1. finance

RULE 15c2-12 FILING COVER SHEET
This cover sheet is sent with all submissions to the Municipal Securities Rulemaking Board (the
Nationally Recognized Municipal Securities Information Repository) and any applicable State
Information Depository pursuant to Securities and Exchange Commission (SEC) Rule 15c2-12 or any
analogous state statute.
Issuer Name: Town of Falmouth, Massachusetts
Issue(s):
$
$
$
$
$
$
$
$
$
$
3,205,000
7,710,000
18,714,000
9,700,000
17,195,000
7,131,000
35,912,000
21,717,000
6,265,000
4,509,000
General Obligation Bonds Dated 8/1/03
General Obligation Refunding Bonds Dated 3/15/05
General Obligation Bonds Dated 7/15/05
General Obligation Bonds Dated 1/15/07
General Obligation Municipal Purpose Loan of 2007 Bonds Dated 7/15/07
General Obligation Municipal Purpose Loan of 2009 Bonds, Dated 7/15/09
General Obligation Municipal Purpose Loan of 2010 Bonds, Dated 3/1/10
General Obligation Municipal Purpose Loan of 2011 Bonds Dated 7/14/11
General Obligation Refunding Bonds Dated 9/29/11
General Obligation Municipal Purpose Loan of 2012 Bonds Dated 3/8/12
Filing Format X electronic ___ paper; If available on the Internet, give URL:_______________
CUSIP Numbers to which the information filed relates (optional):
X Nine-digit number(s) (see following page(s)):
___ Six-digit number if information filed relates to all securities of the issuer
* * *
Financial & Operating Data Disclosure Information
X Annual Financial Report or CAFR
X Financial Information & Operating Data
___ Other (describe)
X Fiscal Period Covered: FYE 2012
___ Monthly ___ Quarterly X Annual ___Other:
* * *
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature: /s/ Susan Ripley
Name:
Susan Ripley
Employer: Town of Falmouth, Massachusetts
Voice Telephone Number: (508) 495-7362
Email Address:
[email protected]
Title:Treasurer
DESCRIPTION OF ISSUES COVERED BY THIS REPORT
General Obligation Bonds Dated 8/1/03
Date
08/01/13
08/01/14
08/01/15
08/01/16
08/01/17
08/01/18
$
$
Principal
235,000
165,000
165,000
165,000
165,000
165,000
CUSIP
306801RY9
306801RZ6
306801SA0
306801SB8
306801SC6
306801SD4
1,060,000
General Obligation Refunding Bonds Dated 3/15/05
Date
03/01/14
03/01/15
03/01/16
03/01/17
03/01/18
03/01/19
03/01/20
$
$
Principal
770,000
730,000
730,000
715,000
255,000
255,000
250,000
3,705,000
CUSIP
306801SS1
306801ST9
306801SU6
306801SV4
306801SW2
306801SX0
306801SY8
General Obligation Bonds Dated 7/15/05
Date
07/15/13
07/15/14
07/15/15
07/15/16
07/15/17
07/15/18
07/15/19
07/15/20
07/15/21
07/15/22
07/15/23
07/15/24
07/15/25
$
$
Principal
960,000
960,000
955,000
950,000
950,000
950,000
950,000
950,000
940,000
935,000
935,000
925,000
315,000
CUSIP
306801TH4
306801TJ0
306801TK7
306801TL5
306801TM3
306801TN1
306801TP6
306801TQ4
306801TR2
306801TS0
306801TT8
306801TU5
306801TV3
11,675,000
General Obligation Bonds Dated 1/15/07
Date
01/15/14
01/15/15
01/15/16
01/15/17
01/15/18
01/15/19
01/15/20
01/15/21
01/15/22
01/15/23
01/15/25
01/15/27
$
$
Principal
485,000
485,000
485,000
485,000
485,000
485,000
485,000
485,000
485,000
485,000
970,000
970,000
6,790,000
CUSIP
306801UK5
306801UL3
306801UM1
306801UN9
306801UP4
306801UQ2
306801UR0
306801US8
306801UT6
306801UU3
306801UW9
306801UY5
General Obligation Municipal Purpose Loan of 2007 Bonds Dated 7/15/07
Date
07/15/13
07/15/14
07/15/15
07/15/16
07/15/17
07/15/18
07/15/19
07/15/20
07/15/21
07/15/22
07/15/23
07/15/24
07/15/25
07/15/26
07/15/27
07/15/28
07/15/29
07/15/30
07/15/31
07/15/32
07/15/33
07/15/34
$
$
Principal
595,000
605,000
615,000
630,000
645,000
660,000
670,000
690,000
705,000
720,000
710,000
730,000
750,000
750,000
530,000
530,000
560,000
585,000
615,000
650,000
680,000
715,000
14,340,000
CUSIP
306801VF5
306801VG3
306801VH1
306801VJ7
306801VK4
306801VL2
306801VM0
306801VN8
306801VP3
306801VQ1
306801VR9
306801VS7
306801VT5
306801VU2
306801VV0
306801VW8
306801VX6
306801VY4
306801WC1
306801WC1
306801WC1
306801WC1
General Obligation Municipal Purpose Loan of 2009 Bonds, Dated 7/15/09
Date
07/15/13
07/15/14
07/15/15
07/15/16
07/15/17
07/15/18
07/15/19
07/15/20
07/15/21
07/15/22
07/15/23
07/15/24
07/15/25
07/15/26
$
$
Principal
500,000
450,000
450,000
450,000
450,000
375,000
375,000
375,000
375,000
375,000
375,000
375,000
350,000
350,000
CUSIP
306801WQ0
306801WR8
306801WS6
306801WT4
306801WU1
306801WV9
306801WW7
306801WX5
306801WY3
306801WZ0
306801XA4
306801XB2
306801XC0
306801XD8
5,625,000
General Obligation Municipal Purpose Loan of 2010 Bonds, Dated 3/1/10
Date
02/01/14
02/01/15
02/01/16
02/01/17
02/01/18
02/01/19
02/01/20
02/01/21
02/01/22
02/01/23
02/01/24
02/01/25
02/01/26
02/01/27
02/01/28
02/01/29
$
$
Principal
3,440,000
3,005,000
2,985,000
2,665,000
2,570,000
2,560,000
2,085,000
2,070,000
1,980,000
905,000
905,000
905,000
900,000
900,000
505,000
210,000
28,590,000
CUSIP
306801 XJ5
306801 XK2
306801 XL0
306801 XM8
306801 XN6
306801 XP1
306801 XQ9
306801 XR7
306801 XS5
306801 XT3
306801 XU0
306801 XV8
306801 XW6
306801 XX4
306801 XY2
306801 XZ9
General Obligation Municipal Purpose Loan of 2011 Bonds Dated 7/14/11
Date
10/15/13
10/15/14
10/15/15
10/15/16
10/15/17
10/15/18
10/15/19
10/15/20
10/15/21
10/15/22
10/15/23
10/15/24
10/15/25
10/15/26
10/15/27
10/15/28
10/15/29
10/15/30
10/15/31
$
$
Principal
555,000
570,000
580,000
590,000
1,345,000
1,355,000
1,360,000
1,360,000
1,370,000
1,375,000
1,385,000
1,385,000
1,190,000
1,195,000
1,205,000
1,215,000
1,145,000
1,000,000
1,000,000
CUSIP
306801YJ4
306801YK1
306801YL9
306801YM7
306801YN5
306801YP0
306801YQ8
306801YR6
306801YS4
306801YT2
306801YU9
306801YV7
306801YW5
306801YX3
306801YY1
306801YZ8
306801ZA2
306801ZB0
306801ZC8
21,180,000
General Obligation Refunding Bonds Dated 9/29/11
Date
11/15/13
11/15/14
11/15/15
11/15/16
11/15/17
11/15/18
11/15/19
11/15/20
11/15/21
11/15/22
$
$
Principal
665,000
660,000
660,000
645,000
640,000
630,000
625,000
605,000
585,000
540,000
6,255,000
CUSIP
306801ZF1
306801ZG9
306801ZH7
306801ZJ3
306801ZK0
306801ZL8
306801ZM6
306801ZN4
306801ZP9
306801ZQ7
General Obligation Municipal Purpose Loan of 2012 Bonds Dated 3/8/12
Date
03/01/14
03/01/15
03/01/16
03/01/17
03/01/18
03/01/19
03/01/20
03/01/21
03/01/22
03/01/23
03/01/24
03/01/25
03/01/26
03/01/27
03/01/28
03/01/32
$
$
Principal
130,000
130,000
135,000
130,000
130,000
355,000
355,000
355,000
355,000
355,000
355,000
355,000
220,000
170,000
170,000
680,000
4,380,000
CUSIP
306801ZS3
306801ZT1
306801ZU8
306801ZV6
306801ZW4
306801ZX2
306801ZY0
306801ZZ7
306801A27
306801A35
306801A43
306801A50
306801A68
306801A76
306801A84
306801B42
ONTINUING
ISCAL
ISCLOSURE EPORT
OR HE
EAR NDED UNE
GENERAL OBLIGATION DEBT
FINANCIAL STATEMENTS
The audited financial statements for the Town for the fiscal year ended June 30, 2012 are being
separately filed directly with the Nationally Recognized Municipal Securities Information Repository
and any applicable State Information Depository, and are hereby incorporated by reference into this
Annual Continuing Disclosure Report.
SIGNATURE OF ISSUER
The information set forth herein has been obtained from the Town and other sources believed to be
reliable, but such information is not guaranteed as to accuracy or completeness and is not to be
construed as a promise or guarantee. This Annual Continuing Disclosure Report may contain, in part,
estimates and matters of opinion which are not intended as statements of fact, and no representation is
made as to the correctness of such estimates and opinions, or that they will be realized. The
information and expressions of opinion contained herein are subject to change without notice, and the
delivery of this Annual Continuing Disclosure Report will not, under any circumstances, create any
implication that there has been no change in the affairs of the Town or other matters described.
TOWN OF FALMOUTH, MASSACHUSETTS
/s/ Susan Ripley
Susan Ripley
Treasurer
Approved for Submission:
03/26/2013
Date
CERTIFICATE OF SUBMISSION OF ANNUAL REPORT
Subject to the continuing disclosure requirements of SEC Rule 15c2-12, this Annual Continuing
Disclosure Report for the Town of Falmouth, Massachusetts with respect to the issues listed on the
report cover was submitted directly to the National Recognized Municipal Securities Information
Repository (“NRMSIR”) listed below as well as to any applicable State Information Depository
(“SID”).
NRMSIR
Municipal Securities Rulemaking Board ("MSRB")
via the Electronic Municipal Market Access ("EMMA") system
First Southwest Company
Signed by:
/s/ Henriqueta Da Costa
Annual Report
TOWN OF FALMOUTH,
MASSACHUSETTS
For The Fiscal Year Ended
June 30, 2012
TOWN OF FALMOUTH, MASSACHUSETTS
/s/ Susan Ripley, Treasurer
FILING DATE: MARCH 27, 2013
1
TOWN OF FALMOUTH, MASSACHUSETTS
General
The Town is situated on Cape Cod, 72 miles southeast of Boston and 239 miles from New York City. Located in
Barnstable County, on the shoulder or southwest end of Cape Cod, it is bordered on the south by Vineyard Sound and
Nantucket Sound and on the West by Buzzards Bay. First settled in 1660, Falmouth was incorporated as a town in 1686.
It occupies a land area of 45 square miles with a year round population of 31,531 (2010 federal census) and a summer
population of approximately 90,000.
The Town is primarily a residential resort community with a highly stable summer population. A substantial portion of its
summer residents either own property in Falmouth or are repeat visitors.
Subject to the legislative decisions made by a representative town meeting, the affairs of the Town are administered by a
board of five selectman, elected for overlapping three-year terms, and a Town Manager. The Town Treasurer serves as
the Town’s chief financial officer.
The following table sets forth the principal executive officials of the Town.
PRINCIPAL TOWN OFFICIALS
Title
Selectman, Chair
Selectman
Selectman
Selectman
Selectman
Town Manager
Assistant Town Manager
Finance Director
Town Treasurer
Town Clerk
Town Counsel
Town Collector
Acting Town Accountant
Name
Kevin Murphy
Mary Pat Flynn
David Braga
Brent Putnam
Doug Jones
Julian M. Suso
Heather B. Harper
Jennifer Petit
Susan Ripley
Mic hael C. Palmer
Frank K. Duffy Jr.
Patricia O'Connell
Victoria Rose
Selection/Term
Term Expires
Elected/3 Yrs.
Elected/3 Yrs.
Elected/3 Yrs.
Elected/3 Yrs.
Elected/3 Yrs.
Appointed
Appointed
Appointed
Appointed/3 Yrs.
Elected/3 Yrs.
Appointed
Appointed/3 Yrs.
N/A
2014
2013
2013
2014
2015
2014
Indefinite
Indefinite
2015
2013
2015
2013
N/A
Municipal Services
The Town provides general governmental services for the territory within its boundaries, including police and fire
protection, public education in grades kindergarten through twelve, 3 libraries, road maintenance, trash collection,
curbside recycling, a sanitary landfill, and parks and recreational facilities. Water is supplied by the Town Water
Department from ground and surface water sources. Technical education in grades nine through twelve is provided by
the Upper Cape Cod Regional Vocational Technical School District.
