HomeBusinessThe Value of Hopkinton: $5.5 Billion

The Value of Hopkinton: $5.5 Billion

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Sunnyside Gardens

This morning Town Manager Norman Khumalo and Chief Financial Officer Tim O’Leary held a listening session with local business leaders to discuss the town’s budget. The event was hosted at HCAM’s studios, and was facilitated by the Hopkinton Chamber of Commerce.

Mr. O’Leary took the audience through the current budget and the proposed 2024 budget, which will be voted on at Town Meeting and will take effect July 2023. The 2023 budget for the Town was $104 million, with the majority of the revenue raised from property taxes. The town has seen an extraordinary increase in revenues primarily due to rising home values, which have doubled since 2011. The average cost of a new construction home in Hopkinton is now $753,000, up from $570,000 in 2018.

Sources of Revenue for the Town of Hopkinton in 2023

2023 Expenses

In spite of rising energy costs, payments to union and non-union employees, and other inflationary pressures, the town is in good shape from an operating expense perspective. The unexpected addition of a 5.1% increase in revenue will counteract rising prices.

The budget for schools is set at 53%, but the actual number is much higher, according to Mr. O’Leary. For example, in 2023 the town will spend 7% on debt payments, which were mostly capital projects for school improvements. In total, education funding is closer to 72%, O’Leary stated.

School comprise 53% of budgeted spending, but in actuality account for 72% of total spending

Valuation and Borrowing

Mr. O’Leary indicated that the current valuation for the Town of Hopkinton is now $5.5 billion, a key figure in determining how much the town can borrow. Hopkinton has a AAA Bond Rating, which is the highest level of creditworthiness a municipality can achieve. By comparison, the US Government is rated AA+, lower than the town.

Most of the town’s value is comprised of residential property values.

Budget Crunch

This brought Khumalo and O’Leary to the central issue they wished to discuss. The town has a list of requests for capital improvements spanning 2024 – 2028 that would require borrowing to complete. There are 28 requests in total, and Mr. O’Leary emphasized that none of them have been approved yet.

Requests include new equipment for DPW, improvements to the Woodville Fire Station, a sidewalk improvement plan, and several for the schools. Excluding the Elmwood School project, the total size of these requests is $10.8 million. However, including the Elmwood project (the budget of which is estimated roughly at $120 million), and looking at the large projects only, the total amount of these requests will near $300 million.

But Hopkinton cannot borrow that much because its current debt load stands at $73 million. To fund each of these capital requests will create an inversion in the debt fund between the debt limit and the capital plan, which is prohibited by law.

O’Leary said that if the voters approved all of these projects the average taxpayer would see an increase of approximately $3,000 to their annual tax bill. While he feels confident that these are problems that can be solved, he wanted to make sure that everyone understood the “bow wave of capital projects” that the town is facing before voting on them at Town Meeting.

O’Leary closed with a final comment about the town’s rising costs in conjunction with the Massachusetts Water Resources Authority. Hopkinton does not currently produce enough water to meet its needs, and lingering contamination issues have forced it to connect to the Quabbin Reservoir, which has added $25 million in costs. They are working with State and Federal agencies to secure funding to offset these costs, but he does anticipate a significant impact on water rates.

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