Looking at the Numbers: How Much Bonded Debt is Still Out

Budget season has arrived, and with it are plans for bond articles for Fiscal Year 2015 to go before voters on the March ballot.
While voters often look at the budget numbers, the bonded indebtedness they are required to pay also figures into their taxes.

School District
Last year voters turned down a School District bond request for several roofing and paving projects and renovations that the district had delayed for several years. School District Business Administrator Peter Curro noted the article failed to get the required 60 percent by 11 votes.
“Because we came very close to the 60 percent threshold, we feel another attempt for a bond is warranted,” Curro said earlier this fall. “Like last year, the majority of the funding will be for roofing and paving projects that have been delayed many years due to funding.”
Curro said the projects included completion of the paving of the Matthew Thornton Elementary School parking lot, roof replacement at the high school and middle school, and replacement of two boilers at the middle school.
Curro said on a 10-year bond, the district is looking at an interest rate between 3.1 percent and 3.3 percent.
Meanwhile, the taxpayers are already funding four School District bonds:
• For Londonderry Middle School renovations. The 2004 bond was originally $10.6 million and has a principal balance of $505,000 at 3.25 percent. It is scheduled to be paid off in 2017.
• For Londonderry High School renovations and stand-alone gym. The 2002 bond was originally for $10,020,000, and has a principal balance of $670,000 at 4.47 percent interest.
• For North School renovations. The 2005 bond was originally for $5.5 million at 3.89 percent interest and has a current principal balance of $275,000. Payoff is scheduled in 2026.
• For South School renovations. The 2007 bond was originally for $5.1 million at 4.09 percent interest, and has a current principal balance of $255,000. Payoff is set for 2029.
The School District is also looking to fund a new School Administrative Unit (SAU) office building at $3.18 million for FY16, again paid for by a bond. And for the future, the School District wants to fund an auditorium at $16 million, with funding from the capital reserve fund and a bond for FY 2018-2019.
Curro said the total amount that the school district can bond is $186 million.
Town
On the town side, when Comprehensive Planner Jon Vogl briefed the Planning Board on the Capital Improvement Plan (CIP) for FY 15 to FY 20, he noted that six projects were moved to Priority 1, the urgent category.
Among the projects listed as urgent and requiring a bond are: Public Works, Sewer Division, Plaza 28 sewer pump station replacement, $3.1 million, funded by access fees and a bond in FY 15; and Fire Department Central Station renovations, $2.9 million, funded by a bond, with engineering and architectural work in FY15 and construction in FY2016.
Town Manager Kevin Smith said as of now, no bond is being contemplated for the newly designated Tax Increment Finance (TIF) district for the Pettengill Road area.
“I believe the Council is going to look at how things develop there over the next few months to determine what the best course of action is going forward,” he said. “One of those options (either in FY15 or beyond) could be asking the voters to approve of a bond to complete a portion of Pettengill Road (the cost of which is unknown at this time, but is most likely significantly less than what the CIP called for).
“That being said, the Council has indicated a number of times that they do not have the appetite to ask the voters to approve of a bond that would not be paid for beginning in year one and any subsequent years with the revenue from the development in that district (which is possible now that it has the TIF designation),” he continued. “Under such a scenario, it would have no negative effect on the tax rate.”
When the CIP was discussed earlier this season, a priority 2 project, the Pettengill Road upgrade, was listed at $12.3 million for FY2015, with funding through a TIF and grant. A TIGER (Transportation Investment Generating Economic Recovery) grant had been sought but was not awarded.
Asked how much it is feasible to bond, Smith said that is a question best left to the taxpayers to decide. According to Finance Director Sue Hickey, the Town can bond $75 million.
“As manager of the town’s affairs, I would caution the town from incurring too much debt at one time, as it could negatively affect our bond rating, which is currently a healthy Aa2 according to Moody’s,” he said. “Again, though, the taxpayers ultimately get the final say in how much they believe is feasible.”
Currently the town has 11 bonds totaling $1.9 million in principal and $589,193.89 in interest for FY 14.
They are:
• Refunding in 2003 of bond issued in 1994, 1992, and 1995. The original bond was for $4.5 million, and current principal is $205,000, with an interest rate of 2.73 percent and interest a payment of $11,925 in FY 14. Payoff is in 2016. The bond was for the Auburn Road landfill cap, the Boston North (Exit 4A) settlement, and library construction.
• Mammoth Road sewer project, issued 2001 for $2.4 million, with principal balance of $120,000 at 4.33 percent interest and a FY 14 interest payment of $47,660. Pay-off date is 2022.
• Multi-purpose bond issued 2003 for open space, police station and town hall. The bond was originally $13.65 million at 3.82 percent interest, and has a principal balance of $685,000 with a FY14 interest payment of $283,307.50. Payoff is in 2024.
• Open Space bond issued 2004 for $1 million at 3.31 percent interest, with a $100,000 principal payment and a FY 14 interest payment of $5,425. The payoff will be in 2015.
• Bond for open space and the South Fire Station, issued 2006, originally for $4.37 million, with a principal balance of $225,000 and an interest rate of 4.02 percent and an FY 14 interest payment of $117,300. Payoff will be in 2027.
• Roadway improvement bond issued 2008, originally for $1.2 million with an interest rate of 3.06 percent and a principal payment of $120,000, and a FY 14 interest payment of $19,500. Payoff is 2018.
• Road improvement bond issued 2008, originally for $1.5 million, with a principal payment of $150,000 and an interest rate of 3.49 percent. FY 14 interest is $35,062.50, and payoff is in 2019.
• Road improvement bond issued 2009, originally for $1 million, with a principal payment of $100,000 and an interest rate of 2.38 percent and a FY 14 interest payment of $19,000. Payoff is in 2020.
• Road improvement bond issued 2010, originally for $1 million, with a principal payment of $100,000. The interest rate is 2.38 percent and the FY 14 interest amount is $17,250. Payoff is in 2021.
• Road improvement bond issued 2011, originally for $1 million. The principal is $100,000 and the interest rate is 2.31 percent, with a FY 14 interest payment of $21,750. Payoff is in 2022.
• A road improvement bond issued 2012, originally for $500,000, with an interest rate of 2.01 percent and a principal payment of $100,000 starting in FY 15. The FY 14 interest payment is $3,013.89. Payoff is in 2019.

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