SWAMPSCOTT — One year ago, Garelick Farms in Lynn abruptly closed. Now, the loss of business is digging into Swampscott’s pockets.
Town Administrator Sean Fitzgerald’s presentation during Wednesday’s Select Board meeting stated the town’s sewer enterprise fund, which is paid to the Lynn Water and Sewer Commission (LWSC), is projected to end the year in a deficit due to the closing of one of Lynn’s biggest businesses. He said the closing of Garelick Farms, two months into Fiscal Year 2019, increased Swampscott’s percentage of the LWSC’s operating costs by 1.3 percent, estimating out to more than an additional $100,000. But the total reconciled cost will not be known until September.
“It’s hard to believe one business can have such a significant impact on four communities,” Fitzgerald said. “Frankly, we didn’t see this coming … We’re surprised this came in at the third quarter, after we’ve held Town Meeting. It leaves no time for municipalities to react.”
Swampscott’s wastewater flows into the LWSC’s treatment facility, along with Lynn, Saugus and Nahant. Prior to closing, Garelick Farms was responsible for 4 percent of the LSWC’S operating budget and Swampscott was responsible for 7.26 percent.
While Lynn’s percentage of the now $7.9 million operating budget decreased from 74.91 percent to 69.98 percent, Fitzgerald said the total percentages from Swampscott, Saugus and Nahant will increase from 25 percent to 30 percent.
During his presentation, Fitzgerald said, under the 20-year contract with LWSC that ends in 2020, there is an expected 30 percent increase in operating costs in 2021 for the status of good repair investments. There is $25 to $45 million in capital requirements needed for the facility’s treatment plant, including issues with the out fall pipe in Lynn harbor, which has an administrative order from the state to be repaired with $500,000 annually.
“All those costs will get built into a new contract in 2020,” Fitzgerald said. “We will likely have to increase sewer rates and revenue to offset some of these costs.”
The increases come as a shock to town officials considering Town Meeting members voted in May to transfer $100,000 from the retained earnings in the water enterprise funds in order to reduce the water rates.
Fitzgerald said the town froze the enterprise budget upon discovery of the projected deficit and made quick plans for departments to reduce costs where possible from now until June 30. He said the town has to put a team together to study the expiring contract and understand how to negotiate when it comes time to renew.
“We can handle bad news, but we can’t handle surprises,” said Select Board Chair Peter Spellios. “I’ll put this one in the surprise box. I’m concerned we’re not as prepared as we need to be so there’s a lot of homework that needs to be done on this. This is a real issue where we have to fix both the process and the substance.”