It should be noted that numerous chemical spill plumes emanating from the Massachusetts Military Reservation have
been identified in the towns of Falmouth, Mashpee, Sandwich and Bourne and corrective measures to protect water
supplies are being developed. All water main extensions in vulnerable areas have been funded by the Air Force Center
for Environmental Excellence. The Town believes that the environmental safeguards undertaken will provide protection
for the public health in Falmouth. Any additional costs are expected to be borne by the federal government.
The Town’s principal water supply has historically been Long Pond, a surface water source. Three additional wells were
added between 1980 and 1993 to augment the system. Additionally, the construction of a new well with water treatment,
which produces an additional 1.5 MGD of water, was completed in late fall 2005. These water sources are capable of
pumping approximately 10-12 million gallons of water a day through 380 miles of mains. Approximately 1.334 billion
gallons, from all sources, were pumped during calendar year 2009.
The Town has completed construction of three new elevated water storage tanks to replace obsolete stand pipes. The
new tanks were placed into service in early 2003, providing improved fire protection throughout the Town and increasing
useable storage capacity from approximately 2.5 million gallons to nearly 8.0 million gallons.
2
The Town is a participating member of the Upper Cape Water Supply Cooperative and is entitled to purchase 1.0 MGD of
additional water from the regional inter-municipal system at a cost of $1.00/1,000 gallons, a rate that is actually 33% less
than Falmouth’s cost to produce its own water. Availability of water from a regional source also affords the Town the
flexibility to better manage its resources and minimize environmental impacts associated with the over pumping of
municipal wells during the tourist season.
The Town has embarked on a project to identify and develop additional water sources totaling 5.0 MGD complete with
associated treatment facilities. Capital costs are approximately $18 million, and the federal government has agreed to
fund 100% of the construction costs. These new sources will reduce environmental stressors imposed by existing
sources and satisfy the Town’s water needs for the next 50 years.
The Town has participated in the Title V Community Septic Management Program through the Massachusetts Water
Pollution Abatement Trust (the “Trust”) and has borrowed money from the Trust and has lent the proceeds to
homeowners who, otherwise, would not be able to replace a failing system. Administration of the program is supported by
the Barnstable County Department of Health and Environment. A lien is placed on the homeowner’s property and the
homeowner loan repayment is added to their annual real estate tax bill. On July 25, 2005, the Falmouth Board of
Selectmen voted to authorize homeowners to participate in the Barnstable County Community Septic Management
Program created to administer these same types of loans in lieu of the Town’s direct involvement in the future.
Barnstable County has opened a District Court House in Falmouth which also serves the upper-cape towns of Bourne and
Mashpee.
The Cape Cod Regional Transit Authority provides bus service to the Town. The principal services provided by
Barnstable County are a hospital, a jail and house of correction, a registry of deeds and a judicial court system.
The Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority provides ferry service to the islands of Nantucket
and Martha’s Vineyard. Woods Hole is a village within the Town.
Education
The Town provides public education for grades kindergarten through twelve. The Town operates four elementary schools
as well as two middle schools. One middle school houses grades five and six and another grades seven and eight. The
Town also operates one high school. Total capacity at the Falmouth Elementary Schools is estimated at 2,500. Total
capacity at the middle and high schools is 1,851 and 1,800, respectively. The following table sets forth the trend in
enrollments for the various schools in Falmouth.
PUBLIC SCHOOL ENROLLMENTS
(as of October 1)
Actual
2008
2009
Elementary (K-4)
1,450
1,482
1,504
1,463
1,567
1,597
M iddle/Jr. Hi gh (5-8)
1,139
1,113
1,121
1,087
1,116
1,137
H igh School (9-12)
1,064
995
925
875
875
843
3,653
3,590
3,550
3,425
3,558
3,577
Totals
3
2010
Proj ected
2011
2012
2013
Industry and Commerce
Falmouth’s economic base is characterized by a strong retail and service sector with a growing industrial segment. Since
the 1970’s, the Town’s population has grown at a rate far above state and nation-wide levels. As increasing numbers of
people have chosen to live in Falmouth on a year-round basis, the Town’s retail and service sectors have expanded to
meet the needs of the increase in population. Supplementing these sectors is the industrial component of Falmouth’s
economy, which has traditionally centered on printing, lumberyards and construction.
Falmouth’s location between Buzzards Bay and the Atlantic Ocean has helped the Town develop into one of the largest
oceanographic and marine research centers in the country. The Town is the home of such renowned institutions as the
Wood’s Hole Oceanographic Institution, the National Marine Fisheries Service, United States Geological Survey, and the
National Academy of Science. In addition, Falmouth serves as the home for the largest Coast Guard base on the
continental United States.
The Otis Air National Guard Base is partially located in Falmouth and each of the adjacent towns of Mashpee, Bourne,
and Sandwich, and is part of the Massachusetts Military Reservation (“MMR”). Local officials do not expect the recent
announcement by the U.S. Defense Department recommending the transfer of airplanes from the Otis Air Reserve Base
housed at the MMR to have a material affect on the Town’s economy. The MMR employs an average of 1,500 people on
a year-round basis, and the number of service personnel on base can reach as high as 7,000 during the summer months.
The Town’s Economic Development and Industrial Corporation (“EDIC”) continues its efforts to diversify the local
economy through development of Falmouth Technology Park and Raymond Business and Technology Park.
Development of Falmouth Technology Park, which consists of 22 lots on 106 acres, has been ongoing since 1979 when
the Town of Falmouth set aside 114 acres for creation of a technology park. To date, all lots have been sold to Corner
Fabrications which built a manufacturing facility in 2006. As reported in the EDIC’s recently completed Silver Anniversary
Oral History, the park hosts close to 400 jobs at more than a dozen companies. The majority of Falmouth Technology
Park residents are engaged in research and/or value added manufacturing.
In September 2003 the EDIC purchased a 21-acre, industrially zoned property in North Falmouth known as Raymond
Business and Technology Park. To date, 8 of the 11 lots have been sold, with 3 lots becoming owned by the EDIC. Of
the 3 owned by the EDIC, 2 are vacant and 1 holds a propane storage facility.
The Town of Falmouth has a substantial amount of industry. The Education and Health Services industry is the leading
economic pursuit. The table below sets forth the major categories of income and employment in the Town during the
following calendar years.
Industry
Construction
Manufacturing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Public Administration
Total Employment
Number of Establishments
Average Weekly Wages
Total Wages
2007
2008
Calendar Year Average
2009
2010
2011
700
478
2,453
189
406
2,122
3,843
2,308
525
1,483
14,507
701
504
2,388
194
381
2,168
3,943
2,333
505
1,366
14,483
698
440
2,270
180
375
2,230
3,891
2,260
481
1,324
14,149
575
490
2,192
183
354
2,330
3,807
2,304
508
1,385
14,128
602
509
2,161
215
342
2,350
3,871
2,325
493
1,387
14,255
1,202
$
812
$ 613,195,964
1,176
$
838
$ 632,065,571
1,152
$
841
$ 619,293,784
1,189
$
852
$ 627,176,429
1,171
$
871
$ 646,770,810
__________________
Source:
Massachusetts Department of Education and Training. Data based upon place of employment, not place of
residence. Due to the reclassification the U.S. Department of Labor now uses the North American Industry
Classification System (NAICS) as the basis for the assignment and tabulation of economic data by industry.
4
The following table lists the Town’s largest employers, exclusive of the Town itself.
LARGEST EMPLOYERS
Name
Massachusetts Military Reservation
Woods Hole Oceanographic Institute
Falmouth Hospital
Woods Hole, Martha’s Vineyard
and Nantucket Steamship Authority
Sea Crest Hotel & Motor Inn.
Marine Biological Laboratory
National Marine Fisheries
Wal-Mart
Coonamessett, Flying Bridge and Red Horse Inns
United States Geological Survey (USGS)
Product/Function
Military Base
Oceanographic Research
General Hospital
Approximate
No. of
Employees
1,833 (1)
1,396
800 (2)
Ferry Service
Convention Hotel
Biological Research
Marine Research
Retail
Restaurant/Inn
Oceanographic Research
501
75-300 (3)
270
220
190
100-300 (3)
100 (4)
_______________
(1) The MMR is partially located in Falmouth and each of the towns of Mashpee, Bourne and Sandwich. The number of
reserve personnel reporting on weekends ranges from 0 to 3,000.
(2) Plus 200 per diem employees.
(3) Seasonal.
(4) 65 are federal employees and 35 are contract workers.
Labor Force, Employment and Unemployment Rate
According to the Massachusetts Division of Employment and Training, in December 2012, the Town had a total labor
force of 17,096 of which 15,915 were employed and 1,181, or 6.9%, were unemployed, as compared with 6.6% for the
Commonwealth (unadjusted). Employment levels generally increase during the summer months.
The following table sets forth the Town’s average labor force and unemployment rates, as well as the unemployment rates
for the Commonwealth and the United States, for calendar years 2007 through 2011.
UNEMPLOYMENT RATES
Year
2011
2010
2009
2008
2007
Town of Falmouth
Labor Force
Unemployment Rate
17,561
18,185
18,300
18,093
19,328
7.4
8.2
7.5
5.1
4.5
Massachusetts
Unemployment Rate
%
7.4
8.5
8.1
5.3
5.3
United States
Unemployment Rate
%
9.0
9.4
9.3
5.8
5.5
%
______________
SOURCE: Mass. Division of Employment and Training, Federal Reserve Bank of Boston and U.S. Bureau of Labor
Statistics. Data based upon place of residence, not place of employment. Monthly data are unadjusted.
5
Building Permits
The following table sets forth the number of building permits issued and the estimated dollar value of new construction
and alterations to date. The estimated dollar values are builders’ estimates and are generally considered to be
conservative. Permits are filed and estimated valuations are shown for both private construction and Town projects.
BUILDING PERMITS
Calendar
Year
2012
2011
2010
2009
2008
New Construction
Residential
Non-Residential
No.
Value
No
Value
Additions/Alterations
No
Value
69
87
116
50
61
2,404
2,226
2,388
2,164
1,892
$ 26,628,430
39,480,682
35,117,351
17,796,784
14,968,614
3
5
6
8
22
$ 5,309,500
17,397,000
7,808,500
1,850,380
12,520,130
$ 50,544,530
44,678,622
61,107,270
49,114,091
31,254,902
Totals
No
Value
2,476
2,318
2,510
2,222
1,975
$ 82,482,460
101,556,304
104,033,121
68,761,255
58,743,646
Transportation and Utilities
The principal highways serving the Town include State Routes 28, 28A and 151. The Cape Cod Regional Transit
Authority provides bus service to fourteen towns on the Cape, including Falmouth. Private bus companies provide service
to Providence, Boston and New York. The Hyannis Municipal Airport, which is located in the Town of Barnstable,
provides daily air service to Boston and New York City. The Woods Hole Martha’s Vineyard and Nantucket Steamship
Authority provides ferry service to the islands of Nantucket and Martha’s Vineyard. Established trucking firms provide
competitive service locally and to long-distance points.
Gas and electric services are provided by established private utilities.
The table below sets forth the Town’s retail sales in comparison with the State’s for the years shown below.
RETAIL SALES
Falmouth
Establishments:
2007
2002
1997
Sales(000):
2007
2002
1997
Per Capita Sales:
2007
2002
1997
Massachusetts
179
178
186
25,469
25,932
26,209
$477,941
421,198
296,721
$88,082,966
75,183,807
58,578,048
$14,634
12,896
10,612
$13,873
11,842
9,736
__________________
SOURCE: 2007, 2002 and 1997 U.S. Census of Retail Trade.
6
Population, Income and Wealth Levels
The following table shows the median age, median family income and per capita income for the Town for the last four
censuses.
Falmouth
Median Age:
2010
2000
1990
Massachusetts
50.8
45.0
38.6
United States
39.1
36.5
33.6
37.2
35.3
32.9
Median Family Income:
2010
$
2000
1990
77,488
47,500
40,655
$ 81,165
61,664
44,367
$
51,114
50,046
35,225
Per Capita Income:
2010
2000
1990
38,334
26,292
17,131
$ 33,966
25,952
17,224
$
27,344
21,587
14,420
$
_______________
SOURCE:
U.S. Bureau of the Census.
On the basis of the 2010 Federal census, the Town has a population density of 712 persons per square mile.
