Tax Implications and Funding Options
by Members of the CCS School Board

This is the last in a series of three articles to present information about the condition of the school, the desired alternative fuel (aka wood chips) facility and upcoming bond vote.
After prioritizing the repairs outlined in the 2007 Feasibility Study, the Charlotte Central School Board considered five different renovation options to address the repair needs in the 1949 and 1969 buildings, ranging from a Bare Necessities renovation approach (estimated cost $2.8 million) to complete tear down (estimated cost $5-6 million). A community Facilities Forum was held in December 2008 to obtain input on the five renovation options as well as to discuss an alternative fuel (i.e., wood chips) heating system (estimated cost $1.6 million).
After hearing from the community, the building experts, and after much deliberation, the board voted unanimously in February to bring two bonds to the voters on November 3: the Bare Necessities approach in one bond and the installation of a wood chip heating system in a second bond. The past two issues of The Charlotte News outlined the renovation needs and proposed solutions to address those needs in the 1949 and 1969 school buildings, as well as an alternative fuel (i.e., wood chips) heating system. In this issue, the focus will be on the costs and funding mechanisms for the bonds.
The proposed project costs of the Bare Necessities renovation project in the 1949 and 1969 building are as follows:

Anticipated Contract Bid Cost $2,157,878

Architectural/Engineering Fees,
Permitting, Clerk, Bond Fees and
other non-contract costs: $426,334

Project Reserve $215,788

TOTAL $2,800,000

Efficiency Vermont has worked with the design team and estimates the energy savings alone (at current energy costs) to be approximately $21,000 per year for the work done in the Bare Necessities scope of work.
The proposed project costs of the Alternative Fuel Heating Facility are as follows:

Anticipated Contract Bid Cost $1,275,960

Architectural/Engineering Fees,
Permitting, Clerk, Bond Fees and
other non-contract costs: $221,963

Project Reserve $102,077

TOTAL $1,600,000

Our engineer has calculated that with oil at $2 per gallon, the savings in operations and maintenance would be approximately $28,000 per year. If oil were to be $3.50 per gallon (as it was last fall), the calculated proposed savings would be well over $65,000 per year.
Traditionally, the school has always issued bonds to pay for any capital improvement projects. The bond would be paid off over a 20-year period, with the tax impact being greatest in the second year. The impact tax impact is outlined in the table below. Those homeowners qualifying for a property tax adjustment credit will likely not see the tax increase listed below.
Currently, there is a moratorium on school construction aid through the state which had previously provided 30% funding to qualified projects. However, the American Recovery and Reinvestment Act (stimulus money) offers the potential for significant funding through Qualified School Construction Bonds (QSCB) and energy grants. It is the board’s intent to take advantage of all funding options available. However, all of the stimulus money requires voter approval prior to our application.
QSCB’s would be an alternative to issuing a traditional, interest-bearing bond. The QSCB is a near zero interest bond that would offer the lending institution a tax credit in lieu of interest. If we are able to obtain voter approval and utilize this financing, we would save over $1 million in interest in the Bare Necessities bond and over $500,000 in interest in the Alternative Fuel Heating System bond. The related tax impact is outlined in the following table:

Estimated Tax Implications
$2.8M Bare Necessities Renovations

Estimated increase in tax rate $0.03 per hundred dollars
with stimulus money $0.05 per hundred dollars
without stimulus money* Annual impact on $100K home $30 $50

$1.5M Alternative Fuel Heating Facility
Estimated increase in tax rate $0.02 per hundred dollars
with stimulus money $0.03 per hundred dollars
without stimulus money*
Annual impact on $100K home $20
with stimulus money $30
without stimulus money*
*assumes bond with 20-year borrowing at 4.071%

Education Property Tax Calculation: Schools are able to remove qualified school construction costs from the penalty threshold calculation and the two-vote calculation.
In addition to the QSCB, with voter approval, the board intends to apply for $350,000 in grants from the Clean Energy Development Fund. This money is set aside specifically for projects that focus on renewable energy systems, such as the proposed alternative fuel (i.e. wood chip) system.
Finally, there are potential rebates from Efficiency Vermont as full design is done and we utilize energy efficient features in our electrical (and potentially mechanical) systems.
Further information regarding the scope of work for both the Bare Necessities Project and the Wood-Chip Facility, as well as funding options, can be found at ccsvt.us. Click on BOND VOTE on the left hand side. We can also be reached at schoolboard@ccsvt.us. Mark your calendar to attend a presentation at the Grange Hall on October 19 at 7 p.m. to learn more about the bond vote. In addition, there will be another Community Forum and Guided Tour on October 28 at 6:30 p.m. that will commence in the CCS Library, followed by the Bond Hearing at 7:30 p.m. in the Multi-Purpose Room.