RTC Meeting Agenda & Chairman's Message.

Meeting Agenda

Roger Ludlowe Middle School, Team Room

Monday, May 13, 2013

Call to Order 7:30 p.m.

1. Chairman’s Report  – Jamie Millington

2. Treasurer’s Report – Ron Pine

3. Secretary’s Report – Ann Roche

4. Registrar of Voters’ Report – Roger Autuori

5. Discussion of RTM Redistricting

6. Discussion of changes to the RTC Rules

7. New Business

8. Adjournment

Chairman’s Message  

We will be revising the rules of the RTC in the coming weeks and put those changes up for a vote in July.  We would like to present our ideas, hear any ideas you may have and gauge the level of support of prospective changes.   

The Lobster Bake has been scheduled for Thursday, August 22, 2013 at the Jacky Durrell Pavilion.  We need members to volunteer for the ad book committee.  I will be forming the committee at the meeting, so let me know if you are interested.

The RTM has been hard at work to get the redistricting completed.  We will have a large map for Republican Plan for review at the meeting. 

CANDIDATES NEEDED:  Let me know if you or someone you know is interested in getting involved.  Send me a confidential email at Jmillington@snet.net.  We are always looking for new people, new ideas and new energy! 

Jamie Millington

Chairman

RTC Member Bud Morten responds to Democratic Minority Leader

In response to a post (see below) by Hal Schwartz, Democratic RTM Minority Leader:

 

An Alternative View on “Balancing Town Services and Affordability”

Dear Mr. Schwartz,

Thanks to you and everyone else who is willing to take a public stand on the issues, which is the only way that we can advance the public debate and resolve the issues and challenges we face as a community.

The points in your letter upon which I would like to focus are the following:

“I . . . will be fighting any further cuts to the proposed budget.   The ones already made . . . have cut services below the bone.  The budget with no additional cuts would represent approximately . . . a 3% tax increase which balances the need to keep taxes affordable while still providing the . . . services the town needs.  Anything further would tip the scales toward austerity – and harm our town for many years to come.”

In the hope of advancing the debate, I would like to pose the following three questions:

1.       How do you measure “below the bone” with regard to cuts to services, particularly given that even including the $500,000 cut in paving and the $283,036 cut in professional fees & services, the total reductions in proposed spending on services at $3.95 million represent only 1.4% of the $287 million budget originally proposed by the First Selectman (the other $4.6 million  required to reduce the tax increase from 6.4% to 3.1% having come from changes in assumptions about the cost of various benefits and reserves)?

2.       How do you measure “affordability,” and how do you determine that a 3% tax increase provides the right balance between keeping taxes affordable and providing the services that the town needs?

3.       How do want us to understand the term “austerity,” how do you measure the harm you that you think would come from it, and have you considered the harm that will be caused by continued increases in taxes at more than the rate of inflation?

These are important questions for those who are very concerned about Fairfield’s future after more than 14 years when our taxes have increased at more than 2.5 times the rate of inflation.  Because of this, our tax rates are already 11%-125% higher than other fine Fairfield County towns like Darien, Westport, Greenwich, Ridgefield, Wilton and New Canaan. 

If we continue to raise taxes more than inflation – barring a miracle like a surge in our Grand List that does not require a comparable increase in services (e.g., a huge rise in Commercial & Industrial property development), or a magical Fairfield Midas Touch that allows incomes for Fairfield residents to rise as much or more than the increases in their taxes – property taxes will consume most of every resident’s income.  In reality, long before taxes become that onerous, people will have voted with their feet by leaving Fairfield and relocating, whether in or out of CT, to where the cost of living is lower.  

The people most likely to leave first are those on fixed incomes with no children in our fine but expensive public schools, and the most likely people to replace them when they leave are the opposite, leading to continued growth in school enrollment and ever higher spending.  As more and more people decide to leave, and fewer and fewer people are attracted to Fairfield, our property values (both commercial and residential) will continue to decline, pushing tax rates even higher in order to sustain the same revenues and services, resulting in still more pressure on property values and a growing exodus that can be very difficult to halt or reverse.

