1. Town of Lincoln Finance Committee 1 FinComm Recommendations Warrant Articles 30-33 We support Renovation of the Lincoln Schools – With our facility needs, a significant project will be more efficient with lower risk of major disruption. – A significant project provides us an opportunity to add value educationally. We get the most for our taxpayer dollars by approaching MSBA – 35-40% of the project cost not borne by the Town – An MSBA project positions us to improve school facilities, provide educational enhancements AND to have more financial flexibility to consider a Community Center We recommend Articles 30 and 31 We recommend Article 33 as a next step to considering a Master Plan that could include a Community Center

2. Town of Lincoln Finance Committee Lincoln Historical Tax Position – Lowest growth since FY ’99 in average tax bill among 8 peer towns – Due in part to Lincoln’s relatively limited major capital outlays during the period Need for Major Capital Outlays – Schools need a minimum of ~$30 million in capex in the not too distant future: McGuire, Dore & Whittier, SBAC – Significant capex needs for Council on Aging; fit with Rec Department needs & potential Community Center Summary FinComm Observations Lincoln Context for Capital Projects 2 See analysis from State of the Town as updated March 2015 Detailed version available at http://www.lincolntown.org/index.aspx?NID=416http://www.lincolntown.org/index.aspx?NID=416

3. Growth in Mean Tax Bill since 1999 Lincoln is Lowest among Neighboring Towns Summary FinComm Observations

4. Maximum Impact of New Debt on Median Tax Bill 4 Summary FinComm Observations Details & further analysis available at http://www.lincolntown.org/index.aspx?NID=416http://www.lincolntown.org/index.aspx?NID=416

5. Town of Lincoln Finance Committee 5 FinComm Recommendations Warrant Articles 30-33 Warrant Articles 30 and 31 are structured in a way to maximize our chances of obtaining MSBA approval. We improve our chances of MSBA approval by having a predominant majority on both Articles and at the ballot box We strongly recommend Articles 30 and 31 We recommend article 33

6. Backup Slides Detailed Assumptions & Analysis 6

7. Tax Impact: Growth Rate in Median Tax Bill Average annual tax growth, 2002-20155.4% FY 2016 estimated tax growth0.8% FY 2016 with Capital Exclusions3.9%

8. Impact of 30 & 33 on FY 2016 Median Tax Bill Median House Value: $883,500 (FY 2015) FY 2015 Median Tax Bill $12,502Increase Operating Increase$ 2962.4% Existing Debt Exclusions(47)-0.4% FY 2016 Est. Median Tax Bill$12,7512.0% CPC Funds Applied to Debt (Article 10) (153)-1.2% FY 2016 Estimated Median Tax Bill$ 12,5980.8% With Capital Exclusions School Building Feasibility Study (Article 30) $ 3562.8% Campus Master Plan (Article 33) 360.3% FY 2016 Est. Median Tax Bill$12,9903.9%

9. 9 15% Agency Criteria Financeability & Our Financial Position Preliminary advice from our Bond Advisor: for new Total Town borrowings > $50 million we may begin to stretch our financeability limits, potentially impairing our ratings & raising our borrowing rates. S & P debt service as a percentage of operating: ≤15% as a scoring criteria: Detailed Assumptions, Explanation & Analysis

10. Summary of Outputs Borrowings through debt exclusions have an impact on taxes over an extended period. The results of new borrowings are shown in summary tables included based on two key metrics: Maximum Year Over Year Tax Growth – Maximum annual percentage increase (or the annual growth rate) in the median tax bill – Year in which the maximum annual %age increase occurs Maximum Impact of New Debt on Median Tax Bill – Maximum dollar increase in the median tax bill comparing: with additional debt service vs without additional debt service – Maximum percentage increase in the median tax bill comparing: with additional debt service vs without additional debt service – Year in which maximum impact occurs 10 Detailed Assumptions, Explanation & Analysis

11. Outputs Shown Graphically Based on Illustrative $30 mm Borrowing Maximum year-over-year tax growth Maximum impact of new debt on tax bill 11 Detailed Assumptions, Explanation & Analysis

12. Town of Lincoln Finance Committee Purpose: These materials are intended to provide Lincoln taxpayers with illustrative data regarding the tax impact of potential capital projects and other information regarding current and potential Town borrowings. They are illustrative only and are sensitive to a number of assumptions. Tax analyses are provided for a median taxpayer based on the following data: – Median property value of $883,600 in FY’15 – Median tax bill (including debt service) of $12,503 in FY’15 All borrowing amounts shown are net amounts funded by debt exclusion – Borrowing amounts are net of any potential MSBA funds provided by the State for school building projects – All borrowing and all tax bill amounts are net of any taxes and debt service funded by application of Community Preservation Act (CPA) funds – Borrowing amounts are shown without specific reference to use of funds (eg schools, community center) The Finance Committee welcomes further discussion of financial and tax assumptions and analysis. The quality of any tax impact estimates will be improved with refined estimates of borrowing amounts and timing. Detailed Assumptions, Explanation & Analysis Financial Impact of Possible Capital Projects 12

13. Key Assumptions Tax impact data provided are based on a number of assumptions relating to: Property values & construction Operating expenditure and tax decisions to be made in the future, including operating budget growth, other capital expenditures, debt service and the application of CPA funds The timing of any Capital Project(s) The specifics of any borrowing(s) including: – Borrowing amount & timing – Borrowing maturity – Structure of the borrowing (level payments vs. level principal) – Interest rate The amount and application of stabilization funds (current balance: $2.4 mm) to smooth the impact of borrowing In order to show the sensitivity to some assumptions, four illustrative cases are provided: Detailed assumptions and summary tables are provided in the Further Materials 30 year borrowing20 year borrowing 4.0% interest rateCase 1Case 3 5.0% interest rateCase 2Case 4 13 Detailed Assumptions, Explanation & Analysis

