The new Powers Elementary will be paid off three years earlier than expected, thanks to low interest rates.
That means taxpayers will foot the bill through 2038 instead of 2041, Amherst Schools treasurer Barbara Donohue said.
“The feds didn’t raise the rates when the school system thought it would,” she said. In May, speculators had anticipated hikes by the Federal Reserve — anything from Congressional votes on health care reform to tweets by President Donald Trump can drastically affect rates on a day-to-day basis.
But Amherst residents lucked out when investors bought bonds in sales May 2 and 18.
The first day, the interest rate was at 3.21 percent and the second it sank to 2.98 percent. Both were well under the 3.75 percent rates educators had expected and conservatively based their projections upon.
At the same time, the Amherst Schools earned a credit rating of AA2 from Moody’s after officials flew to Chicago to present to the investment firm. The district had been in danger of sliding to a AA3 rating, which would have added $700,000 to the cost of building a new school.
Lorain County as a whole presents a negative picture to credit rating companies, so educators “had to go to work to tell the story of Amherst — why Amherst is a good place to live and go to school and what’s going on with development,” said Donohue.
“We are pleased to be able to save taxpayer dollars in the long run by shortening the number of years they will pay interest on these bonds,” said board of education president Ron Yacobozzi.
When asking voters in November to financially support construction of the new school on South Lake Street, district officials said they would take on 25 years of debt. But they promised to do so without raising property taxes.
Voters agreed to keep taxes where they were from construction of Amherst Junior High, the cost of which had been paid down.
“We promised this issue would not raise taxes and this will hold true as long as property values remain at or above their current levels,” said superintendent Steve Sayers. “Together, we can work to maintain our property values by keeping our programs strong and our district financially stable.”
That’s an important caveat: If Amherst is caught up in recession and property values nose dive, millage rates will go up and so will tax bills.
The new $32 million Powers Elementary will be built where Harris Elementary stands now. Demolition will be this summer to make way for construction.
When complete, the school will be home to prekindergarten through third grade.
Jason Hawk can be reached at 440-988-2801 or @EditorHawk on Twitter.