Town gets good news on school borrowing costs

The impact on property taxes from the school project won’t be quite as bad as many had feared. The interest rate for the lion’s share of the bonds that the town will issue to fund the project is 3.379%, compared to the 4% and 5% projections outlined by the Finance Committee in November.

The town received eight competitive bids and a glowing bond-rating report, Town Administrator Tim Huggins reported to the Board of Selectmen on Monday night. The town will also retain its AAA bond rating, which he added is unusual for a town taking on this level of debt.

“The property tax impact will be significantly lower than the most conservative of our forecasts were showing,” Higgins said. Officials had been predicting a tax hike of 18–20%, but it now looks like it will be more in the 14–16% range, depending on the interest rate for a second, relatively small “cleanup” bond that will be issued towards the end of construction once the exact final costs are known.

Voters in December approved borrowing a total of $88.5 million for the school project, which will cost a total of $93.9 million. The initial bond is for $80 million; the rest of the funding includes $4.4 million from the town’s debt stabilization fund and $1 million from free cash.

A back-of-the-envelope calculation by Selectman Jonathan Dwyer indicated that the 3.379% interest rate could save the town half a million dollars a year compared to the higher rates that were projected earlier.

The favorable interest rate is largely due to the prudent financial management and planning efforts of current and former town officials, selectmen agreed. “We know [the debt is] going to be burden that all of us have to take on, but it could have been a whole lot more painful. Kudos to all those before us who paved the way,” Selectman James Craig said.

The Finance Committee will present revised tax-impact figures at the School Building Committee meeting on Wednesday, Feb. 27 at 7 p.m. in the Hartwell multipurpose room.