Which could mean only a new building a Frenchtown and an add/reno at Hanaford
The Town Council this week met for nearly eight hours over two evenings with one thing on the agenda: the School Bond Referendum. They have yet to decide how much they will ask voters for in a school bond referendum in November but it looks like they may settle on or near $140 million. They need to decide by this month in order for the referendum to get on the ballot.
The back-to-back meetings were by design. Town Manager Andy Nota wanted to game out the various scenarios – if the town borrowed $130 million, $140 million or $150 million, and how those different amounts would affect taxpayers. But discussion also centered on project details – what was going to be spent where – and bond referendum language.
The council approved bonding up to $180 million in April, primarily with the hope that the state would increase school construction reimbursement rates. The General Assembly did not make any changes but the reimbursements remain a significant enticement for the project. In addition to the district’s base 35 percent reimbursement for school construction, the district could qualify for a number of “bonuses,” bumping up that reimbursement by 20 percent. In other words, whatever size bond gets approved, the actual cost to the town would be less than half that amount, provided the construction meets all the state’s bonus criteria.
As previously reported, the plan calls for either two new buildings at Frenchtown and Hanaford or a renovation and addition at the latter; transforming Meadowbrook into a Pre-K/K center; and renovations at EGHS, which is estimated in the $140 million to $150 million price range. Part of the plan would be to realign both elementary schools as dedicated 1-5 facilities and decommission Eldredge as a school.
“At the $130 [million], you really can’t really think about two new elementaries,” said Town Manager Andy Nota at a meeting Monday night. He added that dropping below $130 million might make a full grade realignment challenging or – if they were to keep the renovations at Hanaford and the new build at Frenchtown – may “eliminate most work at the high school.”
On Tuesday night, though, Nota noted the “many priorities” around town that also require funding and said he “would hate for the council to get too far out ahead of itself and then all of sudden some other goals you’ve set might not be possible.”
No matter the bond number, if EG residents approve it, there will be a tax impact on residents hitting primarily in the years 2027 and 2028. That’s because the town would have to start paying off the new school debt by then, but other town debt wouldn’t be paid off until 2029.
On Tuesday night, Sunderland gave council members a breakdown of the difference in the estimated tax increases in 2027 for the three potential bond amounts they had deliberated up until that point. For a homeowner with a property assessed at $500,000:
- At $130 million, a tax increase of $691 from the previous year.
- At $140 million, a tax increase of $714 from the previous year.
- At $150 million, a tax increase of $737 from the previous year.
“The tax impact at $130 [million], $140 [million], and $150 [million] is essentially the same,” said Town Council President Mark Schwager Tuesday night. In an interview Wednesday, Schwager said there were a lot of different ways to handle this type of debt.
“It’s not like a home mortgage where you are paying the same over 20 years,” he said. “There are a lot of levers you can pull over time, to try to lower the debt and smooth the debt as much as you can.”
Even at its smoothest, however, adding this much debt to the town will have an impact on the town’s ability to borrow in the future.
Stephen Maceroni, director of PFM Financial Advisors LLC, explained to the Town Council on Tuesday that by taking on this much debt, the town’s interest rate would increase but it would probably retain its AA1 rating, which comes with a borrowing rate between 1.5 and 2.5 percent. Currently, EG borrows at 1.61 percent.
It’s not just the amount but also how the referendum is worded that the Town Council needs to decide this month. Nota briefed the council on different ways to address the bond question, which range in flexibility from just stating the money be allocated for school construction down to an example that specifies proposed construction projects.
“How does that affect our ability to control?” asked council member Renu Englehart.
Nota explained that while the School Building Committee would be tasked with planning and crafting recommendations, the buck stops with the Town Council.
“The authority rests with the council,” he said. “The contracts come from the [School Building] committee, get approved by the School Committee, and ultimately the council.”
“I have to give [people] assurances that this money is 100 percent going to the high school,” Councilmember Mike Zarrella said after explaining he did not think the referendum would pass unless funds were specifically designated for the high school.
“If the fear is, the School Committee won’t spend that money on the high school, they don’t have the authority here unless we delegate it to them,” said Town Council Vice President Mike Donegan. “We have it.”
Where They Sit
Before adjourning Tuesday night, Schwager asked members of the council where each sat in terms of bond language and the dollar amount they would be willing to support after he voiced support for a $140 million bond referendum.
“I’m kind of leaning toward the $150 [million],” said Donegan, who cited in part the information about the town likely not dropping its rating and the small difference in tax impact on residents between the three proposed numbers as changing his mind from seeking a lower construction referendum total.
However, he explained that he had a slightly different vision for the total. “The $150 [million] I’m thinking about might still be an add/reno [at Hanaford], and the $150 [million] means more to the high school.”
“This is going to cost something,” said councilor Caryn Corenthal. “And we’re going to get something for it. And it will increase your home value and it will make the town more attractive, I think.” She then mentioned she was interested in a project at the cost of $140 million.
Another council member who said they were “perfectly happy at $140” was Renu Englehtart, who, in addition to being on the council, is a member of the School Building Committee. But couched what she thought the project could do.
“I don’t want people to get the wrong impression,” Engleheart said after referring to the schools as having “decades of needs,” saying the plan will “be good, but it’s not going to be perfect.”
One member of the council who declined to specify a bond amount was Zarrella, who said, “I don’t know where I’m at.” He told his fellow council members that he would spend the week talking with people and “digest” the information.
“It is possible that we could reach a consensus on Tuesday,” said Schwager. If they do not agree on bond language which includes a number Tuesday, the council has one more regularly scheduled meeting on Aug. 21.
The Town Council will meet next on Tuesday, Aug. 15, at 6 p.m. at Town Hall. You can find previous stories on the school construction project HERE.