Many people feel that this downward spiral has already begun.  Real estate agents all over town report that increasingly people moving into Fairfield County are not interested in Fairfield because our taxes are so much higher than other fine towns.  The market for homes at the high end of Fairfield’s market is particularly weak, with such homes languishing on the market for years despite sharp reductions in asking prices as more and more owners try to escape from their heavy and increasing tax burdens.  As higher-end property values decline, the tax burden shifts more and more to lower-end homes and drives mill rates still higher.  That shift in tax burden will add to the increasingly direct impact of tax increases on the cost of housing now that virtually everyone has already reduced their interest costs by refinancing their mortgages at the substantially lower rates available in recent years.

Once this downward spiral begins, it is very difficult to reverse as “conventional wisdom” and perceptions spread (e.g., among real estate agents in other Fairfield County towns) that Fairfield is much more expensive in terms of its tax burden and can’t seem to control its spending and taxes.  As the spiral gains momentum, a tipping point is reached beyond which increasing numbers of people are forced to leave even median-value homes, and you end up with something that looks increasingly like Bridgeport where property values have collapsed, services are poor, and tax rates are extremely high.

Either we restore through good management the balance we need between services and taxes, and live within the means of the people who must pay for the services, or Fairfield faces a steady, long-term decline toward a future that looks more like our neighbor to the east than our neighbor to the west.  Accordingly, please consider the possibility that you are overestimating the “harm” that service cuts may cause in the short term, and underestimating what could be the greater “harm” that continued tax increases greater than inflation will cause in the longer term.

The choice for Fairfield is not really, as some have suggested, between “desirability” and “affordability,” or between "want to live there" and "can afford to live there."  The real choice is between either preserving or not preserving both the desirability and affordability of our town for all its residents, by finding ways to lower the cost of the services we need and by making the tough decisions to eliminate services we can no longer afford.  To do this, we must first acknowledge that we have a problem, and then work together to find the best solution.  

An important step toward addressing our long-term problem is to hold the FY 14 tax increase to no more than the 2% inflation rate, and then to create a five-year plan that will reduce future tax increases below the rate of inflation.

Bud Morten, Taxpayer

http://fairfield.patch.com/groups/opinion/p/an-alternative-view-on-balancing-town-services-and-affordability

 

Balancing Town Services and Affordability

By Hal Schwartz, RTM Democratic Minority Leader,  Yesterday

 

I want to commend my fellow Democratic members of the RTM for their vigilance and perspective at our April meetings. Through emails, phone calls and personal conversations, we communicated with hundreds of constituents about the three appeals of Board of Finance budget cuts (Pequot Library, Senior Center Director and Fairfield Counseling Services), and about the budget as a whole. The RTM restored Pequot's funding by an overwhelming margin. I voted to restore the funding because the BOF cut was unfairly sudden and eliminated 100 percent of town funding in one year. Most other RTM Democrats voted the same way, although the Democratic caucus has never voted in a block on any item that has come before us, and I as the leader of our caucus would never speak for them. Democracy is about the individual voice, not herding people into a position their leadership prefers. At the May 6 meeting, I intend to propose a far more modest cut in funding for the Pequot library, as I stated at our April meeting, per the Moderator's request to announce intended cuts and give departments and agencies an opportunity to respond. (Something the Republican caucus did not do, although they did state that they intend to make cuts.) The tradition of proposing possible cuts to the budget at the April RTM meeting, allowing public discussion and time to reflect before the May budget vote, has been in place for all of my five terms – ten years - on the RTM, no matter who the majority party was. For the past two years, the Republican leadership of the RTM has tried to change the process, because it interferes with their control – they would rather marshal their full majority caucus and bring a completed plan before the body the day of the final vote. This may reduce the possibility of dissention in their own ranks; it definitely reduces the opportunity of Democrats to respond, and, most importantly, it denies the public their voice. I applaud the moderator for allowing public comment at the May 6th meeting—although it would seem that interested Fairfield residents still won't know what's coming in advance. Except for trimming funding to the private Pequot Library—which I will propose because, after all, town libraries, paving budgets and education funding have also been cut—I (and many members of the Democratic Caucus) will be fighting any further cuts to the proposed budget. The ones already made by the boards of selectmen and finance have cut services below the bone. The budget with no additional cuts would represent approximately a little over 3% tax increase which balances the need to keep taxes affordable while still providing the school, fire, police and public works services the town needs. Anything further would tip the scales toward austerity—and harm our town for many years to come. Hal Schwartz, Democratic RTM Minority Leader

