought HCG could go on as it is, Ford said that it is continuing to look at a number of paths to increase revenue and reduce expenses.

“It’s a delicate path forward,” he said, while also saying that the enabling legislation is unsustainable.

Bera Dunau can be reached at bdunau@gazettenet.com




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