The Chestertown Town Council heard the findings of the town’s fiscal 2012 audit last night from the CPA firm of Mayer Hoffman McCann, which indicates the Marina purchase raised the long-term debt for every town resident to $1,100.
“If you back out the Marina debt, you’d be down to $700,” said Steve Ochse, one of the firm’s CPAs who presented at the council meeting.
Chestertown Marina
The Chestertown Marina was officially purchased in May with a 20-year infrastructure bond from the state in the amount of $2,045,444–at an interest rate 3.562 percent.
With property taxes of $11,000 and principal and interest obligations, the town has an annual liability of around $156,000, roughly $13,000 per month. The report, which only covers activity on the marina for May and June, the last two months of the fiscal year, showed $41,534 in operating revenue for the two-month period–with nearly $12,000 in net operating income. See page 23 of the Financial Statement 6-30-12.
But the marina purchase also increased the town’s fixed assets by nearly the same amount to $2,002,432, the audit report said.
Audit Compared Chestertown’s revenue and expenses to Centreville and Denton
Chestertown took in only $725 in revenue per resident in FY2012, compared to Denton and Centreville, which took in $1,013 and $938 respectively. Most of the revenue came from property taxes and sewer services.
Expenditures of $888 per person in Chestertown were also lower that Denton and Centreville, which came to $969 and $955 respectively. Of the total expenditures, Chestertown paid more per person for public safety at $221 per resident than Centreville at $216. But Denton dwarfed Chestertown and Centreville with $375 per person expenditures for public safety.
Chestertown also had the lowest debt per person of $1,101—with Denton and Centreville coming in at $1,338 and $2,622 respectively. The debt figures combine “governmental” and “business-type” activities, with Chestertown showing a mere $7 for government activities—compared to Denton and Centreville at $768 and $939 respectively.
Of the town’s $1,094 per person debt for “business-type” activities, nearly 40 percent was attributed to the Marina.
How the actual budget compared to the FY2012 forecast
Property taxes declined by $130,000 but income tax revenue made it a wash with $136,000 in unanticipated income tax revenue. General budget expenditures were $11,000 less than budgeted. Combined expenditures for public safety and public works came in at $81,000 below what was budgeted.
Unrestricted net assets, which come in the form of investments and cash-on-hand, rose to $2.32 million from fiscal 2011 and was largely attributed to a $500,000 settlement paid to the town for MTBE contamination that occurred in the 1990s and the bump in income tax revenue of $136,000.
Jack Offett says
Just another example of just how good a job Bill Ingersoll and the Town management team and staff do. The Mayor and Council and residents should give them a real thanks.
Margie Elsberg says
Can The Spy follow this up with a story that offers insights from experts who can translate this data into English and put it in perspective? Or perhaps knowledgeable readers can answer my questions. While I’m delighted that Jack Offett says Bill Ingersoll and the Town management team is doing a great job, I don’t understand enough to know whether I agree with him. (I hope Jack’s right.) Is it good or bad that we have so little “debt per person” related to government activities compared to Denton and Centreville? Does that mean that our town isn’t being well-maintained (think potholes and troubled water and sewer systems) or does it mean we’re better maintained and more efficient? If others are spending so much more, does that mean we could/should spend money on things that will make us happier, healthier and safer? (How about more bike paths and bike lanes to lure people out of their cars; town-supported programs that would benefit seniors, students and those in-between.) With so much concern about our ailing business community, can we afford to spend more to attract and keep business in town? After all, healthy businesses pay taxes. Is $1,100 per resident of long-term debt an affordable number? And since the marina needs dredging as well as new and repaired piers, and improved facilities so it can earn money–maybe even turn a profit–will the money we borrow and spend be affordable under our current tax structure? This story prompts lots of questions, but I don’t have a clue what the answers are.
Keith Thompson says
My take on this is that Chestertown has been rather frugal on how it spends money which is a good thing. I’m not a numbers guy, but let me attempt to answer your questions based on my observations.
Is it good or bad that we have so little “debt per person” related to government activities compared to Denton and Centreville?” Generally I’d say that it’s a good thing meaning that the town is frugal in how it spends tax money. However, based on conversations I’ve had with property owners (residential and business) I believe that Chestertown makes property owners responsible for things that other towns cover through tax revenue. So it comes down to who is actually footing the bills.
Does that mean that our town isn’t being well-maintained (think potholes and troubled water and sewer systems) or does it mean we’re better maintained and more efficient? Short term I think the town is being well-maintained. The problem may be with long term maintenance that can explode and be expensive when it breaks without warning. I don’t know the answer to that.
If others are spending so much more, does that mean we could/should spend money on things that will make us happier, healthier and safer? (How about more bike paths and bike lanes to lure people out of their cars; town-supported programs that would benefit seniors, students and those in-between.) If you have the money, then yes. If you don’t have the money, then no. I’d rather pay for such things via business tax revenue and not via property taxes.