POPULATION TRENDS
2010
31,531
2000
32,660
7
1990
27,960
1980
23,640
PROPERTY TAXATION
Tax Levy Computation
The principal revenue source of the Town is the tax on real and personal property. The amount to be levied in each year
is the amount appropriated or required by law to be raised for municipal expenditures less estimated receipts from other
sources and less appropriation voted from available funds. The total amount levied is subject to certain limits prescribed
by law; for a description of those limits, see “Tax Limitations” herein. The estimated receipts for a fiscal year from other
sources may not exceed the actual receipts during the preceding fiscal year from the same sources unless approved by
the State Commissioner of Revenue. Excepting special funds, the use of which is otherwise provided for by law, the
deduction for appropriations voted from available funds for a fiscal year cannot exceed the “free cash” as of the beginning
of the prior fiscal year as certified by the State Director of Accounts plus up to nine months’ collections and receipts on
account of earlier years’ taxes after that date. Subject to certain adjustments, free cash is surplus revenue less
uncollected overdue property taxes from earlier years. Although an allowance is made in the tax levy for abatements no
reserve is generally provided for uncollectible real property taxes. Since some of the levy is inevitably not collected, this
creates a cash deficiency, which may or may not be offset by other items.
The table below illustrates the manner in which the tax levy was determined for the following fiscal years.
TAX LEVY COMPUTATION
Total Appropriations(1)
Additions:
State and County Assessments
Overlay Reserve
Other Additions
Total Additions
Gross Amount to be Raised
Deductions:
Local Estimated Receipts
State Aid(2):
Available Funds(3):
Free Cash
Other
Total Deductions
Net Amount to be Raised
(Tax Levy)(4)
Fiscal
2009
Fiscal
2010
Fiscal
2011
Fiscal
2012
Fiscal
2013
$ 105,466,987
$ 112,954,228
$ 114,189,034
$ 116,333,263
$ 117,984,148
1,972,578
522,730
266,236
2,761,544
108,228,531
2,291,802
603,508
167,149
3,062,459
116,016,687
2,247,010
665,148
225,810
3,137,968
117,327,002
2,672,464
709,295
712,966
4,094,725
120,427,988
2,748,064
695,223
306,796
3,750,083
121,734,231
23,481,486
10,470,679
23,157,720
9,870,173
24,277,587
8,867,702
23,052,385
9,102,961
22,031,795
9,140,949
123,207
2,116,352
36,191,724
2,506,523
5,045,940
40,580,356
621,544
4,034,244
37,801,077
2,601,352
3,359,966
38,116,664
2,155,918
3,061,441
36,390,103
$72,036,807
$75,436,331
$
79,525,925
$
82,311,324
$
85,344,128
__________________
(1) Includes annual appropriations from taxation voted subsequent to adoption of the annual budget but prior to setting
the tax rate.
(2) Estimated by the State Department of Revenue and required by law to be used in setting of the tax rate. Actual state
aid payments may vary upward or downward from said estimates, and the State may withhold (generally quarterly)
payments pending receipt of State and County assessments.
(3) Transfers from available funds, including “Free Cash” (see “Free Cash”), generally made as an offset to a particular
appropriation item.
(4) Includes debt service and capital outlays exempted from the constraints of Proposition 2 1/2. See “Tax Limitations –
Levy Limit Exclusions”.
8
State Aid Cuts
The Town of Falmouth does not heavily rely on state aid to fund local services; this source of revenue accounts for
approximately 5%-7% of the Town’s total budget, which is far below the average for the Commonwealth. The net
estimated local aid for fiscal 2013 is $7,436,907. The fiscal 2013 estimated state aid is expected to be reduced by
approximately $71,000 from the fiscal year 2012 original estimates. The Town projected a 5% reduction in state aid when
balancing the fiscal 2013 budget.
Assessed Valuations and Tax Levies
Property is classified for the purpose of taxation according to its use. The legislature has in substance created three classes
of taxable property: (1) residential real property, (2) open space land, and (3) all other (commercial, industrial and personal
property). Within limits, cities and towns are given the option of determining the share of the annual levy to be borne by each
of the three categories. The share required to be borne by residential real property is at least 50 per cent of its share of the
total taxable valuation; the effective rate for open space must be at least 75 per cent of the effective rate for residential real
property; and the share of commercial, industrial and personal property must not exceed 175 percent of their share of the total
valuation. A city or town may also exempt up to 20 percent of the valuation of residential real property (where used as the
taxpayer’s principal residence) and up to 10 percent of the valuation of commercial real property (where occupied by certain
small businesses). Property may not be classified in a city or town until the State Commissioner of Revenue certifies that all
property in the city or town has been assessed at its fair cash value. Such certification must take place every three years, or
pursuant to a revised schedule as may be issued by the Commissioner.
Related statutes provide that certain forest land, agricultural or horticultural land (assessed at the value it has for these
purposes) and recreational land (assessed on the basis of its use at a maximum of 25 percent of its fair cash value) are all to
be taxed at the rate applicable to commercial property. Land classified as forest land is valued for this purpose at five percent
of fair cash value but not less than ten dollars per acre.
In order to determine appropriate relative values for the purposes of certain distributions to and assessments upon cities and
towns, the Commissioner of Revenue biennially makes a redetermination of the fair cash value of the taxable property in each
municipality. This is known as the “equalized value”. See “DEBT LIMITS” below.
The following table sets forth the trend in the Town’s assessed valuations, tax rates, tax levies, and tax levies per capita
for the following fiscal years.
ASSESSED VALUATIONS AND TAX RATES
Fiscal
Year
2013
2012
2011 (1)
2010
2009
Real Estate
Valuation
Personal
Property
Valuation
Total
Assessed
Valuation
$ 10,434,043,184
10,401,267,650
10,862,173,033
10,980,479,076
11,655,109,230
$ 180,898,159
178,594,045
183,094,344
195,273,690
193,049,863
$ 10,614,941,343
10,579,861,695
11,045,267,377
11,175,752,766
11,848,159,093
Tax Rate
Per $1,000
______________
(1) Revaluation year.
(2) Based on 2010 U.S. Bureau of the Census population figure of 31,531.
9
$
8.04
7.78
7.20
6.75
6.08
T ax Levy
$ 85,344,128
82,311,324
79,525,925
75,436,331
72,036,807
Tax Levy
Per C apita(2)
$
2,707
2,610
2,522
2,392
2,285
The following table shows the breakdown of the real estate assessed valuation for fiscal years 2011, 2012 and 2013 by
class.
REAL ESTATE ASSESSED VALUATIONS BY CLASS
Property Type
Residential (2)
Commercial
Industrial
Personal
Total Real Estate
2011 (1)
Amount
%
$ 10,199,530,282
590,585,951
72,056,800
183,094,344
$ 11,045,267,377
2012
% of Total
%
$
92.3 %
5.3
0.7
1.7
100.0 %
Amount
9,761,880,041
568,619,409
70,768,200
178,594,045
$ 10,579,861,695
2013
% of Total
92.3 %
5.4
0.7
1.7
100.0 %
%
$
Amount
% of Total
9,783,235,733
574,980,651
72,537,600
180,898,159
$ 10,611,652,143
92.2 %
5.4
0.7
1.7
100.0 %
______________
(1)
(2)
Revaluation year.
Includes Open Space.
Largest Taxpayers
The following is a list of the largest taxpayers in the Town based upon taxes assessed for fiscal 2013. All of the taxpayers
listed below are current in their payments.
Nature of
Business
Name
NSTAR
OCW Retail Falmouth, LLC
WHOI
Verizon, New England
Mellon Bank Trustee
National Grid, Colonial Gas
Sea Scout Partners
Anistasios ParaFestas, Trustee
Clarkson, LLC
Gerald Drucker
Total
Utility
Retail
Research
Utility
Residential
Utility
Resort/Developer
Residential
Residential
Retail
Total Assessed
Valuation for
2013
$
59,767,150
29,136,700
25,700,500
21,840,600
21,470,800
21,309,600
20,446,100
18,701,100
12,536,600
12,078,300
$ 242,987,450
% of Total
Assessed
Valuation
0.56 %
0.27
0.24
0.21
0.20
0.20
0.19
0.18
0.12
0.11
2.29 %
State Equalized Valuation and Estimated Full Value Tax Rate
In order to determine appropriate relative values for the purposes of certain distributions to and assessments upon cities
and towns, the Commissioner of Revenue biennially makes a redetermination of the fair cash value of the taxable
property in each municipality as of January 1 of even numbered years. This is known as the “equalized value”. The
following table sets forth the trend in equalized valuations of the Town.
State Equalized
Valuation
January 1,
2012
2010
2008
2006
2004
2002
$
11,476,687,700
12,168,109,600
13,126,721,800
12,247,802,400
9,104,210,400
6,532,637,100
% Change
(5.68) %
(7.30)
7.18
34.53
39.37
41.81
Local assessed valuations are determined annually as of January 1 and used for the fiscal year beginning on the next July
1. The Town of Falmouth’s most recent revaluation was completed for use in setting the fiscal 2011 tax rate and levy.
10
Based on that valuation, the Town’s local tax rate for fiscal year 2011 is believed to approximate a full value tax rate for
that year.
Abatements and Overlay
The Town is authorized to increase each tax levy by an amount approved by the Commissioner of Revenue as an
“overlay” to provide for tax abatements. If abatements are granted in excess of the applicable overlay, the excess is
required to be added to the next tax levy. Abatements are granted where exempt real or personal property has been
assessed or where taxable real or personal property has been overvalued or disproportionately valued. The assessors
may also abate uncollectible personal property taxes. They may abate real and personal property taxes on broad
grounds (including inability to pay) with the approval of the State Commissioner of Revenue. But uncollected real property
taxes are ordinarily not written off until they become municipal “tax titles” by purchase at the public sale or by taking, at
which time the tax is written off in full by rescinding the amount of the tax and charging surplus.
The following table sets forth the amount of the overlay reserve for the following years and actual abatements granted as
of June 30, 2012.
Fiscal
Year
2012
2011(2)
2010
2009
2008(2)
Overlay Reserve
Dollar
As a % of
Amount
Net Levy
Net Tax
Levy(1)
$
82,311,324
78,860,777
74,832,812
71,514,077
68,686,091
$ 709,295
665,148
603,508
522,730
546,402
0.86 %
0.84
0.81
0.73
0.80
Abatements
Granted through
June 30, 2012
$
296,420
324,197
402,985
365,251
419,269
_________________
(1) Net of overlay reserve for abatements.
(2) Revaluation years.
Tax Collections
In past fiscal years and in the current fiscal year, the taxes for each fiscal year are due in two installments on November 1
(subject to deferral if tax bills are sent out late) and May 1. Effective July 1, 2011, preliminary tax payments are due on
August 1 and November 1 with payment of the actual bill (after credit is given to preliminary payments) in installments on
February 1 and May 1 if actual tax bills are mailed by December 31. Interest accrues on delinquent taxes at the rate of
percent per annum. Interest accrues on delinquent taxes currently at the rate of 14 percent per annum.
Real property (land and buildings) is subject to a lien for the taxes assessed upon it (subject to any paramount federal lien
and subject to bankruptcy and insolvency laws). If the property has been transferred, an unenforced lien expires on the third
October 1 after the first year. If the property has not been transferred by the third October 1, an unenforced lien expires
upon a later transfer of the property. Provision is made, however, for continuation of the lien where it could not be enforced
because of a legal impediment.
The persons against whom real or personal property taxes are assessed are personally liable for the tax (subject to
bankruptcy and insolvency laws). In the case of real property, this personal liability is effectively extinguished by sale or
taking of the property as described below.
The table below compares the Town’s net tax collections with its net (gross tax levy less overlay reserve for abatements) tax
levies for the following fiscal years.
Fiscal
Year
Gross Tax
Levy
2012
2011
2010
2009
2008
$ 82,311,324
79,525,925
75,436,331
72,036,807
69,232,493
Overlay
Reserve for
Abatements
$
709,295
665,148
603,508
522,730
546,402
Collections During
Fiscal Year Payable(1)
Dollar
% of
Amount
Net Levy
Net
Tax Levy
$
81,602,029
78,860,777
74,832,823
71,514,077
68,686,091
$
__________
(1) Actual dollar collections net of refunds.
11
82,067,306
76,764,485
73,281,042
70,033,166
67,496,663
100.6 % $
97.3
97.9
97.9
98.3
Collections as of
June 30, 2012 (1)
Dollar
% of
Amount
Net Levy
82,067,306
79,160,843
77,169,546
72,936,819
69,673,214
100.6 %
100.4
103.1
102.0
101.4
Tax Titles and Possessions
Massachusetts law permits a municipality either to sell by public sale (at which the municipality may become the
purchaser) or to take real property for non-payment of taxes thereon. In either case the property owner can redeem the
property by paying the unpaid taxes, with interest (at a rate of 14% by the collector and 16% by the treasurer) and other
charges, but if the right of redemption is not exercised within six months (which may be extended an additional year in the
case of certain installment payments) it can be foreclosed by petition to the land court.
Upon foreclosure, a tax title purchased or taken by the municipality becomes a “tax possession” and may be held and
disposed of like any land held for municipal purposes.
The following table sets forth the amount of tax titles and possessions as of the end of each of the last five fiscal years as
well as the redemptions for those years.
Fiscal
Year
Total Tax
Titles and
Possessions
2012
2011
2010
2009
2008
$ 541,840
518,764
423,968
346,480
440,247
Redemptions
$
64,680
31,345
41,720
100,569
22,340
Sale of Tax Receivables
Cities and towns are authorized to sell delinquent property tax receivables by public sale or auction, either individually or
in bulk. The Town does not expect to utilize this option at the present time.