14. Maximum Annual %age Increase in Median Tax Bill 14 Detailed Assumptions, Explanation & Analysis Median tax bill of $12,503 in FY ‘15

15. Maximum $ Impact of New Debt on Median Tax Bill 15 Detailed Assumptions, Explanation & Analysis

16. Maximum % Impact of New Debt on Median Tax Bill 16 Detailed Assumptions, Explanation & Analysis Median tax bill of $12,503 in FY ‘15

17. Debt Service vs Operating Lincoln is 2 nd Lowest among Neighboring Towns 17 Detailed Assumptions, Explanation & Analysis

18. For more information, please call the Assessors Office at 781-259-2611 Or email Dorothy Blakeley at blakeleyd@lincolntown.org 18

19. For more information, please call the Assessors Office at 781-259-2611 Or email Dorothy Blakeley at blakeleyd@lincolntown.org 19

20. Town of Lincoln Finance Committee Illustrative analysis and taxpayer dollar amounts are shown for median taxpayer with the following tax assumptions: – Based on median value $883,600 (FY’15). Median tax bill (including debt service) of $12,503 in FY’15. – Operating tax bill assumed to increase at 2.5% per annum going forward – No property value appreciation, shift in median property value or new construction is assumed going forward – Capital exclusions of $825,000 are assumed for FY ‘16. Capital exclusions of $235,000 are assumed for FY 2017 (resulting in 0% growth in the FY ‘17 median tax bill) Illustrative Cases for Comparing the Impact of Different Amounts Borrowed All borrowing amounts shown are net amounts funded by debt exclusion – Borrowing amounts are net of any potential MSBA funds provided by the State – All borrowing and all tax bill amounts are net of any taxes and debt service funded by application of Community Preservation Act (CPA) funds Borrowing assumptions for all borrowings shown – Initial net borrowing in FY ’17; initial debt service commences in FY ‘18 – Level payments with switch to level principal after 2 years – CPA funding applied to Town Offices Debt Service going forward – Current stabilization balances are assumed to grow from $2.4 mm to $3.4 mm. Available stabilization balances are applied to borrowing amounts as follows: 1/3 applied to $10 mm, 2/3 applied to $20 mm, 100% applied to borrowings of $30 mm and greater. Interest rate for Illustrative Case 1: 4.00% (current market rates as indicated by Lincoln’s bond advisor) Illustrative cases as shown: Further Materials Assumptions 20 30 year borrowing20 year borrowing 4.0% interest rateCase 1Case 3 5.0% interest rateCase 2Case 4

21. Median Tax Bill Effects Illustrative Case 1 Applying Stabilization Maximum Year Over Year Tax Growth Maximum Impact of New Debt on Median Tax Bill Borrowing Amount % annual growth Year $ impact on Median Tax Bill % increaseYear $10 mm2.5%2049 $ 3402.5%2021 $20 mm2.5%2049 $ 6384.6%2022 $30 mm3.0%2022 $ 9997.2%2022 $40 mm3.8%2020 $ 1,3599.9%2021 $50 mm4.9%2020 $ 1,69812.4%2021 30 year borrowing in 2017Median tax bill in 2017: $12,984 Level payments with switch to level principal after 2 years Interest rate: 4.00% 21

22. Median Tax Bill Effects Illustrative Case 2 Applying Stabilization Maximum Year Over Year Tax Growth Maximum Impact of New Debt on Median Tax Bill Borrowing Amount % annual growth Year $ impact on Median Tax Bill % increaseYear $10 mm2.5%2049 $ 3862.8%2021 $20 mm2.8%2021 $ 7565.4%2022 $30 mm3.2%2021 $ 1,1338.1%2022 $40 mm4.3%2020 $ 1,54411.3%2021 $50 mm5.6%2020 $ 1,93014.1%2021 30 year borrowing in 2017Median tax bill in 2017: $12,984 Level payments with switch to level principal after 2 years Interest rate: 5.00% 22

23. Median Tax Bill Effects Illustrative Case 3 Applying Stabilization Maximum Year Over Year Tax Growth Maximum Impact of New Debt on Median Tax Bill Borrowing Amount % annual growth Year $ impact on Median Tax Bill % increaseYear $10 mm2.5%2019 $ 4133.0%2021 $20 mm2.8%2019 $ 8256.0%2021 $30 mm3.5%2020 $ 1,2389.1%2021 $40 mm4.9%2020 $ 1,65012.1%2021 $50 mm6.2%2019 $ 2,11215.7%2020 20 year borrowing in 2017Median tax bill in 2017: $12,984 Level payments with switch to level principal after 2 years Interest rate: 4.00% 23

24. Median Tax Bill Effects Illustrative Case 4 Applying Stabilization Maximum Year Over Year Tax Growth Maximum Impact of New Debt on Median Tax Bill Borrowing Amount % annual growth Year $ impact on Median Tax Bill % increaseYear $10 mm2.5%2021 $ 4573.3%2021 $20 mm3.1%2021 $ 9156.7%2021 $30 mm3.9%2020 $ 1,37210.0%2021 $40 mm5.4%2020 $ 1,83013.4%2021 $50 mm7.0%2019 $ 2,34917.5%2020 20 year borrowing in 2017Median tax bill in 2017: $12,984 Level payments with switch to level principal after 2 years Interest rate: 5.00% 24