South Burlington School District Proposed Long-Term Bond Why issue - - PowerPoint PPT Presentation

Proposed Long-Term Bond

South Burlington School District

Why issue a long term bond?

• Entities issue long-term bonds to finance long-term

infrastructure assets with extended lives. The large dollar cost of these projects can be difficult to pay for in one year. The benefits from the improvements will accrue to residents

• ver many years.
• If current residents shoulder the full cost for improvements,

they will be charged for improvements that may accrue over 20, 30, 40 or more years and not necessarily benefit current residents.

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Why issue a long-term bond?

• Economists term this concept “intergenerational equity”:

having the taxpayers who benefit from a particular improvement shoulder their cost of the particular improvement for the time period they utilize it.

• Current residents may be reluctant, or unwilling, to pay the

full cost of a needed school addition, major renovation, or series of capital improvements. Breaking that cost into a series of years makes the improvement easier to afford on an annual basis. How large is the proposed bond? $950,500 Over how many years will the bond be paid? Twenty years

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Public Hearing on Long-Term Bond

Does the State of Vermont contribute to the debt service payments?

• The State of Vermont for many years contributed 30% to the

cost of capital improvement projects. It discontinued that program several years ago. Debt service payments are included in the total district budget and are part of the state’s education financing system. What will the annual payments be on the proposed bond?

Why issue a long-term bond?

February 21, 2018 4

School Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Principal $0 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 Interest $20,010 $36,119 $34,218 $32,317 $30,416 $28,515 $26,614 $24,713 $22,812 $20,911 Total $20,010 $83,644 $81,743 $79,842 $77,941 $76,040 $74,139 $72,238 $70,337 $68,436

Proposed Bond Estimate of f Debt Service Expense

Public Hearing on Long-Term Bond

2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Principal $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $47,525 $0 Interest $19,010 $17,109 $15,208 $13,307 $11,406 $9,505 $7,604 $5,703 $3,802 $1,901 $0 $0 Total $66,535 $64,634 $62,733 $60,832 $58,931 $57,030 $55,129 $53,228 $51,327 $49,426 $47,525 $0

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Public Hearing on Long-Term Bond

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

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What improvements are you proposing for the bond?

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It Items proposed for the $950,500 Bond

Public Hearing on Long-Term Bond

Chamberlin Elementary School

• Light fixtures replacements $3,000
• Carpet & asbestos floor tile replace

$7,000

• Parking Lot Upgrades

$7,500

• Fire Alarm Upgrade

$5,000 Orchard Elementary School

• Carpet & asbestos floor tile replace

$5,000

• Light fixture replacements

$3,000

• Roof

$67,000

• Fire Alarm Upgrade

$5,000

• Key Scan Access

$5,000 Rick Marcotte Central School

• Light fixture replacements

$3,000

• Carpet & asbestos floor tile replace

$5,000

• Roof Replacement

$30,000

• Fire Alarm Upgrade

$7,000

• Main door replacement

$10,000 Munson Field / Iverson Track

• Restrooms & Training Room

$325,000

• Storage Building

$50,000 South Burlington High School

• Library Reconfiguration

$150,000

• Fire Alarm Upgrade

$43,000

• Re-Key and door hardware upgrade and

security $15,000

• Exterior door upgrades

$13,000 Frederick H. Tuttle Middle School

• Burner Replace

$65,000

• Carpet & asbestos floor tile replace $110,000
• Light fixture replacements

$12,000

• Fire Alarm Upgrade

$10,000

• Key and Lock Security Upgrades

$5,000

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How do the payments on the proposed bond compare with debt service the district has paid in prior years?

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Public Hearing on Long-Term Bond

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Annual Debt Service Expense, Past and Proposed

Past Debt Service Proposed

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Tax Impact of Proposed Bond

How much would the proposed bond add to the school district’s tax rate?

• First year debt service is equal to one-half the interest expense for a
• year. Our estimates show this would add 0.09 cents (9 hundredths of

a cent) to the tax rate, 0.86 cents in additional tax per $100,000 in property value.

• In the second year and following years, the bond would add 1.64

cents annually to the tax rate, $3.58 per $100,000 in property value.

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Public Hearing on Long-Term Bond

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

cents on the tax rate

"Debt Tax Rate," Past and Proposed

February 21, 2018 12

Is there an “appropriate” level of debt for a School District? Part I

Public Hearing on Long-Term Bond

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Burlington SD Champlain Valley USD #15 Colchester Town SD Essex Community Ed Center USD #46 Essex Junction ISD Essex Town SD Huntington Town SD Milton Town SD

• Mt. Mansfield

Modified USD South Burlington City SD Williston Town SD Winooski SD

Outstanding Debt, Nearby Districts

February 21, 2018 13

Public Hearing on Long-Term Bond

Is there an “appropriate” level of debt for a School District? Part II

The Vermont Statutes Online Title 24 : Municipal And County Government Chapter 053 : Indebtedness Subchapter 001 : Indebtedness Generally (Cite as: 24 V.S.A. § 1762)

• § 1762. Limits
• (a) A municipal corporation shall not incur an

indebtedness for public improvements which, with its previously contracted indebtedness, shall, in the aggregate, exceed ten times the amount of the last grand list of such municipal corporation. Bonds or obligations given or created in excess of the limit authorized by this subchapter and contrary to its provisions shall be void. (b) However, the provisions of this subchapter as to the debt limit shall not apply to bonds issued under section 1752 or 1754 of this title, relating to the ordinary expenses of a municipality. (Amended 2011, No. 155 (Adj. Sess.), § 10.)

$0 $5,000,000,000 $10,000,000,000 $15,000,000,000 $20,000,000,000 $25,000,000,000 $30,000,000,000 $35,000,000,000 Debt Limit South Burlington

Statutory Debt Limit vs Ditsrict Debt, with Proposed Bond

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Who would perform the work that the district is proposing to fund with the bond?

• As with any major expense the district engages in, the district is

required by law to put major purchases out for bid. This project would be broken into different components that would be publicly advertised and contracts would be awarded to the lowest responsible bidder for each project.

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Questions?

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