Taxation to Meet Deficits
As noted elsewhere (see “Overlay” herein) overlay deficits, i.e. tax abatements in excess of the overlay included in the tax levy
to cover abatements, are required to be added to the next tax levy. It is generally understood that revenue deficits, i.e. those
resulting from non-property tax revenues being less than anticipated, are also required to be added to the tax levy (at least to
the extent not covered by surplus revenue).
Amounts lawfully expended since the prior tax levy and not included therein are also required to be included in the annual tax
levy. The circumstances under which this can arise are limited since municipal departments are generally prohibited from
incurring liabilities in excess of appropriations except for major disasters, mandated items, contracts in aid of housing and
renewal projects and other long-term contracts. In addition, utilities must be paid at established rates and certain established
salaries, e.g. civil service, must legally be paid for work actually performed, whether or not covered by appropriations.
Cities and towns are authorized to appropriate sums, and thus to levy taxes, to cover deficits arising from other causes, such
as “free cash” deficits arising from a failure to collect taxes. This is not generally understood, however, and it has not been the
practice to levy taxes to cover free cash deficits. Except to the extent that such deficits have been reduced or eliminated by
subsequent collections of uncollected taxes (including sales of tax titles and tax possessions), lapsed appropriations,
non-property tax revenues in excess of estimates, other miscellaneous items or funding loans authorized by special act, they
remain in existence.
Tax Limitations
Chapter 59, Section 21C of the General Laws, also known as Proposition 2½, imposes two separate limits on the annual tax
levy of a city or town.
The primary limitation is that the tax levy cannot exceed 2½ percent of the full and fair cash value. If a city or town exceeds
the primary limitation, it must reduce its tax levy by at least 15 percent annually until it is in compliance, provided that the
reduction can be reduced in any year to not less than 7½ percent by majority vote of the voters, or to less than 7½ percent by
two-thirds vote of the voters.
For cities and towns at or below the primary limit, a secondary limitation is that the tax levy cannot exceed the maximum levy
limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2½ percent, subject to
exceptions for property added to the tax rolls or property which has had an increase, other than as part of a general
revaluation, in its assessed valuation over the prior year’s valuation.
12
This “growth” limit on the tax levy may be exceeded in any year by a majority vote of the voters, but an increase in the
secondary or growth limit under this procedure does not permit a tax levy in excess of the primary limitation, since the two
limitations apply independently. In addition, if the voters vote to approve taxes in excess of the “growth” limit for the purpose of
funding a stabilization fund, such increased amount may only be taken into account for purposes of calculating the maximum
levy limit in each subsequent year if the board of selectmen of a town or the city council of a city votes by a two-thirds vote to
appropriate such increased amount in such subsequent year to the stabilization fund.
The applicable tax limits may also be reduced in any year by a majority vote of the voters.
The State Commissioner of Revenue may adjust any tax limit “to counterbalance the effects of extraordinary, non-recurring
events which occurred during the base year”.
The statute further provides that the voters may exclude from the taxes subject to the tax limits and from the calculation of the
maximum tax levy (a) the amount required to pay debt service on bonds and notes issued before November 4, 1980, if the
exclusion is approved by a majority vote of the voters, and (b) the amount required to pay debt service on any specific
subsequent issue for which similar approval is obtained. Even with voter approval, the holders of the obligations for which
unlimited taxes may be assessed do not have a statutory priority or security interest in the portion of the tax levy attributable to
such obligations. It should be noted that Massachusetts General Laws Chapter 44, Section 20 requires that the taxes
excluded from the levy limit to pay debt service on any such bonds and notes be calculated based on the true interest cost of
the issue. Accordingly, the Department of Revenue limits the amount of taxes which may be levied in each year to pay debt
service on any such bonds and notes to the amount of such debt service, less a pro rata portion of any original issue premium
received by the city or town that was not applied to pay costs of issuance.
Voters may also exclude from the Proposition 2½ limits the amount required to pay specified capital outlay expenditures or for
the city or town’s apportioned share for certain capital outlay expenditures by a regional governmental unit. In addition, the
city council of a city, with the approval of the mayor if required, or the board of selectmen or the town council of a town may
vote to exclude from the Proposition 2½ limits taxes raised in lieu of sewer or water charges to pay debt service on bonds or
notes issued by the municipality (or by an independent authority, commission or district) for water or sewer purposes, provided
that the municipality’s sewer or water charges are reduced accordingly.
In addition, Proposition 2½ limits the annual increase in the total assessments on cities and towns by any county, district,
authority, the Commonwealth or any other governmental entity (except regional school districts, the MWRA and certain
districts for which special legislation provides otherwise) to the sum of (a) 2½ percent of the prior year’s assessments and (b)
“any increases in costs, charges or fees for services customarily provided locally or for services subscribed to at local option”.
Regional water districts, regional sewerage districts and regional veterans districts may exceed these limitations under
statutory procedures requiring a two-thirds vote of the district’s governing body and either approval of the local appropriating
authorities (by two-thirds vote in districts with more than two members or by majority vote in two-member districts) or approval
of the registered voters in a local election (in the case of two-member districts). Under Proposition 2½ any State law to take
effect on or after January 1, 1981 imposing a direct service or cost obligation on a city or town will become effective only if
accepted or voluntarily funded by the city or town or if State funding is provided. Similarly, State rules or regulations imposing
additional costs on a city or town or laws granting or increasing local tax exemptions are to take effect only if adequate State
appropriations are provided. These statutory provisions do not apply to costs resulting from judicial decisions.
The Town of Falmouth has been in full compliance with Proposition 2 1/2 since its inception. Under the law as now
written, the current and future levies may increase by up to 2 1/2% of the maximum levy limit for the previous fiscal year,
plus by any amounts voted for override and debt exclusion, or “new” valuations or “real” valuation increases.
13
The table below presents the Town’s primary levy limits, its maximum levy limits, and its actual tax levies for the following
fiscal years.
Local
A ssessed
Val uation
Fi scal
Year
2 013
2 012
2 011
2 010
2 009
$
10,614,941,343
10,579,861,695
11,045,267,377
11,175,752,766
11,848,159,093
Prim ary
Levy
Lim i t(1)
$
265 ,373 ,53 4
264 ,496 ,54 2
276 ,131 ,68 4
279 ,393 ,81 9
296 ,203 ,97 7
Ma xim um
Levy
Lim i t
$
85,423,339
82,676,809
79,555,627
75,534,229
72,082,730
Und er(over)
Prim ary
Levy Li m it
Actual
Tax Levy
$
85,344,128
82,311,324
79,525,925
75,436,331
72,036,807
$
18 0,0 29,4 06
18 2,1 85,2 18
19 6,6 05,7 59
20 3,9 57,4 88
22 4,1 67,1 70
Under(over)
M axim um
L evy Lim it
$
7 9,21 1
36 5,48 5
2 9,70 2
9 7,89 8
4 5,92 3
___________
(1) Primary Levy Limit is 2.5% of Local Assessed Valuation.
Pledged Taxes
Taxes on the increased value of certain property in designated development districts may be pledged for the payment of
costs of economic development projects within such districts and may therefore be unavailable for other municipal
purposes.
Cape Cod Open Space Land Acquisition Excise Tax
An excise tax of 3% of the real estate tax levy against real property is levied by the towns on Cape Cod that have
accepted the Cape Cod Open Space Land Acquisition Program authorized by Chapter 293 of the Acts of 1998, as
amended ( the “Land Bank Act”). This levy is not counted in the total taxes assessed for the purpose of determining the
permitted levy amount under Proposition 2 ½ (see “Tax Limitations” under “PROPERTY TAXATION” herein). The
proceeds of the excise tax, together with any state matching funds, are deposited in the Land Bank Fund held by each
town and may be appropriated, upon the recommendation of the designated open space committee, for the purposes of
acquiring land and interests in land for the protection of public drinking water supplies, open space and conservation and
the creation of walking trails, bicycling trails and recreational areas. The Land Bank Act also authorized the issuance of
bonds and notes for these purposes and the payment of debt service on such bonds and notes from amounts on deposit
in the Land Bank Fund. Under the terms of the Land Bank Act, the excise tax expires on January 1, 2020.
Pursuant to recent legislation, towns on Cape Cod that have adopted the Land Bank Act may, by vote of its legislative
body and subsequent approval by the voters at a state or municipal election, replace its Cape Cod Open Space Land
Acquisition Program with a Community Preservation Program. (See “COMMUNITY PRESERVATION ACT” below.) If any
such town votes to adopt the Community Preservation Act (the “CPA”) in place of the Land Bank Act, the 3% excise tax
receipts previously deposited in the town’s Land Bank Fund will be deposited in a Community Preservation Fund, together
with state matching funds available under the CPA. The revenues in the Community Preservation Fund will be expended
pursuant to recommendations of a community preservation committee not just for open space land acquisitions, but also
for affordable housing, historic preservation and recreation purposes in accordance with the CPA. Notwithstanding the
minimum spending requirements for each of such purposes imposed by the CPA described in “COMMUNITY
PRESERVATION ACT” below, revenues deposited in the Community Preservation Fund under the CPA will be available
to pay debt service on the portion of any bonds previously authorized by the town under the Land Bank Act. Although
other municipalities may set the surcharge tax under the CPA at any rate up to 3% and may revoke its acceptance of the
CPA at any time after 5 years from the date of such acceptance, towns on Cape Cod that adopt the CPA as a
replacement for the Land Bank Act are required to maintain the surcharge rate at 3%, and may not revoke their
acceptance of the CPA until fiscal year 2020.
The Town voted to replace its Cape Cod Open Space Land Acquisition Program with a Community Preservation Program
as described above. The termination of the Land Bank program and the commencement of the Community Preservation
Program took effect on July 1, 2005. See table of receipts and state matching funds on the following page.
14
Community Preservation Act
The Massachusetts Community Preservation Act (the “CPA”) permits cities and towns that accept its provisions to levy a
surcharge on its real property tax levy and to receive state matching funds for the acquisition, creation, preservation,
rehabilitation and restoration of open space, historic resources and affordable housing. The provisions of the CPA must
be accepted by the voters of the city or town at an election after such provisions have first been accepted by either a vote
of the legislative body of the city or town or an initiative petition signed by 5% of its registered voters.
A city or town may approve a surcharge of up to 3% of the real property tax levy, and it may accept one or more
exemptions to the surcharge under the CPA, including an exemption for low-income individuals and families and for low
and moderate-income senior citizens, an exemption for $100,000 of the value of each taxable parcel of residential real
property, and an exemption for commercial and industrial properties in cities and towns with classified tax rates. The
surcharge is not counted in the total taxes assessed for the purpose of determining the permitted levy amount under
Proposition 2 ½ (see “Tax Limitations” under “PROPERTY TAX”). A city or town may revoke its acceptance of the
provisions of the CPA at any time after 5 years from the date of such acceptance and may change the amount of the
surcharge or the exemptions to the surcharge at any time, provided that any such revocation or change must be approved
pursuant to the same process as acceptance of the CPA.
Any city or town that accepts the provisions of the CPA will receive annual state matching grants to supplement amounts
raised by its surcharge on the real property tax levy. The state matching funds are raised from certain recording and filing
fees of the registers of deeds. Those amounts are deposited into a state trust fund and are distributed to cities and towns
that have accepted the provision of the CPA, which distributions are not subject to annual appropriation by the state
legislature. The amount distributed to each city and town is based on a statutory formula which requires that 80% of the
amount in the state trust fund be used to match an equal percentage of the amount raised locally by each city and town,
and that the remaining 20% of the amount in the fund be distributed only to those cities and towns that levy the maximum
3% surcharge base on a formula which takes into account equalized property valuation and population, resulting in larger
distributions to those communities with low valuations and small populations. The total state distribution made to any city
or town may not, however, exceed 100% of the amount raised locally by the surcharge on the real property tax levy.
The amounts raised by the surcharge on real property taxes and received in state matching funds are required to be
deposited in a dedicated community preservation fund. Each city or town that accepts the provisions of the CPA is
required to establish a community preservation committee to study the community preservation needs of the community
and to make recommendations to the legislative body of the city or town regarding the community preservation projects
that should be funded from the community preservation fund. Upon the recommendations of the committee, the legislative
body of the city or town may appropriate amounts from the fund for permitted community preservation purposes or may
reserve amounts for spending in future fiscal years, provided that at least 10% of the total annual revenues to the fund
must be spent or set aside for open space purposes, 10% for historic resource purposes and 10% for affordable housing
purposes.
The CPA authorizes cities and towns that accepts its provisions to issue bonds and notes in anticipation of the receipt of
surcharge revenues to finance community preservation projects approved under the provisions of the CPA. Bonds and
notes issued under the CPA are general obligations of the city or town and are payable from amounts on deposit in the
community preservation fund. In the event that a city or town revokes its acceptance of the provisions of the CPA, the
surcharge shall remain in effect until all contractual obligations incurred by the city of town prior to such revocation,
including the payment of bonds or notes issued under the CPA, have been fully discharged.