 

http://fairfield.patch.com/groups/opinion/p/balancing-town-services-and-affordability 

 

Fairfield Taxpayers respond to CT Article

Response to Data Cited from CT Post on Fairfield Home Values

At the RTM meeting on Monday, April 22, 2013, a member of the public cited an article from the April 12, 2013 edition of the Connecticut Post, as a basis for suggesting that the pressure on Fairfield’s home prices is perhaps not as great as some, including Fairfield Taxpayer, have feared, both in absolute terms and relative to other towns.  We believe this conclusion is both intuitively and demonstrably wrong.

We believe that the numbers published by the CT Post – which implausibly showed Fairfield’s home prices down only 15% from their 2007 peak – are distorted and misleading, probably because they are based on median prices.  Based on what we believe is better data from the University of Connecticut Business School that tracks mean (average) selling prices for “constant quality” single-family homes in most CT towns, Fairfield’s home prices are among the weakest over the same 2007-2012 period used by the CT Post, down almost 35% versus declines of only 21% and 24% for towns like Greenwich and Darien, where tax rates are substantially lower.[1]

Mean (Average) Constant Quality Single Family Home Sales by Town

Towns		2007 Value		2012 Value		Decline
Greenwich		$1,186,600		$943,300		(20.5)%
Stamford		657,300		520,800		(20.8)
Guilford		430,200		328,000		(23.8)
Darien		1,102,900		833,500		(24.4)
Madison		493,500		372,500		(24.5)
Weston		767,500		573,800		(25.2)
Westport		1,314,100		978,400		(25.5)
Norwalk		541,300		402,500		(25.6)
Wilton		908,300		671,700		(26.0)
Shelton		454,000		332,800		(26.7)
New Canaan		1,357,700		969,500		(28.6)
Milford		353,700		246,800		(30.2)
FAIRFIELD		553,900		361,800		(34.7)
Bridgeport		247,000		158,300		(35.9)
Stratford		285,700		179,500		(37.2)
Trumbull		475,900		292,400		(38.5)

As it happens, Fairfield Taxpayer has a major research effort underway to quantify exactly what is happening to home prices in Fairfield both in absolute terms in each segment of the market (i.e., higher end, middle and lower end) and relative to surrounding towns.  We will present our full analysis as soon as possible, but meanwhile wanted to respond to the CT Post data presented at the RTM meeting.

The CT Post data, which are provided in the next table, show Fairfield’s home prices down only 15% over the 2007-2012 period, which we all dearly wish were true.

Median Selling Price Data from Connecticut Post Article

					2007-12		Jan.-Feb.		2012-13
Towns	2007 Value		2012 Value		Decline		2013 Value		Change
Darien	$1,330,000		$1,200,000		9.8%		$950,000		(20.8)%
Guilford	425.000		380,000		10.6%		375,000		(1.3)%
Fairfield	615,000		521,500		15.2%		415,000		(20.4)%
Wilton	891,000		735,000		17.5%		631.250		(14.1)%
Weston	935,000		755,000		19.3%		793,000		5.0%
Stamford	695,000		550,000		20.9%		494,000		(10.2)%
Milford	344,000		270,000		21.5%		244,500		(9.4)%
Ridgefield	777,500		607,500		21.9%		541,500		(10.9)%
Norwalk	525,000		410,000		21.9%		361,000		(12.0)%
Shelton	380,000		294,900		22.4%		290,000		(1.7)%
Trumbull	460,000		350,000		23.9%		288,000		(17.7)%
New Canaan	1,685,000		1,280,000		24.0%		950,000		(25.8)%
Westport	1,315,500		1,000,000		24.0%		1,238,250		23.8%
Greenwich	2,030,000		1,520,000		25.1%		1,800,000		(18.4)%
Easton	745,000		555,500		25.4%		468,475		(15.7)%
Madison	539,500		401,875		25.5%		309,900		(22.9)%
Stratford	285,000		208,900		26.7%		197,500		(5.5)%
Bridgeport	248,000		130,000		47.6%		149,000		14.6%

The data for this table came from an organization called The Warren Group,[2] and anyone can obtain seven days of free, limited access to their database at no cost.  When we checked the CT Post numbers against their source, we found a number of errors that change the results primarily for Guilford (which was down only 10.6%, not 27.3%), Norwalk (down 21.9%, not 26.7%), Westport (down 24.0%, not 34.0%), and Madison (down 25.5%, not 27.7%).