With so much concern about our ailing business community, can we afford to spend more to attract and keep business in town? After all, healthy businesses pay taxes. I don’t think the problem with the ailing business community is based around the town needing to spend money to attract businesses (although good marketing and incentives doesn’t hurt); but I think the problem is more around the town attempting to micromanage how businesses would operate in town (such as with the Chester River Brewing Company or even with the Royal Farms store that was proposed for the upper end of High Street). I think the key to economic development is for the town to get out of the way and let it happen rather than micromanage it.
Is $1,100 per resident of long-term debt an affordable number? It depends on the affluence of the residents. There’s a lot of affluence in Chestertown but there’s also quite a bit of income disparity.
And since the marina needs dredging as well as new and repaired piers, and improved facilities so it can earn money–maybe even turn a profit–will the money we borrow and spend be affordable under our current tax structure? I think the key here is that the marina needs to be an economic hub that will spur the rise of new business that will build around it. The idea should be that the money that goes into repairs for the marina that aren’t generated through grants should come from the increased revenue via economic growth spurred by the marina. If that’s the case, it’s a good investment. If that doesn’t happen, then the responsibility falls on the residents and then it is not near as good an investment.
The biggest thing to consider when comparing Chestertown to Centreville and Denton is that Chestertown has a greater economic advantage over those other two towns with Washington College being the big one. Centreville did invest in purchasing the Wharf, but the Centreville waterfront will never have the economic potential of Chestertown’s riverfront. I think Centreville is largely what Chestertown would be now if Washington College wasn’t here. Denton and Caroline County has gone the Wal-Mart route which may have been necessary due to the lack of anything else there to build economic development around.
John Leek says
I second Ms Elsberg’s request for meaningful interpretation of those nice bar graphs that graphically compare us to Denton and Centreville.
Fletcher R. Hall says
Excellent reporting. Kudos!
It is of importance that the town understand the impact of town ownership of a marina and the implications of such ownership.
The marina is one of the first impressions folks observe as they enter town via the bridge or by water. Remember, you never get a second chance at a first impression. Also the mariba is very near the complex Washington College is planning for the waterfront. This fact is of significance to Chestertown in both the short and long range.
It would seem that private, contracted mangement of the marina makes sound business sense. Afterall, it is necessary that Chestertown become a desired designation for boaters who navigate the beautiful Chester river.
Lolli Sherry says
Keith says “I think the key to economic development is for the town to get out of the way and let it happen rather than micromanage it.”
That’s exactly how you end up with a Middletown, DE. Certainly not what I and many others would like to see happen in Kent County. Managed economic development is how the most-visited and delightful historic downtowns got that way: Think Alexandria, VA; Portland, OR; Savannah, GA. The garishly lit Royal Farms on Rt 213 always reminds me of a UFO at night. Not what I’d like to see glowing in Chestertown.
As a cruiser, I believe that the Chestertown Marina will be a huge draw for visiting boaters. There are many yacht clubs and boating groups on the Chesapeake Bay who love to go to interesting destinations on weekends but Chestertown doesn’t have the room. MTOA, the Marine Trawler Owners Association, has 2000 members, with the most numerous and active members here on the Bay. The minute the improved marina opens, providing there is enough transient dockage for 12 to 30 boats, our group will be there! If there’s room for 65 boats we would bring in an annual Fall rendezvous with up to 200 people that pump money into the community for food, equipment and recreational activities. Hotel rooms are booked by those who don’t come by boat. Chestertown is a prime destination for cruisers, who love to stroll interesting towns, shop and enjoy good food. The one caveat is, we need to have more places open Saturday evenings and Sundays. Nobody wants to visit a town that is closed.
Keith Thompson says
Could there be a connection with vacant storefronts, and few stores open on evenings or Sundays and micromanaged economic development? There’s a huge difference between Middletown and Chestertown and that is that is despite the glut of big box stores, it has a far livelier downtown with far fewer vacant commercial properties. As convenient a whipping boy as Middletown is, there should be little fear that Chestertown will ever turn into Middletown. The biggest reason for the commercial explosion is that Middletown has quadrupled in population in the last decade or so, due to people moving to the area out of Newark, Wilmington, and Philadelphia. The town was forced to grow an in order to keep up with the infracture due to the influx of population moving in around the town. Chestertown certainly doesn’t have this massive influx of population, so it faces a different set of issues.
Anyway, when I talk about micromanagement…I’m not saying that Chestertown should not have a development plan, but I’m simply saying that I think they’re often overthinking it (especially given the roadblocks that was facing the Chester River Brewing Company or even the roadblocks the Garfield Center is facing with their refurbished marquee). To me, the town seems to be focused more on what it wants to say yes to rather that open to things that they won’t say no to. I think the experience of something like the Chester River Brewing Company is a prime example of what I’m talking about in that the focus seemed to be more on finding problems rather than working with the entrepreuer on solutions to make it happen. That’s micromanagement. As for Royal Farms, as garishly lit as it may be, would have been something on the upper end of High Street that would be open on Saturday evenings and Sundays which is something that you cite Chestertown needing. As it stands now, the property is empty which adds nothing to the town but blight.