The Town has adopted the Community Preservation Act as discussed in “Cape Cod Open Space Land Acquisition Excise
Tax”.
15
The following table sets forth the amount of Community Preservation Act and the state matching funds received in the
years shown below.
Fiscal
Year
CPA
Receipts
2012
2011
2010
2009
2008
$
State Match
1,957,167
2,200,735 (1)
2,159,199
2,068,947
1,995,932
$
681,247
632,354
776,354
1,425,172
1,900,140
__________________
(1) Includes $500,000 state reimbursement for land purchase.
Levy Limit Exclusions
The following table sets forth the portion of the current and recent levies that have been excluded from Proposition 2 ½.
Fiscal
Year
2012
2011
2010
2009
2008
Debt
Service
$
8,365,620
7,817,411
6,938,507
5,988,830
5,688,721
Capital
Exclusion
$
1,450,000
-
16
Cape Cod
Commission
Assessment
$
419,999
415,646
405,508
398,578
388,857
Total
Exclusions
$ 8,785,619
9,683,057
7,344,015
6,387,408
6,077,578
TOWN FINANCES
Budget and Appropriation Process
Town Meeting: The annual appropriations of the Town are ordinarily made at an annual meeting, which usually takes
place in April. Appropriations may also be voted at other meetings. The Town has a finance committee which submits
reports and recommendations on proposed expenditures at Town Meetings. School committees are no longer
autonomous with respect to school expenditures for current purposes. The school budget is limited to the amount
appropriated by the Town Meeting.
The board of selectmen of a town with the concurrence of the finance committee may transfer within the last 2 months of
the fiscal year any amount appropriated for the use of any department to the appropriation for any other department,
provided that no such transfer may be made from any appropriation for a school department, regional school district, or
municipal light department.
Mandatory Items: Mandatory items, such as state and county assessments, the overlay for abatements, abatements in
excess of overlays, principal and interest not otherwise provided for and final judgments are included in the tax levy
whether or not included in the appropriations voted at town meeting.
Revenues: Revenues are not required to be set forth in the budget but estimated non-tax revenues are taken into
account by the assessors in fixing the tax levy. (See “PROPERTY TAXATION–Tax Levy Computation”.)
Operating Budget Trends
The following table sets forth the operating budgets for fiscal years 2009 through 2013 as voted by the Annual Town
Meetings. Said budgets exclude Mandatory Items (see above) and expenditures for “non-operating” or extraordinary
items authorized under “special” warrant articles at special town meetings.
BUDGET COMPARISON
Fiscal 2009
General Government
Public Safety
Health and Human Services
Public Works
Library Services
Recreation, Beaches &
Waterways
Education
Debt Service
Insurance, Retirement,
and Benefits
Miscellaneous
Stabilization Fund
Total Expenditures
$
5,984,923
12,219,527
1,316,449
9,698,108
1,843,831
Approved
Fiscal 2011
Fiscal 2010
$
5,868,628
12,465,878
1,347,416
10,049,332
1,856,760
$
5,971,619
11,644,120
1,294,927
9,703,392
1,700,420
Fiscal 2012
$
6,598,709
11,235,615
1,058,078
9,676,915
1,700,420
Fiscal 2013
$
5,301,704
11,520,663
1,325,411
9,855,356
1,700,420
1,406,160
43,668,950
12,176,358
1,411,883
44,533,294
13,690,624
1,330,311
43,075,118
15,660,859
1,335,872
43,369,049
14,932,220
1,752,834
43,823,047
15,706,342
15,148,521
$ 103,462,827
16,337,827
7,500
$ 107,569,142
17,499,969
6,750
$ 107,887,485
18,735,028
6,750
250,000
$ 108,898,656
19,046,115
750
2,333,658
$ 112,366,300
17
Revenues
Property Taxes: Property taxes are a major source of revenue for the Town. The total amount levied is subject to certain
limits prescribed by law; for a description of those limits see “PROPERTY TAXATION–Tax Limitations” herein. There is
litigation in the Commonwealth claiming that the system of financing public education, with its heavy reliance on the
property tax, is unconstitutional because it is based on the wealth of the municipality in which the student lives.
State Aid: The Town’s state aid entitlement is based upon a number of different formulas, and while said formulas might
indicate that a particular amount of state aid is owed, the amount of state aid actually paid is limited to the amount
appropriated by the state legislature. The state annually estimates state aid but actual payments may vary from the
estimate.
Water and Sewer Rates and Services: The Town’s water and sewer operations are accounted for in the general fund. In
May 1992, the Water Department converted from quarterly to semi-annual billing. A “ready-to-serve” charge of $49.49 is
assessed in May and November for an allowance of 10.96 cubic feet per day. This minimum of $98.98 per year applies to
standard 5/8-inch meters. Usage in excess of allowable is billed at the rate of $2.80 per one hundred cubic feet. Services
with larger meters have higher minimums and daily allowances.
The Town owns and operates a main wastewater treatment facility which was originally completed in 1986 and upgraded in
2005, and another smaller wastewater treatment facility which began operating in 2009. Operating expenses are supported
by user charges. Approximately 4% of the developed properties in Town are connected to the municipal sewer system; most
other developed properties in Town have septic systems. The sewer rate structure was changed in October of 2009 to a
structure similar to the Town’s water rate structure, i.e., there is now a minimum “ready to serve” charge covering a daily
allowance of water, and a rate that is applied for every one hundred cubic feet of water used above the allowance for the
period. For a residential customer with a 5/8 inch water meter, the sewer minimum charge is $122.00 per semi-annual billing
period. The sewer rate for water used above the allowance for the period is $6.10 per hundred cubic feet. For septage (or
grease) discharge at the Town’s main treatment facility, the Town charges $80.00 per 1,000 gallons, from October through
March and $95.00 per 1,000 gallon from April through September.
Although not accounted for as enterprises, water and sewer receipts are more than sufficient to provide for all water and
sewer expenditures.
Motor Vehicle Excise: An excise is imposed on the registration of motor vehicles (subject to exemptions) at the rate of $25
per $1,000 of valuation. The excise is collected by and for the benefit of the municipality in which the motor vehicle is
customarily kept. Valuations are determined by a statutory formula based on manufacturers’ list price and year of
manufacture. Bills not paid when due bear interest at 12 percent per annum. Provision is also made, after notice to the owner,
for suspension of the owner’s operating license or registration by the registrar of motor vehicles.
Room Occupancy Tax: Under this tax, local governments may tax the provision of hotel, motel and lodging house rooms
at a rate not to exceed six percent (6%) of the cost of renting such rooms. The tax is paid by the operator of the hotel,
motel or lodging house to the State Commissioner of Revenue, who in turn pays the tax back to the municipality in which
the rooms are located in quarterly distributions. The Town has levied 4% since the inception of the tax in the Town.
Other: Other major General Fund sources of revenue include interest income, licenses and permits and fines, fees and
penalties.
Investment of Town Funds
Investments of funds of cities and towns, except for trust funds, are generally restricted by Massachusetts General Laws
Chapter 44, §55. That statute permits investments of available revenue funds and bond and note proceeds in term deposits
and certificates of deposits of banks and trust companies, in obligations issued or unconditionally guaranteed by the federal
government or an agency thereof with a maturity of not more than one year, in repurchase agreements with a maturity of not
more than 90 days secured by federal or federal agency securities, in participation units in the Massachusetts Municipal
Depository Trust (“MMDT”), or in shares in SEC-registered money market funds with the highest possible rating from at least
one nationally recognized rating organization.
MMDT is an investment pool created by the Commonwealth. The State Treasurer is the sole trustee, and the funds are
managed under contract by an investment firm under the supervision of the State Treasurer’s office. According to the State
Treasurer the Trust’s investment policy is designed to maintain an average weighted maturity of 90 days or less and is limited
to high-quality, readily marketable fixed income instruments, including U.S. Government obligations and highly-rated corporate
securities with maturities of one year or less.
18
Trust funds, unless otherwise provided by the donor, may be invested in accordance with §54 of Chapter 44, which permits a
broader range of investments than §55, including any bonds or notes that are legal investments for savings banks in the
Commonwealth. The restrictions imposed by §54 and §55 do not apply to city and town retirement systems.
A breakdown of such investments may be obtained from the Town Treasurer.
Pension funds are under the jurisdiction of the Falmouth Contributory Retirement System. Investments and the retirement
system are discussed in Appendix A.
Summary of Significant Accounting Policies
See audited financial statements attached as Appendix A.
Audits
The Town’s accounts have been audited for fiscal year 2012 by Roselli, Clark & Associates, Certified Public Accountants,
a copy of which is attached hereto as Appendix A. Copies of previous audits are available upon request.
The attached report speaks only as of its date, and only to the matters expressly set forth therein. The auditors have not
been engaged to review this Annual Report or to perform audit procedures regarding the post-audit period, nor have the
auditors been requested to give their consent to the inclusion of their report in Appendix A. Except as stated in their
report, the auditors have not been engaged to verify the financial information set out in Appendix A and are not passing
upon and do not assume responsibility for the sufficiency, accuracy or completeness of the financial information presented
in that appendix.
Financial Statements
Set forth on the following pages are Governmental Funds Balance Sheets for fiscal years 2012, 2011 and 2010, and a
Combined Statement of Revenues, Expenditures, and Changes in Fund Balance – General Fund for fiscal years 2008
through 2012. Such statements were extracted from the Town’s audited financial statements and then combined for
purposes of this presentation.
19
TOWN OF FALMOUTH, MASSACHUSETTS
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2012 (1)
General
ASSETS:
Cash and short-term investments
Investments
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes
Other
Due from other government
TOTAL ASSETS
LIABILITIES AND FUND BALANCES:
Warrants and Accounts Payable
Accrued payroll and withholdings
Bond Anticipation and Promissory Notes
Deferred Revenues
TOTAL LIABILITIES
$ 14,609,315
1,760,543
$
$
FUND BALANCES:
Nonspendable
Restricted
Committed
Assigned
Unassigned
TOTAL FUND BALANCES
$
4,048,405
1,942,280
14,367,536
36,728,079
2,389,077
2,962,971
19,640,441
24,992,489
1,239,725
2,142,426
444,267
7,909,172
11,735,590
36,728,079
(1) Extracted from the Audited Independent Auditor's Report.
20
Nonmajor
Governmental
Funds
Total
Governmental
Funds
3,639,415
-
$ 14,584,837
1,278,636
$ 32,833,567
3,039,179
88,763
3,728,178
908,713
889,823
$ 17,662,009
4,137,168
2,850,993
15,257,359
$ 58,118,266
$
$
Community
Preservation
$
$
$
$
11,038
500,000
88,763
599,801
3,128,377
3,128,377
3,728,178
287,850
3,286,839
1,045,853
4,620,542
175,000
12,866,467
13,041,467
$ 17,662,009
2,687,965
2,962,971
3,786,839
20,775,057
30,212,832
175,000
17,234,569
2,142,426
444,267
7,909,172
27,905,434
$ 58,118,266
TOWN OF FALMOUTH, MASSACHUSETTS
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2011 (1)
ASSETS:
Cash and short-term investments
Investments
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes
Other
Due from other government
Cash - restricted
Investments - restricted
TOTAL ASSETS
LIABILITIES AND FUND BALANCES:
Warrants and Accounts Payable
Retainage on construction contracts
Bond Anticipation and Promissory Notes
Deferred Revenues
TOTAL LIABILITIES
FUND BALANCES:
Nonspendable
Restricted
Committed
Assigned
Unassigned
TOTAL FUND BALANCES
General
Community
Preservation
Nonmajor
Governmental
Funds
Total
Governmental
Funds
$ 11,052,606
1,665,815
$ 4,009,883
-
$ 14,209,499
-
$ 29,271,988
1,665,815
3,215,633
1,869,013
15,604,326
$ 33,407,393
76,851
$ 4,086,734
909,451
4,135,642
1,048,665
1,991,955
$ 22,295,212
3,292,484
2,778,464
19,739,968
1,048,665
1,991,955
$ 59,789,339
$
$
$
$
4,684,512
20,080,786
24,765,298
1,256,120
917,863
483,699
5,984,413
8,642,095
$ 33,407,393
(1) Extracted from the Audited Independent Auditor's Report.
