Frequently Asked Questions Q. Where did the plan for the Capital Improvement Project come from?
A. The district has been developing the Capital Improvement Project for nearly a decade. It has been a collaborative process between the Superintendent, Board of Education, District Facilities Committee, architect and legal counsel.
Q. Why is it important to do this work now?
A. New York State Education Law and regulations require a building condition survey (BCS) for all occupied school buildings to be conducted at least every five years. The most current survey identified some code, safety and building concerns throughout the district. There are also state mandates for lead water testing and CO2 emissions that need to be addressed long term. These issues are among the first to be addressed in the Capital Improvement Project.
Q. What will be the cost and impact on taxpayers?
A. On March 6, district voters will have the chance to approve the Capital Improvement Project at a total cost of $60,180,000. $56 million will come from serial bonds, $4 million from the district’s Capital Reserve Fund, with the remaining balance paid by retiring debt and a small tax levy impact of 2.14 percent. The estimated average tax impact is $0.38 per $1,000 of assessed value or $37.87 increase on a $100,000 home.
Q. How long will the Capital Improvement Project take and when will it begin?
A. Following voter approval, groundbreaking is expected soon after State Education approval. We are hopeful to receive approvals during the 2018-19 school year. The project length is dependent on NYS Education approvals as well as contractor availability.
Q. How was the work order determined?
A. The Capital Improvement Project will first address code and safety updates at all seven buildings including replacing water systems to prevent lead contamination, Life Safety System upgrades, floor and stair finishes and masonry restoration and reconstruction.
Q. How does the Capital Improvement Project relate to the district’s overall finances?
A. The Capital Improvement Project and district annual operating budget are two entirely separate budgets. Over the past several years, district leadership has undertaken the necessary and often painful task of reducing our staffing, taking a critical look at programming and extracurricular needs to better serve our students. These hard decisions, along with retiring debt, have put our district in a position to begin the Capital Improvement Project now.
Q. What will be the impact of the Capital Improvement Project on the environment?
A. A State Environmental Quality Review (SEQR) has determined there will be no significant impact to the environment.
Q: The project will cost just over 60 million. How will it be funded?
A. The Capital Improvement Project totals $60,180,000, which will be funded through NYS Building Aid at a rate of 63.4% of the estimated Aidable cost of $53 million dollars. The district will also use $4,000,000 of its Capital reserve to help defray costs. The remaining part will be paid from the local share. This means that an average home with a value of $100,000 will result in an additional $37.87 per year in additional tax or $.38 per thousand of assessed value.
Q. What is the status of our prior bonds? Amount, and when will they be paid off?
A. The district currently has 14 debt issuances for capital projects, energy performance contracts and buses which have various timelines for payoff. The district will start to see a decrease in debt service by 2019/20.
Q. Why not fund repairs and renovations through the annual budget?
A. Large building projects, such as roofs, windows, plumbing and floors are too costly to include in a school district’s annual operating budget. Through a bond vote we take advantage of state building aid while spreading the cost over a 15 year period. As part of a bond project, site work is eligible for building aid when it is linked to capital work being done at the same school. This amounts to millions of dollars being funded by the state and not directly from the taxpayers.
Q. How does investing in our school benefit me?
A. Investing in our schools and our students is investing in the future of our community. Public Education benefits society as a whole and prepares students to be Fully Prepared and Life Ready. Our district provides 3,664 students in grades K-12 with a positive educational learning environment to continue to help them grow. By maintaining their facilities and providing rich academic environments for learning we will attract families which in turn increase property values.
Q. Why are the costs of the project so high?
A. Construction in our schools has to follow strict guidelines from the state on what products we can use, how buildings are constructed, ADA compliance for the safety of our staff and student, to name a few. As a school district we are also required to bid out projects and they must adhere to prevailing wage dictated by NYS. These many restrictions escalate costs over what a homeowner would pay for construction.
Q. How are costs determined in the bond?
A. The bond issuance size is based on the project’s cash flow, timing of construction of the project and capital reserve funds the District approved to finance the project. Since the project would be issued in phases and the State Education Department must approve each project there may be several bond issues over time to finance the capital project. Issuance Costs are determined on the obligations issued (BANs versus Bonds) and they are standard in the Industry. All Issuance Costs are aided by the State.
Q. The project is very large, affecting almost every school. How will the project be divided up across the timeline? What is the length of the timeline?
A. The entire capital project will be done in four phases with the project to be completed in 15 years.
Q. Will anyone have to move temporarily while work is going on?
A. There is a possibility that classrooms will be moved in order to accommodate construction. The district with guidance from the Architect, Construction Manager, Director of Facilities, Principal, Facilities Committee and Superintendent will collaborate to make decisions related to temporary placements.
Q. While our athletic fields are being redone, where will our musicians and athletes practice and play games? What seasons will be impacted?
A. The Superintendent and the Director of Physical Education and Athletics will be realigning any physical education classes and music and sporting events affected during the construction period. Alternate sites will be considered using the best interest of students.
Q. What is the interest rate of the bond? Since it is over several years and money is not borrowed all at one time, is there something built into the bond to account for an increase in the interest rate?
A. The interest rate of the bond anticipation notes or serial bond will not be known until the time of pricing when bids are received from banks/underwriters. The interest rate is fixed for these types of obligations so the rates cannot increase. The State will aid the District at the borrowing rate. The estimates in the financing projections are conservative so the District can budget for debt service appropriately. The financing projections would also be reviewed and updated as the project progresses and phases are completed.
Q. What are the terms of the proposed bond; rate (fixed for life), term, amortization? What type of bond is it?
A. School Districts commonly use bond anticipation notes or serial bonds to finance school district capital projects. Bond anticipation notes are used for short-term financing (one year or less) but can be renewed annually, however, they must be converted to serial bonds by the fifth anniversary of issuance. Principal reductions must also be made beginning at the second anniversary of issuance and interest is paid annually at maturity.
Bond anticipation notes have lower interest rates than serial bonds and an advantage is that they provide the District flexibility to pay down greater principal at maturity if the School District should have extra funds available or if project expenses are less than anticipated, therefore, reducing interest expense.
Bond anticipation notes are typically issued early on in the project and converted to long term financing once project costs are known and the School District has filed necessary documentation with the State Education Department to ensure timely receipt of building aid.
The bonds are General Obligation Serial Bonds which are fixed rate bonds. Principal payments are scheduled annually with interest payable semi-annually. It is anticipated that the bonds are amortized over 15 years (for reconstruction projects) to coincide with the receipt of State Building Aid for the term of the bond.
The serial bonds could be potentially refinanced in the future to achieve budgetary savings.
Q. Is the district pledging any collateral or assets to secure the bond?
A. No, the Local Finance Law states that General Obligations are backed by the ability of the School District to raise taxes to pay principal and interest on the bond. No additional collateral is allowed under Local Finance Law.
Q. How will the additional debt expense effect the district's debt service coverage?
A. The District has debt service beginning to retire which will help offset the impact of the additional debt. Under Local Finance Law, the bonds are issued as substantially level debt so the District has similar debt service payments annually.
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