WESTERLY — Members of the Town Council unanimously approved a motion allowing Town Manager J. Mark Rooney to move forward in refinancing general obligation bonds in an effort secure additional funding to help meet the school district’s capital improvement needs.
During a joint meeting between the Town Council and School Committee on Monday evening, Rooney said refinancing two bonds issued through Rhode Island Health and Educational Building Corporation in 2011 would allow the town to reduce its interest rates considerably. The effort would not extend the length of the bond, he said, but would create an estimated $125,000 to $135,000 in savings per year over that time, or an upfront savings of approximately $1.8 million.
The exact savings would depend on the terms of refinancing and interest rate secured. There are currently 10 years remaining on the existing bond debt.
“By refinancing, we could probably secure, at the same debt capacity that is already hitting the taxpayer, almost $2 million to put into capital for the school in the next year,” Rooney said. “It would take a lot of pressure off the tax increase needed to maintain school maintenance needs.”
If the town were to move forward with securing upfront savings, Rooney and Superintendent of Schools Mark Garceau each said the money could potentially go toward meeting the school’s capital improvement requirements set forth under state statues.
Garceau said that, under the previous bond agreements secured with the state, 3% of the district’s operating expenses must go to maintenance annually. The percentage rate required has ticked up by approximately .5% per year.
He said the district has been able to meet these requirements over the past couple years, but will need to continue to plan ahead in order to secure funding moving forward.
In September, members of the School Committee had approved a proposal that called for a $3.5 million proposed capital projects budget during the 2021-22 fiscal year. The plan called for heating and cooling system upgrades in parts of schools throughout the district and roof projects at both Dunn’s Corners and Springbrook elementary schools.
Rooney said that by refinancing in order to take advantage of the record-low interest rates caused in part by the coronavirus pandemic, the town could potentially secure around $2 million for these specific capital purposes. It would also help the town to move forward in meeting capital needs while preparing to deal with revenue and budget uncertainty as a result of a wide range of unknowns resulting from the pandemic’s impact on the state of Rhode Island.
Before the savings could be allocated for such expenses, however, the town would need to go to referendum and receive approval from the taxpayers by March 2.
“The matter would need to be discussed further during a special meeting on [Dec. 28] on what that question would be,” Rooney said.
The concept of refinancing garnered immediate approval from members of both the council and School Committee, who said it would allow the town to realize savings regardless of how the savings is utilized.
School Committee Chairwoman Diane Chiaradio Bowdy endorsed the plan to return it as capital for the school district, noting that there are numerous needs already on the five-year plan that was completed in 2019, and those needs will only continue to grow if capital projects are put off.
She said every year that passes without work being completed will expand the work, and costs, in future years.
“From a school perspective, refinancing of debt makes total sense,” Chiaradio Bowdy said. “The clincher for me is that the debt period is not elongated at all, but remains in same window.”