21
3,362
1,000,000
76,851
1,080,213
3,006,521
3,006,521
$ 4,086,734
750,688
150,540
11,046,672
909,451
12,857,351
175,000
10,990,420
(1,727,559)
9,437,861
$ 22,295,212
5,438,562
150,540
12,046,672
21,067,088
38,702,862
175,000
15,253,061
917,863
483,699
4,256,854
21,086,477
$ 59,789,339
TOWN OF FALMOUTH, MASSACHUSETTS
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2010 (1)
Community
Preservation
General
ASSETS:
Cash and short-term investments
Investments
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes
Other
Due from other government
Cash - restricted
Investments - restricted
TOTAL ASSETS
LIABILITIES AND FUND BALANCES:
Warrants and Accounts Payable
Retainage on construction contracts
Bond Anticipation and Promissory Notes
Deferred Revenues
TOTAL LIABILITIES
FUND BALANCES:
Reserved for:
Encumbrances
Community Preservation
Stabilization
Expenditures
Unreserved:
Undesignated, reported in:
General Fund
Special Revenue Fund
Capital Projects Funds
Permanent Funds
TOTAL FUND BALANCES
$
Stabilization
Nonmajor
Governmental
Funds
Total
Governmental
Funds
7,572,306
-
$ 5,504,822
-
$
758,412
1,243,374
$ 20,908,574
-
$ 34,744,114
1,243,374
2,425,051
1,675,536
17,398,069
$ 29,070,962
65,974
$ 5,570,796
$ 2,001,786
1,017,994
6,379,567
14,083
1,974,063
$ 30,294,281
2,491,025
2,693,530
23,777,636
14,083
1,974,063
$ 66,937,825
$
$
$
$
$
4,539,122
21,498,656
26,037,778
50,457
1,500,000
65,974
1,616,431
1,478,625
-
3,954,365
-
1,554,559
3,033,184
$ 29,070,962
3,954,365
$ 5,570,796
(1) Extracted from the Audited Independent Auditor's Report.
22
-
-
2,001,786
2,001,786
$ 2,001,786
1,658,338
1,023,711
30,743,672
1,017,994
34,443,715
-
5,803,664
(11,941,244)
1,988,146
(4,149,434)
$ 30,294,281
6,247,917
1,023,711
32,243,672
22,582,624
62,097,924
1,478,625
3,954,365
-
1,554,559
7,805,450
(11,941,244)
1,988,146
4,839,901
$ 66,937,825
TOWN OF FALMOUTH, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS (1)
2012
2011
AS OF JUNE 30,
2010
2009
2008
REVENUES:
Real estate and personal property taxes, net
Intergovernmental
Motor Vehicle and other excises
Departmental and Other
Licenses & Permits
Penalties and interest income
Fines and forfeitures
Investment Income
TOTAL
$81,495,518
20,424,654
5,432,960
4,256,186
1,346,154
495,965
180,815
595,547
$114,227,799
$79,153,997
19,337,395
5,090,088
3,643,053
1,400,728
622,102
157,549
428,214
$109,833,126
$74,871,262
18,727,254
4,412,792
5,968,891
1,172,147
453,662
166,161
480,079
$106,252,248
$70,933,183
18,027,061
5,156,717
2,961,569
1,190,247
403,425
184,383
372,805
$99,229,390
$68,750,713
17,719,349
5,002,392
4,065,603
1,223,416
407,366
211,101
1,110,923
$98,490,863
OTHER FINANCING SOURCES
Bond proceeds
Transfer in
Total Other Financing Sources
Total Revenues and Other Financing Sources
$0
114,227,799
2,232,297
2,232,297
112,065,423
2,514,742
2,514,742
108,766,990
231,950
231,950
99,461,340
1,898,440
1,898,440
100,389,303
EXPENDITURES:
General Government
Public Safety
Education
Public Works
Health and human services
Culture and recreation
State and county tax assessments
Pension and other fringes
Debt Service
TOTAL
$5,514,216
11,862,415
43,189,682
6,416,485
1,276,059
2,677,294
2,254,336
28,626,931
6,859,165
108,676,583
$5,438,226
11,636,117
43,172,856
6,555,300
1,280,454
2,588,221
1,988,068
26,873,665
8,587,593
108,120,500
$5,482,218
11,582,915
43,288,381
6,416,793
1,301,288
2,715,994
2,140,141
24,577,158
6,913,881
104,418,769
$6,389,989
11,811,816
43,789,960
6,433,725
1,314,081
2,770,775
1,965,572
21,809,399
6,391,362
102,676,679
$6,816,486
11,985,494
42,913,805
5,929,817
1,244,858
2,661,193
1,775,359
20,446,882
7,217,834
100,991,728
Other Financing Sources/Uses:
Proceeds from refunding bonds
Premiujm on refunding bonds issued, net
Payments to refunded bond escrow agent
Transfers in
Transfers Out
Total Expenditures and Other Financing Uses
5,430,800
632,381
(6,063,181)
1,638,934
(2,096,655)
(457,721)
1,760,774
109,881,274
3,982,151
108,400,920
102,676,679
505,859
101,497,587
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES
3,093,495
2,184,149
366,070
(3,215,339)
(1,108,284)
5,882,453 (2)
$2,667,114
6,990,733
$5,882,449
Fund Balance Beginning of Year
Fund Balance End of Year
__________________
8,642,095
$11,735,590
6,457,946 (2)
$8,642,095
23
2,667,114
$3,033,184
Free Cash
Under Massachusetts law an amount known as “free cash” is certified as of the beginning of each fiscal year by the State
Bureau of Accounts and this, together with certain subsequent tax receipts, is used as the basis for subsequent
appropriations from available funds, which are not required to be included in the annual tax levy. Subject to certain
adjustments, free cash is undesignated fund balance adjusted to a cash basis.
The following table sets forth the trend in free cash as certified by the Bureau of Accounts.
FREE CASH
Fiscal Year
(July 1)
Free Cash
(July 1)
2012
2011
2010
2009
2008
$
3,384,466
2,826,333
1,124,951
719,516
2,310,064
Stabilization Funds
The Town maintains a stabilization fund, which is accounted for in the Trust Funds. Funded by an annual appropriation,
the stabilization fund plus interest income may be appropriated by a two-thirds vote at an annual or special town meeting
for any municipal purpose.
STABILIZATION FUND
Fiscal
Year
Stabilization
Fund Balance
2012
2011
2010
2009
2008
$
1,868,089
1,070,686
1,007,259
1,453,651
1,477,442
Renewable Energy Stabilization Fund
At the November 9, 2009 Annual Town Meeting, the Town established a Renewable Energy Stabilization Fund. The
balance of this fund at June 30, 2010 was $994,528. As of June 30, 2011, the balance was $595,130. As of June 2012,
the balance was $595,130.
Tax Increment Financing for Development Districts
Under recent legislation, cities and towns are authorized to establish development districts to encourage increased
residential, industrial and commercial activity. All or a portion of the taxes on growth in assessed value in such districts
may be pledged and used solely to finance economic development projects pursuant to the city or town’s development
program for the district. This includes pledging such “tax increments” for the payment of bonds issued to finance such
projects. As a result of any such pledge, tax increments raised from new growth properties in development districts are
not available for other municipal purposes. Tax increments are taken into account in determining the total taxes assessed
for the purpose of calculating the maximum permitted tax levy under Proposition 2 ½ (see “Tax Limitations” under
“PROPERTY TAXATION” herein.)
The Town of Falmouth currently has one active TIF (tax incrementing financing) agreement with total tax reductions
equaling $16,042 in fiscal 2010, $12,260 for fiscal 2011, and $4,123 for fiscal 2012. Total tax reductions are estimated to
total $5,425 for fiscal 2013.
24
INDEBTEDNESS
Authorization Procedure and Limitations
Bonds and notes are generally authorized on behalf of the Town by vote of two-thirds of all the Town Meeting Members
present and voting at an annual or special town meeting, subject to a referendum vote if a petition therefore is properly filed
within five days (excluding Sundays and Holidays) after the close of such meetings. Borrowings for certain purposes require
state administrative approval. Temporary loans in anticipation of current revenues and certain state and county
reimbursements are generally authorized by majority vote but provision is made for temporary loans in anticipation of federal
grants and for other purposes in certain circumstances without town meeting authorization.
Debt Limits
General Debt Limit. The General Debt Limit of a city or town consists of a Normal Debt Limit and a Double Debt Limit. The
Normal Debt Limit is 5 percent of the valuation of taxable property as last equalized by the State Department of Revenue. A
city or town can authorize debt up to this amount without state approval. It can authorize debt up to twice this amount (the
Double Debt Limit) with the approval of the state Municipal Finance Oversight Board composed of the State Treasurer, the
State Auditor, the Attorney General and the Director of Accounts.
There are many categories of general obligation debt which are exempt from and do not count against the General Debt Limit.
Among others, these exempt categories include revenue anticipation notes and grant anticipation notes; emergency loans;
loans exempted by special laws; certain school bonds, sewer bonds, solid waste disposal facility bonds and economic
development bonds supported by tax increment financing; and subject to special debt limits, bonds for water (limited to 10
percent of equalized valuation), housing, urban renewal and economic development (subject to various debt limits), and
electric, gas, community antenna television systems, and telecommunications systems (subject to separate limits). Revenue
bonds are not subject to these debt limits. The General Debt Limit and the special debt limit for water bonds apply at the time
the debt is authorized. The other special debt limits generally apply at the time the debt is incurred.
Revenue Anticipation Notes. The amount borrowed in each fiscal year by the issue of revenue anticipation notes is limited
to the tax levy of the prior fiscal year, together with the net receipts in the prior fiscal year from the motor vehicle excise and
certain payments made by the Commonwealth in lieu of taxes. The fiscal year ends on June 30. Notes may mature in the
following fiscal year, and notes may be refunded into the following fiscal year to the extent of the uncollected, unabated current
tax levy and certain other items, including revenue deficits, overlay deficits, final judgments and lawful unappropriated
expenditures, which are to be added to the next tax levy, but excluding deficits arising from a failure to collect taxes of earlier
years. (See “Taxation to Meet Deficits” under “PROPERTY TAX” herein.) In any event, the period from an original borrowing
to its final maturity cannot exceed one year.
Types of Obligations
General Obligations. Massachusetts cities and towns are authorized to issue general obligation indebtedness of these types:
Serial Bonds and Notes. These are generally required to be payable in annual principal amounts beginning no later than the
end of the next fiscal year commencing after the date of issue and ending within the terms permitted by law. A level debt
service schedule, or a schedule that provides for a more rapid amortization of principal than level debt service, is permitted.
The principal amounts of certain economic development bonds supported by tax increment financing may be payable in equal,
diminishing or increasing amounts beginning within 5 years after the date of issue. The maximum terms of serial bonds and
notes vary from one year to 40 years, depending on the purpose of the issue. The maximum terms permitted are set forth in
the statutes. In addition, for many projects, the maximum term may be determined in accordance with useful life guidelines
promulgated by the State Department of Revenue (“DOR”). Serial bonds and notes may be issued for the purposes set forth
in the statutes. In addition, serial bonds and notes may be issued for any other public work improvement or asset not
specifically listed in the Statutes that has a useful life of at least 5 years. Bonds or notes may be made callable and redeemed
prior to their maturity, and a redemption premium may be paid. Refunding bonds or notes may be issued subject to the
maximum applicable term measured from the date of the original bonds or notes and must produce present value savings
over the debt service of the refunded bonds. Generally, the first required annual payment of principal of the refunding bonds
cannot be later than the first principal payment of any of the bonds or notes being refunded thereby, however, principal
payments made before the first principal payment of any of the bonds or notes being refunded thereby may be in any amount.
Serial bonds may be issued as “qualified bonds” with the approval of the state Municipal Finance Oversight Board composed
of the State Treasurer, the State Auditor, the Attorney General and the Director of Accounts, subject to such conditions and
25
limitations (including restrictions on future indebtedness) as may be required by the Board. Qualified bonds may mature not
less than 10 nor more than 30 years from their dates and are not subject to the amortization requirements described above.
The State Treasurer is required to pay the debt service on qualified bonds and thereafter to withhold the amount of the debt
service paid by the State from state aid or other state payments; administrative costs and any loss of interest income to the
State are to be assessed upon the city or town.
Tax Credit Bonds or Notes. Subject to certain provisions and conditions, the officers authorized to issue bonds or notes may
designate any duly authorized issue of bonds or notes as “tax credit bonds” to the extent such bonds and notes are otherwise
permitted to be issued with federal tax credits or other similar subsidies for all or a portion of the borrowing costs. Tax credit
bonds may be made payable without regard to the annual installments required by any other law, and a sinking fund may be
established for the payment of such bonds. Any investment that is part of such a sinking fund may mature not later than the
date fixed for payment or redemption of the applicable bonds.
Bond Anticipation Notes. These generally must mature within two years of their original dates of issuance but may be
refunded from time to time for a period not to exceed five years from their original dates of issuance, provided that for each
year that the notes are refunded beyond the second year they must be paid in part from revenue funds in an amount at least
equal to the minimum annual payment that would have been required if the bonds had been issued at the end of the second
year. For certain school projects, however, notes may be refunded from time to time for a period not to exceed seven years
without having to pay any portion of the principal of the notes from revenue funds. The maximum term of bonds issued to
refund bond anticipation notes is measured (except for certain school projects) from the date of the original issue of the notes.
Revenue Anticipation Notes. These are issued to meet current expenses in anticipation of taxes and other revenues. They
must mature within one year but, if payable in less than one year, may be refunded from time to time up to one year from the
original date of issue.
Grant Anticipation Notes. These are issued for temporary financing in anticipation of federal grants and state and county
reimbursements. Generally, they must mature within two years but may be refunded from time to time as long as the
municipality remains entitled to the grant or reimbursement.
