| Voters in the Town of Longmeadow will soon be confronted with a decision regarding a Proposition 2 1/2 debt exclusion. The debt exclusion request is specific to the Longmeadow High School Feasibility Study. The request is a required step in the Massachusetts School Building Authority's process for the Town to seek financial assistance from the Commonwealth in determining a long term solution for the high school. The study will help determine if renovation or new construction is the most cost effective solution. The debt exclusion will come before the voters in two phases. Phase 1 is an article on the October 28th Special Town Meeting Warrant seeking an appropriation for the Feasibility Study via a bond authorization. This authorization is contingent upon Phase 2 and will require a 2/3 vote at town meeting. Phase 2 is a question on the Nov. 4 ballot authorizing the debt exclusion. The specific language of the November 4th ballot question is from Massachusetts General Laws Ch. 59 Sec. 21C (k). The ballot question will not have a monetary amount within its text. It is designed this way mainly as a result of the unknown interest rate at the time of the vote. It is important to note that both of the above referenced phases must pass for the funds to be available for the Feasibility Study. In order to raise additional property tax revenue above the Proposition 2 1/2 levy limit, the Town must vote the debt exclusion. The debt exclusion would exempt the debt service for the life of the bond from the limitations of Proposition 2 1/2. If the Feasibility Study debt is authorized, it will be bundled with other authorized and unissued debt and be put "out to bid" for a competitive interest rate. The debt issues are anticipated to be sold in mid December. Currently Longmeadow has five previously approved debt exclusions. They are identified in the chart below starting from the bottom. The Feasibility Study would potentially be the sixth. All are listed with the FY08 actual and FY09 and FY10 estimated effects the excludable debt service has on Longmeadow's tax rate. If the Town authorizes the debt exclusion for the LHS Feasibility Study, I will be proposing a debt schedule to the Select Board that minimizes the overall tax impact in FY 2009 and thereafter. This recommendation is possible due to the lessening impact of the Center School debt exclusion. I anticipate that the future total excludable debt service impact will not increase above the FY09 level unless the Town authorizes additional debt exclusions in the future. The chart provides a comparison of the fiscal year tax rate impacts. For FY 2011 and thereafter, the impact would be less than the fifty-seven cent effect of FY2010. Total effect on the tax rate FY08 FY09 FY10 56.2 cents 58.2 cents 57.1 cents For a practical example, if the debt exclusion should pass, the total tax bill of a residential property owner with assessed value of $370,000 will include $215.34 as result of the combined debt exclusions in FY 2009. Of the $215.34, the Feasibility Study would represent approximately $31. The combined FY 2010 impact is estimated at $211.70. As debt is paid, the total exclusion amount will decline. The impact of the Feasibility Study would follow the same declining pattern. Overall, the average cost of the Feasibility Study to the property owner with an assessed value of $370,000 would be approximately $30 per year for the projected 5 year life of the debt exclusion. Every effort is made to manage the debt exclusion portion of the tax rate to minimize the overall impact to the taxpayer while insuring that the major capital needs of the Town are funded. Hopefully these Longmeadow debt exclusion facts help answer questions you may have regarding debt exclusions and how they relate to the tax rate. Paul J. Pasterczyk Finance Director |