However, more important than these clerical errors is the fact that these data are based on median selling prices.

Why Median Prices Can be Distorted and Misleading

The fundamental problem with using median data to analyze changes in home values is that: (a) the trend in median home values over time (a.k.a., a “time series”) can be significantly distorted by shifts the mix of the homes being sold; and (b) comparisons of changes in median home values between two or more towns can be significantly distorted unless the towns have similar numbers of homes in each price segment.

If the mix of the homes that are sold changes significantly in terms of high, medium, and low segments: (a) the median selling price can change significantly, even if all the homes were sold at exactly the same price for which they sold five years earlier; and (b) the median selling price can remain unchanged even if home prices rise or fall significantly.   A pretty good explanation from an independent source of how median prices can be misleading is as follows:

“We have observed before that most market areas contain a number of price ranges. Think of them as layers, something like geological strata. Consider a hypothetical example, greatly more simplified than any real market. There are three levels to this imaginary market: Starter Homes that currently range from $150,000 - $200,000; Mid-range Homes that are $300,000 - $500,000; and Luxury Homes that run from $800,000 - $1 million. Now, if in one year there were 20 sales of Starter Homes, 5 sales of Mid-range Homes, and 2 sales of Luxury Homes, the median would be somewhere in the Starter Homes range of $150,000 - $200,000. Suppose that in the next year, the Mid-range Homes and the Luxury Homes each experienced price declines in the neighborhood of 30%. (It happens.) Now, their respective price ranges would be $210,000 - $350,000 and $560,000 - $700,000. Suppose that, along with those price declines, sales of those higher priced properties picked up. Let's say that in the next year there were 5 sales of Starter Homes, 15 sales of Mid-range Homes, and 7 sales of Luxury Homes. The median then would be in the middle range of $210,000 - $350,000. It would be higher than the year before, even though it was reflective of sales of properties whose values had declined.”[3]

How Can We Explain the Results from the CT Post Data?

Without access to the raw data to determine exactly how many sales took place in each meaningful segment of the market, we can’t definitively explain the results of the Warren Group data.

However, we know that two primary sources of housing mix distortion in the 2007-2012 period were: (a) foreclosure sales at distress prices, which have increased the number of lower-end home sales in some towns; and (b) changes in the tax laws, which stimulated the sale of primarily higher-end homes in 2012 in anticipation of a higher capital gains tax rate (20% up from 15%) and the imposition of a 3.8% Medicare tax on investment gains, both of which became effective on January 1, 2013.

Foreclosure sales matter because when there are a lot of them, as there have been in a town like Bridgeport, they pull down the median sales price.  Thus, we should not be surprised that Bridgeport showed the greatest decline in median selling price between 2007 and 2012 in the CT Post data.  For the same reason, we should not be surprised if, when most foreclosure sales have been completed, that Bridgeport shows one of the strongest increases in median home price.

Anticipated tax increases would have had the greatest impact on median selling prices in towns that had a significant number of higher-end homes that have been owned long enough that they are still worth significantly more than the owner paid, despite the substantial decline in housing values from the 2007 peak.  This may have happened in Fairfield in 2012, and if so, it could have shifted the mix of sales toward the higher end and thus shifted the median price higher than it would otherwise have been.  If this theory is correct, then Fairfield’s median price should show a greater decline in 2013 than otherwise.  Indeed, the results from the Warren Group for the first two months show the median price in Fairfield down 20.4% from 2012.  Other towns with similarly sharp declines include: New Canaan (25.8%), Madison (22.9%), Darien (20.8%), Greenwich (18.4%) and Trumbull (17.7%).  Since these could be statistical flukes (particularly because so few sales close in the first two months of the year – only 35 in Fairfield versus 552 in all of 2012, according to Warren), we will continue to monitor the 2013 data to see if these declines persist, and will update this analysis.