Revenue Bonds. Cities and towns may issue revenue bonds for solid waste disposal facilities, for projects financed under the
Commonwealth’s Water Pollution Abatement or Drinking Water Revolving Loan Programs and for certain economic
development projects supported by tax increment financing. In addition, cities and towns having electric departments may
issue electric revenue bonds, and notes in anticipation of such bonds, subject to the approval of the State Department of
Telecommunications and Energy. This article is not intended to summarize laws relating to revenue bonds or to notes issued
in anticipation of them. Industrial revenue bonds are also outside the scope of this article.
The Town issued $20,000,000 revenue anticipation notes in September 2010 that were retired upon their maturity on
March 2011, which was its first issuance of revenue anticipation notes since October 1995 and which resulted from a
delay in finalizing a revaluation completed for use in fiscal 2011.
26
TOWN OF FALMOUTH
DIRECT DEBT SUMMARY
AS OF JUNE 30, 2012
General Obligation Bonds Outstanding as of June 30, 2012:
School (1)
Water (2)
Sewer (3)
Other (4)
Land Bank
SRF (5)
Total Outstanding
$
Temporary Notes Outstanding:
Bond Anticipation Notes Outstanding (6)
55,077,000
10,400,400
1,915,900
32,060,400
12,522,300
18,037,489
$
130,013,489
$
131,543,489
1,530,000
Total Direct Debt
_______________
(1) The unpaid balance of state school construction grants payable over the life of outstanding school debt is approximately
$11,836,826. Such grant payments are applicable to construction costs, including interest on debt incurred to finance
(2)
(3)
(4)
(5)
(6)
construction costs. Payments are made in equal annual installments over the life of bond issued to finance the project. Exempt
from the limits of Proposition 2 ½, subject to the limitations imposed by Chapter 59, Section 21C of the General Laws.
Self-Supporting and $10,260,400 is outside the Town’s debt limit.
Self-Supporting and exempt from the limits of Proposition 2 ½, subject to the limitations imposed by Chapter 59, Section 21C of the
General Laws.
$10,288,900 is outside the Town’s debt limit and $12,968,500 is exempt from the limits of Proposition 2 ½, subject to the limitations
imposed by Chapter 59, Section 21C of the General Laws.
Does not reflect subsidy from MWPAT. $10,996,363 is exempt from the limits of Proposition 2 ½, subject to the limitations
imposed by Chapter 59, Section 21C of the General Laws.
Payable March 8, 2013 ($500,000) and July 26, 2013 ($1,030,000).
Debt Ratios
The following table sets forth the ratio of debt to equalized valuation and per capita debt ratios at the end of the five most
recent fiscal years. The table considers the principal amount of general obligation bonds and serial notes of the Town of
Falmouth. The table does not deduct anticipated state grant payments applicable to the principal amount of outstanding
bonds or debt that may be supported in whole, or part, by non-tax revenues. (See "Direct Debt Summary".)
Fiscal
Year
General
Obligation
Bonds
Outstanding
Equalized
Valuation (2)
Population (1)
Per Capita
Debt
Ratio Debt
To Equalized
Valuation
2012
$ 130,013,489
31,531
$ 12,168,109,600
$ 4,123
1.07 %
2011
112,906,393
31,531
12,168,109,600
3,581
0.93
2010
121,762,651
31,531
13,126,721,800
3,862
0.93
2009
104,343,429
31,531
13,126,721,800
3,309
0.79
2008
102,967,362
31,531
12,247,802,400
3,266
0.84
_______________
(1) 2010 Federal census used for fiscal years 2006 through 2010.
(2) 2006 state equalized valuation used for fiscal year 2008; 2008 state equalized valuation used for fiscal years 2009 and 2010; 2010
state equalized valuation used for fiscal years 2011 and 2012.
27
Authorized Unissued Debt and Prospective Financing
The Town currently has approximately $6,052,384 bonds authorized but unissued, of which $2,772,250 is for Wastewater
Management Planning. Said debt has been excluded from the limits of Proposition 2 ½. $1,000,000 unissued debt is for
Road and Sidewalk Improvements. $1,250,000 unissued debt is for golf course acquisition purposes and is expected to
be self-supporting. The balance of authorized debt is for miscellaneous capital purposes.
Principal Payments by Purpose
The following table sets forth the principal payments by purpose on outstanding general obligation bonds and serial notes
of the Town of Falmouth.
GENERAL OBLIGATION BONDS AND SERIAL NOTES
PRINCIPAL PAYMENTS BY PURPOSE
AS OF JUNE 30, 2012
Fiscal
Year
School (1)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
$
3,520,000
3,495,000
3,485,000
3,480,000
3,465,000
3,775,000
3,990,000
3,610,000
3,597,000
3,585,000
2,870,000
2,695,000
2,690,000
2,375,000
2,320,000
1,445,000
1,170,000
1,170,000
1,170,000
1,170,000
-
Total
$
55,077,000
Water (2)
$
950,900
946,100
881,000
879,600
869,800
865,000
865,000
855,000
603,000
595,000
510,000
490,000
480,000
430,000
180,000
-
$ 10,400,400
Sewer (3)
$
150,900
155,000
150,000
150,000
150,000
150,000
129,000
145,000
145,000
147,000
144,000
85,000
85,000
65,000
65,000
-
$ 1,915,900
Land
Bank
Other (4)
$
2,483,900
2,488,900
2,004,000
2,015,400
1,725,200
1,630,000
1,595,000
1,585,000
1,603,000
1,615,000
1,625,000
1,615,000
1,640,000
1,280,000
1,285,000
965,000
955,000
705,000
585,000
615,000
650,000
680,000
715,000
$ 32,060,400
$
1,270,300
1,250,000
1,240,000
1,235,000
1,215,000
1,215,000
1,211,000
960,000
942,000
853,000
541,000
265,000
265,000
60,000
-
$ 12,522,300
Total
Outstanding
6/30/2012
SRF (5)
$
1,101,627
1,125,294
1,153,707
1,184,460
1,214,743
1,245,032
1,275,326
1,294,759
1,330,287
1,349,550
1,384,869
1,400,194
570,527
570,866
548,750
553,750
558,750
175,000
-
$
9,477,627
9,460,294
8,913,707
8,944,460
8,639,743
8,880,032
9,065,326
8,449,759
8,220,287
8,144,550
7,074,869
6,550,194
5,730,527
4,780,866
4,398,750
2,963,750
2,683,750
2,050,000
1,755,000
1,785,000
650,000
680,000
715,000
$ 18,037,489
$
130,013,489
_________________________
(1) The unpaid balance of state school construction grants payable over the life of outstanding school debt is approximately
(2)
(3)
(4)
(5)
$11,836,826. Such grant payments are applicable to construction costs, including interest on debt incurred to finance construction
costs. Payments are made in equal annual installments over the life of bond issued to finance the project. Exempt from the limits
of Proposition 2 ½, subject to the limitations imposed by Chapter 59, Section 21C of the General Laws.
Self-Supporting and $10,260,400 is outside the Town’s debt limit.
Self-Supporting and exempt from the limits of Proposition 2 ½, subject to the limitations imposed by Chapter 59, Section 21C of the
General Laws.
$10,288,900 is outside the Town’s debt limit and $12,968,500 is exempt from the limits of Proposition 2 ½, subject to the limitations
imposed by Chapter 59, Section 21C of the General Laws.
Does not reflect subsidy from MWPAT. $10,996,363 is exempt from the limits of Proposition 2 ½, subject to the limitations
imposed by Chapter 59, Section 21C of the General Laws.
28
Debt Service Requirements
The following table sets forth the required principal and interest payments on all general obligation debt of the Town of
Falmouth, as of June 30, 2012.
GENERAL OBLIGATION BONDS AND SERIAL NOTES
DEBT SERVICE REQUIREMENTS
AS OF JUNE 30, 2012
Fiscal
Year
Outstanding (1)
Principal
Interest
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
$
9,477,627
9,460,294
8,913,707
8,944,460
8,639,743
8,880,032
9,065,326
8,449,759
8,220,287
8,144,550
7,074,869
6,550,194
5,730,527
4,780,866
4,398,750
2,963,750
2,683,750
2,050,000
1,755,000
1,785,000
650,000
680,000
715,000
Total
$
130,013,489
$
4,895,641
4,558,320
4,194,930
3,854,488
3,513,717
3,127,546
2,757,072
2,425,737
2,110,691
1,775,991
1,405,222
1,159,900
990,350
802,708
636,075
486,416
381,650
287,463
208,263
134,528
79,550
48,794
16,534
$ 39,851,586
MSBA
Payment
$
(1,397,246)
(1,397,246)
(1,397,246)
(1,397,246)
(1,397,246)
(1,397,246)
(1,397,246)
(685,368)
(685,368)
(685,368)
-
$ (11,836,826)
MWPAT
Subsidies
$
(309,762)
(289,708)
(276,999)
(264,283)
(251,090)
(236,767)
(223,109)
(210,554)
(196,486)
(182,084)
(189,819)
(138,696)
(75,285)
(71,911)
(68,556)
(65,094)
(61,525)
(54,902)
-
$ (3,166,629)
Debt
Service
$
12,666,260
12,331,660
11,434,392
11,137,418
10,505,124
10,373,565
10,202,043
9,979,574
9,449,123
9,053,090
8,290,272
7,571,398
6,645,591
5,511,663
4,966,269
3,385,072
3,003,875
2,282,561
1,963,263
1,919,528
729,550
728,794
731,534
$ 154,861,619
_______________
(1) Principal totaling $80,525,425 and interest totaling $23,976,742 is exempt from Proposition 2 ½, subject to the
limitations imposed by Chapter 59, Section 21C of the General Laws.
29
Overlapping Debt
The Town of Falmouth is located in Barnstable County is a member of the Cape Cod Regional Transit Authority, and is
one of five members of the Upper Cape Cod Regional Vocational Technical School District.
The following table sets forth the outstanding bonded debt, exclusive of temporary loans in anticipation of bonds or current
revenue, of each of the overlapping entities as of June 30, 2012, the Town of Falmouth's estimated gross share of such
debt, and the fiscal 2013 dollar assessment for each.
Overlapping Entity
Outstanding
Debt
Falmouth's
Estimated
Share (1)
Fiscal 2013
Dollar
Assessment (2)
Barnstable County (3)
$ 11,085,789
14.33 %
$
411,570
Upper Cape Cod Regional Vocational Technical
School District (4)
510,000
27.21
3,010,903
Cape Cod Regional Transit Authority (5)
13.70
147,823
Cape Cod Commission (6)
None
None
430,499
__________________
(1) Estimated share based on debt service only.
(2) Estimated dollar assessment based upon total net operating expenses, inclusive (where applicable) of debt service.
(3) SOURCE: Barnstable County Treasurer. County expenses including debt service on county bonds are assessed
upon the cities and town within the county in proportion to their taxable valuation as last equalized by the State
Commissioner of Revenue. Estimated share and dollar assessment shown here are based on the 2010 equalized
valuation.
(4) SOURCE: Upper Cape Cod Regional Vocational Technical School District. Towns may organize regional school
districts to carry out general or specialized educational functions including technical and vocational training. The
operating expenses and debt service of regional school districts are apportioned among the member municipalities in
accordance with the agreements establishing the districts.
(5) SOURCE: Cape Cod Regional Transit Authority.
(6) SOURCE: Town Assistant Treasurer. Environmental Protection Fund.
CONTRACTUAL OBLIGATIONS
Obligations to make payments on account of municipal contracts are generally limited to currently available
appropriations. A Massachusetts city or town has general statutory authority to enter into contracts for the exercise of any
of its corporate powers for any period of time deemed to serve its best interests, but in most cases only when funds are
available for the first fiscal year; obligations for succeeding fiscal years are in those cases expressly subject to availability
and appropriation of funds. Specific authority exists in relatively few cases for long-term contractual obligations that are
not subject to annual appropriation, including contracts for refuse disposal (20 year maximum term) and certain contracts
by municipal electric departments. Municipalities may also enter into long-term contracts in aid of housing and renewal
projects. There is implied authority to make other long-term contracts required to carry out authorized municipal functions,
such as contracts to purchase water from private water companies.
Pursuant to the Home Rule Amendment to the Massachusetts Constitution, cities and towns may also be empowered to
make other contracts and leases.
The Town entered into an agreement, dated June 2, 1987, with the Towns of Sandwich, Mashpee and the Massachusetts
Military Reservation for the construction and operation of a transfer station at the Massachusetts Military Reservation, which
was completed in June 1989. The total project cost of $1,941,485 was paid by the three towns and the Massachusetts
Military Reservation in proportionate shares. Operation and maintenance costs are supported entirely by the commercial
disposal fees charged to hauling firms using the facility. Since opening in 1987, the facility has been owned and operated
jointly by the three towns and the Massachusetts Military Reservation. On January 1, 1997, the Town of Bourne was
admitted to the program. The resulting redistribution of the two classifications of member costs reduced Falmouth's share of
capital costs from 46.2% to 39.247%. The Town's share of operating costs has been as follows: $184,926 for fiscal 2008,
$178,419 for fiscal 2009, $149,958 for fiscal 2010, $153,076 for fiscal 2011, and $146,779 for fiscal 2012. The Town
budgeted $171,873 for its share of operating costs in fiscal year 2013.
