By Frank Mustac, Contributor
Hopewell Valley Regional School District officials received disappointing news after bonds were sold recently to finance $35 million-plus worth of facilities projects in the district.
The interest rate for the bonds came in “a lot higher than we were expecting them to be,” said Board of Education President Lisa Wolff said at the Dec. 12 school board meeting.
Voters in Hopewell Borough, Pennington Borough and Hopewell Township passed a multi-million-dollar bond referendum during a special election held Sept. 27. The bond is slated to fund repair work, construction, alterations and other capital improvements at several schools in the district.
“For the referendum, we were scheduled to go to bond, and we did. The (interest rate) number came in a lot higher than we were expecting them to be,” Ms. Wolff said.
The forecast from the school district’s financial advisers, she said, was that a lower interest rate could be expected, because the repayment period for the bond would be 15 years instead of 25.
“They were estimating that it would land somewhere between 2.5 and 3 percent, but it ended up at 3.6 percent,” Ms. Wolff said. “So that was a little bit painful.”
“The financial advisers explained to us that most of it had to do with the (November) election,” she said. “Since July, the interest rates had been going up slowly, but after the election, it literally just went flying up every single day. It went up a full point within three weeks after the election, and that’s how we ended up with the 3.6 percent rate.”
“The good news is that since we did a 15-year (bond), it’s still way more beneficial to the taxpayers,” Ms. Wolff said.
School board member Michael Markulec, who serves on board’s Finance and Facilities Committee, said that shrinking the repayment period by 10 years “had a tremendous savings to the taxpayers. We saved $7 million in interest.”
“We’re still working to keep our promise to keep those first couple of years of tax payments as low as possible,” he said.
Mr. Markulec was referring to efforts by district officials to keep down property taxes for schools during an overlap period from 2018 to 2021 when taxpayers will be simultaneously paying off both part of the new debt incurred through the referendum and an old debt for past facilities projects, which will be retired by August 2021.