As noted above, comparisons of changes in median home values between two or more towns can also be significantly distorted unless the towns have a similar number of homes in each price segment.  For example, if one town has a more concentrated distribution of housing values around the center of its range (e.g., a bell shaped curve), then its median selling price will change less in response to any change in the mix of housing sales than another town with a perfectly flat distribution of housing values.[4]  In other words, if there is a large enough homogenous "core" at the center of the housing stock, variations in the number of "transactions" at either the high end or the low end will not have as much influence on the median value, which will tend to remain within that relatively narrow core range.  However, this would not prevent the median value from reflecting the full extent of any rise or fall in home prices.

We will also be tracking the number of transactions, which last year, as you can see in the table below, were still 30% below their 2007 level in Fairfield, versus only 3%-12% lower in Darien, Greenwich, New Canaan, Westport and Wilton.

Constant Quality Single Family Home Prices by  Town in Connecticut (Uconn School of Business)
	Number of Transactions				2007 Sales Prices					2012 Sales Prices				2007-2012
	2007	2012	Change		Low	Medium	High	Average		Low	Medium	High	Average	Change
Bridgeport	137	349	155%		209.7	235.3	295.9	247.0		127.2	163.2	184.5	158.3	(35.9)%
Darien	306	270	(12)%		841.1	1,116.6	1,351.0	1,102.9		613.3	840.5	1,046.7	833.5	(24.4)%
Easton	na	na	na		na	na	na	na		na	na	na	na	na
Fairfield	744	521	(30)%		441.5	550.5	669.6	553.9		278.0	385.2	422.2	361.8	(34.7)%
Greenwich	428	402	(6)%		870.4	1,120.5	1,568.9	1,186.6		654.5	895.9	1,279.5	943.3	(20.5)%
Guilford	262	207	(21)%		262.0	370.6	658.0	430.2		211.8	284.4	487.8	328.0	(23.8)%
Madison	222	202	(9)%		282.9	437.9	759.8	493.5		225.7	336.5	555.4	372.5	(24.5)%
Milford	531	388	(27)%		289.3	341.2	430.5	353.7		191.6	238.4	310.3	246.8	(30.2)%
New Canaan	233	225	(3)%		1,029.1	1,436.9	1,607.1	1,357.7		728.4	1,035.2	1,144.9	969.5	(28.6)%
Norwalk	621	423	(32)%		326.9	488.9	808.2	541.3		240.4	364.4	602.9	402.5	(25.6)%
Ridgefield	na	na	na		na	na	na	na		na	na	na	na	na
Shelton	293	221	(25)%		330.3	441.8	590.0	454.0		249.3	330.5	418.5	332.8	(26.7)%
Stamford	674	460	(32)%		511.4	649.7	810.8	657.3		385.5	509.5	667.3	520.8	(20.8)%
Stratford	475	402	(15)%		189.1	263.3	404.8	285.7		121.1	167.1	250.3	179.5	(37.2)%
Trumbull	268	325	21%		388.1	457.7	582.0	475.9		225.1	279.1	372.9	292.4	(38.5)%
Weston	154	121	(21)%		568.2	747.0	987.3	767.5		432.6	553.0	735.7	573.8	(25.2)%
Westport	365	322	(12)%		691.6	1,220.9	2,029.7	1,314.1		491.1	899.2	1,544.8	978.4	(25.5)%
Wilton	204	197	(3)%		534.2	851.7	1,339.0	908.3		393.6	581.7	1,039.8	671.7	(26.0)%
Source: http://www.business.uconn.edu/cms/p1175

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[1] We would like to thank Neal Fink for referring us to the UConn Business School database.

[2] http://www.thewarrengroup.com/

[3] http://realtytimes.com/rtpages/20100302_medianprice.htm

[4] Think of one town in which there is a house, and just one house, at each and every price point in $100,000 increments from $100,000 to $2 million. Any change in the mix of sales in this town is going to move the median sales price up or down significantly. Now think of another town with exactly the same number of houses, but with 50% of them at a single price point, say $500,000. In Town #2, changes in the sales mix are not likely to change the median sales price from $500,000.