30
The Town has a multi-year contract extending through April 30, 2014 with BFI for the weekly collection of household refuse
for disposal at the Upper Cape Regional Transfer Station. The cost of this contract in fiscal 2011 was $946,831 and
$1,057,295 in fiscal 2012. The Town budgeted $1,010,000 for this contract in fiscal 2013.
The Town also has a multi-year contract extending through September 30, 2014 (with two renewals for 2015 and 2016) with
Allied Waste for the bi-weekly curbside collection of recyclables, including paper, cardboard, glass, aluminum, tin, and HDPE
plastic. The cost of this contract for fiscal year 2011 was $471,344 and $485,492 for fiscal 2012. The Town budgeted
$523,000 for this contract in fiscal 2013.
The Town has one school bus contract which was renewed in fiscal 2010 for another five years and expires at the end of the
2014 school year. The total amounts appropriated in fiscal 2010, 2011 and 2012 to cover this contract were $1,304,249,
$1,317,272 and $1,350,204, respectively. The Town has budgeted $1,383,959 for this contract for fiscal 2013.
RETIREMENT PLAN
The Massachusetts General Laws provide for the establishment of contributory retirement systems for state employees, for
teachers and for county, city and town employees other than teachers. Teachers are assigned to a separate statewide
teachers’ system and not to the city and town systems. For all employees other than teachers, this law is subject to
acceptance in each city and town. Substantially all employees of an accepting city or town are covered. If a town has a
population of less than 10,000 when it accepts the statute, its non-teacher employees participate through the county system
and its share of the county cost is proportionate to the aggregate annual rate of regular compensation of its covered
employees. In addition to the contributory systems, cities and towns provide non-contributory pensions to a limited number of
employees, primarily persons who entered service prior to July 1, 1937 and their dependents. The Public Employee
Retirement Administration Commission (“PERAC”) provides oversight and guidance for and regulates all state and local
retirement systems.
The obligations of a city or town, whether direct or through a county system, are contractual legal obligations and are required
to be included in the annual tax levy. If a city or town, or the county system of which it is a member, has not established a
retirement system funding schedule as described below, the city or town is required to provide for the payment of the portion
of its current pension obligations which is not otherwise covered by employee contributions and investment income. “Excess
earnings,” or earnings on individual employees’ retirement accounts in excess of a predetermined rate, are required to be set
aside in a pension reserve fund for future, not current, pension liabilities. Cities and towns may voluntarily appropriate to their
system’s pension reserve fund in any given year up to five percent of the preceding year’s tax levy. The aggregate amount in
the fund may not exceed ten percent of the equalized valuation of the city or town.
If a city or town, or each member city and town of a county retirement system, has accepted the applicable law, it is required to
annually appropriate an amount sufficient to pay not only its current pension obligations, but also a portion of its future pension
liability. The portion of each such annual payment allocable to future pension obligations is required to be deposited in the
pension reserve fund. The amount of the annual city or town appropriation for each such system is prescribed by a retirement
system funding schedule which is periodically reviewed and approved by PERAC. Each system’s retirement funding schedule
is designed to reduce the unfunded actuarial pension liability of the system to zero by not later than June 30, 2030, with
annual increases in the scheduled payment amounts of not more than 4.5 percent. The funding schedule must provide that
payment in any year of the schedule is not less than 95 percent of the amount appropriated in the previous fiscal year. City,
town and county systems which have an approved retirement funding schedule receive annual pension funding grants from
the Commonwealth for the first 16 years of such funding schedule. Pursuant to recent legislation, a system (other than the
state employees’ retirement system and the teachers’ retirement system) which conducts an actuarial valuation as of January
1, 2009, or later, may establish a revised schedule which reduces the unfunded actuarial liability to zero by not later than June
30, 2040, subject to certain conditions. If the schedule is so extended under such provisions and a later updated valuation
allows for the development of a revised schedule with reduced payments, the revised schedule shall be adjusted to provide
that the appropriation for each year shall not be less than that for such year under the prior schedule, thus providing for a
shorter schedule rather than reduced payments.
City, town and county systems may choose to participate in the Pension Reserves Investment Trust Fund (the “PRIT Fund”),
which receives additional state funds to offset future pension costs of participating state and local systems. If a local system
participates in the PRIT Fund, it must transfer ownership and control of all assets of its system to the Pension Reserves
Investment Management Board, which manages the investment and reinvestment of the PRIT Fund. Cities and towns with
systems participating in the PRIT Fund continue to be obligated to fund their pension obligations in the manner described
above. The additional state appropriations to offset future pension liabilities of state and local systems participating in the
PRIT Fund are required to total at least 1.3 percent of state payroll. Such additional state appropriations are deposited in the
PRIT Fund and shared by all participating systems in proportion to their interests in the assets of the PRIT Fund as of July 1
for each fiscal year.
31
The Town contributes to the Town of Falmouth Contributory Retirement System (the “Plan”), a multiple employer defined
benefit pension plan, established under Chapter 32 of the General Laws of the Commonwealth of Massachusetts. The Plan
is administered by the Falmouth Retirement Board and is part of the reporting entity. A stand-alone financial report for the
year ended December 31, 2010 was issued and is available at the Retirement Office, Main Street, Falmouth, Massachusetts
and is incorporated by reference.
Substantially all employees of the Town, except certain personnel employed by the School Department, participate in the
Plan. The members of the retirement system do not participate in the Social Security System. Benefits paid under the Plan,
referred to as “retirement allowances,” include both an annuity portion, funded principally from amounts contributed by the
participants, and a pension portion, funded by the retirement system to which the Town contributes. The Town’s payroll for
employees covered by the Plan for the year ended December 31, 2011, was approximately $26,169,968.
Teachers and certain administrative employees of the School Department participate in a contributory retirement plan
administered by the Massachusetts Teachers Retirement Board. Contributions to this plan are made by employees and the
Commonwealth of Massachusetts, and, therefore, the Town does not contribute to this plan. Under the provisions of this
retirement plan, employees contribute specified percentages of their annual compensation and are eligible for retirement
benefits after meeting the required age and service criteria. In addition, the Town must provide annual contribution sufficient
to satisfy the actuarially determined contribution requirements as directed by the Commonwealth of Massachusetts Public
Employee Retirement Administration Commission.
The annual contributions of the Town to fund its unfunded pension liability in recent years have been as follows:
Fiscal
Year
2013
2012
2011
2010
2009
2008
Amount
(Budgeted)
$
5,655,356
5,441,370
5,199,604
4,892,404
4,454,730
4,047,700
The Town’s funding policy is to make annual contributions to the System in amounts which approximate the normal cost
and amortization of the unfunded actuarial liability by June 30, 2037. As of January 1, 2010, the Town’s estimated
unfunded actuarial accrued liability of the Town's Retirement System was $53,728,134 based on the actuarial value of
assets of $84,949,370 and the actuarial accrued liability of $138,677,504 and an assumed 8.0% investment rate of return
through 2037.
For more information relating to the Town’s Retirement System, see Appendix A.
Other Post-Employment Benefits
In addition to pension benefits, cities and towns may provide retired employees with health care and life insurance benefits.
The portion of the cost of such benefits paid by cities or towns is generally provided on a pay-as-you-go basis.
The Town’s pay-as-you-go costs to the Town for such benefits in recent years have been as follows:
Fiscal
Year
2013
2012
2011
2010
Amount
(Budgeted)
$
1,141,577
1,130,645
964,617
914,562
The Governmental Accounting Standards Board (“GASB”) recently promulgated its Statement Nos. 43 and 45, which will for
the first time require public sector entities to report the future costs of these non-pension, post-employment benefits in their
financial statements. These new accounting standards do not require pre-funding such benefits, but the basis applied by the
standards for measurement of costs and liabilities for these benefits is conservative if they continue to be funded on a pay-asyou-go basis and will result in larger yearly cost and liability accruals than if such benefits were pre-funded in a trust fund in the
same manner as traditional pension benefits. Cities and towns that choose to self-insure all or a portion of the cost of the
health care benefits they provide to employees and retirees may establish a trust fund for the purpose of paying claims. In
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addition, cities and towns may establish a trust fund for the purpose of pre-funding other post-employment benefits (“OPEB”)
liability in the same manner as traditional pension benefits.
The Town implemented the new reporting requirements in accordance with GASB 45 for other post-employment benefits
in fiscal year 2008. The Town has performed an actuarial valuation study of its non-pension, post-employment benefits.
As of June 30, 2010, the Town’s unfunded actuarial accrued liability is approximately $119,411,481 (assuming a 5.0%
discount rate) and $68,897,909 (assuming a 8.25% discount rate) and the annual required contributions are $7,766,117
and $5,678,835, respectively. At the Town’s April 3, 2012 Special Town Meeting, an OPEB Trust Fund was created for
this purpose and currently has an approximate $20,000 balance. In fiscal 2014, the Town will contribute $100,000 to
OPEB Trust Fund.
EMPLOYEE RELATIONS
The Town employs approximately 987 full and permanent part-time workers, of whom 627 are employed by the School
Department, 50 by the Police Department, 57 by the Department of Public Works, 65 by the Fire Department, and the
balance by other departments of the Town. Town employees (other than managerial and confidential employees) are
entitled to join unions and to bargain collectively on questions of wages, hours and other terms and conditions of
employment. The Town also employs approximately 400 temporary and part-time workers, the majority to supply seasonal
tourism services. Approximately 817 Town employees are represented by 8 unions.
The following table sets forth the bargaining units for Town employees:
U n ion
AF S C M E
LIU N A
LIU N A
F alm ou th P olice F ed er atio n
Su pe rio r O ffi cers A ssoc.
IA F F
6/30 /20 10
6/30 /20 14
6/30 /20 14
6/30 /20 13
6/30 /20 10
6/30 /20 10
73
25
57
40
10
65
F EA
F EA
F EA
F EA
SE IU
T ea m ste rs
SE IU
6/30 /20 12
6/30 /20 12
6/30 /20 12
6/30 /20 12
6/30 /20 15
6/30 /20 15
6/30 /20 15
3 40
21
88
7
25
40
26
U nit
T ow n H all
L ib rar y
D ep artm en t o f P u blic W o rks
P ol ice
F ire
S ch oo l
T e ach er s
Ad m inistra tor s
T e ach er s A ssistan ts
N u rse s
F o od S er vice
C u sto di an s
Se cre tar ies
A p pro xim ate
N um be r of
Em pl oyee s
E xpi ratio n
D a te (1 )
_______________
(1) Expired contracts are currently being renegotiated.
AFSCME - American Federation of State, County and Municipal Employees
LIUNA - Laborers International Union of North America
IAFF - International Association of Firefighters
FEA - Falmouth Educators Association
SEIU - Service Employees International Union
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LITIGATION
Generally there are several cases pending in various courts throughout the Commonwealth where the Town of Falmouth
is the defendant. In the opinion of the Town none of this litigation, whether pending or threatened, is likely to result, either
individually or in the aggregate, in final judgment against the Town that would materially affect its financial condition.
However, the following case should be noted. In 2009 the Town built the first of two wind turbines at its wastewater
treatment facility. Once the wind turbines were erected and became operational, homeowners in the immediate
neighborhood began to complain that the noise and vibration of the turbines constituted a nuisance. One neighbor filed
suit in Barnstable Superior Court challenging the permitting process for the wind turbine. If the suit is successful, the
Town may be required to seek a different permit and there are several efforts underway to amend the zoning by-law and
prohibit wind turbines. If the lawsuit is successful, the Town may be forced to decommission the turbines and remove
them from the site, in which case the estimated cost of removal would be an estimated $1,200,000 and in addition an
estimated $998,833-$2,054,808 would be required to reimburse the Mass Clean Energy Center for renewable energy
credits. The Town would also remain indebted on the bonds sold to finance construction in the amount of $10,582,862
(including interest) without any revenue from the wind turbines to support the payments. This would amount to
$1,068,620 per year and only if the Town was ultimately required to pay back the Federal ARRA funds of $4,865,000
(which has not been determined as of this date). Also, it would be necessary to purchase electricity at $120,000 per year
for municipal purposes in future years rather than use the electricity generated by the wind turbines. The lawsuit was
heard by a judge in January, 2013 and is presently under advisement. Since the Town purchased one of the turbines from
the Commonwealth of Massachusetts the Town has requested financial assistance from the State in order to offset the
impact of decommissioning the turbine if that occurs. There are a number of variables that are being considered at the
Annual Town Meeting on April 8, 2013 that would reduce the impact of decommissioning the turbines, one of which is
excluding the existing debt from Proposition 2 ½ and the other is requesting special legislation in order to borrow for
decommissioning the turbines and paying back the Mass Clean Energy Center.
______________________________
TOWN OF FALMOUTH, MASSACHUSETTS
/s/ Susan Ripley, Treasurer
March 27, 2013
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