Costs of Naugatuck High School Renovation Plan – 10/12/2011

Posted by Bob on October 12, 2011 under Daily Blogs, Naugatuck High School Renovation | Be the First to Comment

Some of the most frequently asked questions associated with the Naugatuck High School Renovate-as-New proposal surrounds the impact of the plan on Naugatuck taxpayers.  If the project is approved at public referendum scheduled for November 8, 2011, the renovations will be financed initially through bond anticipation notes and ultimately by general obligation bonds.  The debt management plan prepared by the Borough’s Comptroller can be viewed here.

The information in the table is a bit complex, but columns “A” “L” and “N” provide detailed projections regarding the impact on taxpayers.  The A column is the year in which the fiscal year ends. The L column indicates the amount of new debt service in a particular year relative to the Naugatuck High School Renovate-as-New project. The N column shows the net impact to the Borough’s outstanding debt service as the project becomes due and other debt obligations are retired.

The construction phase of the project would be financed through bond anticipation notes, which are described as  “a short-term interest bearing security issued in the anticipation of larger future bond issues.” (Investopedia.com).  Similar to common terms of a conventional construction mortgage, the Borough would pay primarily interest only on the notes during the construction phase of the project.  Municipal bond anticipation notes usually have a term of no more than two (2) years, but can be refinanced into a second (2nd) series of notes.  If the referendum is approved, it is expected that the construction period for renovations would be approximately three (3) years, beginning in the Fall of 2012.

Once construction is complete, bond anticipation notes are converted to fixed general obligation bonds.  The debt management plan shows that initial repayment of general obligation bonds would begin in the 2015-2016 fiscal year.  As a result of other debt retiring during repayment, the debt management plan projects that the greatest net impact of debt service payments associated with the Naugatuck High School renovate-as-new project in any given year would be FOUR HUNDRED TWENTY NINE THOUSAND EIGHT HUNDRED THREE and 00/100THS ($429,803.00) DOLLARS (in fiscal year 2017-2018 according to the table).  This projection does not assess the impact of any future bonding projects that could take place during the repayment period.

It is difficult to say what the exact tax implication is for each year because of unknown variables such as the value of the grand list (including the impact of revaluation), the amount of revenues and/or expenditures and the value of a mill in subsequent years.  For this year’s budget, one (1) mill equates to approximately ONE MILLION NINE HUNDRED FORTY THREE THOUSAND ONE HUNDRED FORTY FIVE and 14/100THS ($1,943,145.14) DOLLARS.

A detailed explanation of the financial impact of the project will take place during the public hearing scheduled for Wednesday, October 26, 2011, 6:30 PM, in the Naugatuck High School Auditorium (543 Rubber Avenue, Naugatuck, CT 06770).  The public hearing will begin with a tour of the high school followed by a presentation and public participation.

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