REGULAR SESSION

 

MARCH 2, 2023

 

At a REGULAR SESSION of the Town Council of the Town of South Kingstown, County of Washington, in the State of Rhode Island held at the Town Hall, in and for said Town on the 2^nd day of March 2023 at 7:00 PM.

 

            PRESENT:     Rory H. McEntee, President

Michael K. Marran, Vice President

Patricia A. Alley

Deborah D. Bergner

Jessica L. Rose

 

 

1.         A.        PLEDGE OF ALLEGIANCE TO THE FLAG

 

The Pledge of Allegiance to the flag is given.

 

B.        LAND ACKNOWLEDGEMENT STATEMENT

 

The Land Acknowledgement Statement is read.

 

2.         ROLL CALL

 

Roll Call is taken and all members are present.

 

Town Manager James M. Manni introduces Lucas Murray, Director of Administrative Services and Chairman of the School Building Committee; Phil Conte, Architect, Studio JAED; Brian Silvia, Finance Director; and Steve Maceroni, PFM Financial Advisors.

 

3.         Brian Silvia, Finance Director gives a presentation on the School Project debt analysis and impact, based on a bond interest rate of 4.25%.

Assumptions are based on a School Facilities Project of $150 million, with bond anticipation notes (BANS) issued during construction beginning in FY 2025. Of that amount, $126 million would be reimbursable by the RI Department of Education (RIDE), and $24 million would not be reimbursable. RIDE reimbursement for Pay Go projects is anticipated in the amount of $9.4 million. It is assumed that the final completion of the project will be in FY 2028. The full cost of the project on an annual basis should be in FY 2029, until then the Town will be ramping up debt service on the project. The annual debt service will stay the same or reduce after FY 2029, with the State contributing annually.

 

Discussion ensues relative to interest rates long term. The total school net debt service on an annual basis, depending on interest rates would be between $5.8 million and $6.1 million.

 

4.         Council President McEntee questions the impact on the Town’s bond rating if a $150 million project was undertaken.

 

Steve Maceroni, Financial Advisor responds that due to a recent change in methodology Moody’s has maintained our bond rating. If $140 million or more is issued in bonds the Town’s rating could go down to Aa2 based on a quantitative analysis. Other factors can influence rating stability. South Kingstown is solid and would not likely be downgraded. The impact from an Aa1 rating to Aa2 would be minimal.

Councilwoman Alley questions if the Town could lower their bond borrowing if a school property was sold.

 

Mr. Maceroni explains that the Town doesn’t have to issue all bonds, and notes that debt service payments are made twice a year.

 

The Finance Director reviews the Town’s Debt Services Fund. Current debt service for FY 2025 is $1,720,669. BANS issuance is projected at $1,420,475 with a resulting tax rate increase of $0.15 per thousand. In FY 2026 the debt service will be $1,642,027 with BANS issuance of $2,717,550 for an increase of $0.14 per thousand. In FY 2027 the debt service will be $1,357,590 with BANS issuance of $3,514,625 for an increase of $0.16 per thousand. In FY 2028 the debt service will be $1,224,606 with BANS issuance of $6,413,654 for an increase of $0.19 per thousand. In FY 2029 the debt service will be $1,159,087 with BANS issuance of $6,413,351 for an increase of $0.19 per thousand. These estimates are based on funding a $150 million project at 4.25% interest over the 5 years, resulting in a tax rate increase of $0.83 or a 7.23% levy increase.

 

Discussion ensues relative to the yearly tax increases for an average value home. A $150 million project at 4.25% interest rate would be approximately $350 total over the 5 years. At an interest rate of 3.75% the cost would total approximately $339. A $125 million project at 4.25% interest rate would be approximately $233 total.

 

Discussion ensues regarding the difference in costs to taxpayers between the $150 million and the $125 million project.

 

Phil Conte, Studio JAED Architect comments that a High School is a flagship facility. The Town is using a methodological approach, determining how large a facility is needed and notes that a decision has already been made to utilize the Columbia Street property. In planning for a new building, student enrollment, square footage and funding are major considerations. RIDE reimbursement at $589 per square foot is not enough for current construction costs, which are projected at $789 per square foot. We will have to carefully arrive at a value to build what we want, recognize there is a gap. A 140,000 square foot building is projected to cost $119 million, with $6 million anticipated for field work. Deferred maintenance is projected at $25 million for the rest of the district’s schools.

 

Discussion ensues.

 

6.         COMMENTS FROM INTERESTED CITIZENS

 

Council President McEntee invites residents to come forward with comments.

 

Jim O’Neill is present and asks who issues the school bonds.

 

Mr. Maceroni responds that by State law, the RI Public Expenditure Council issues the bonds.

 

Mr. O’Neill comments on bond refunding, reimbursement rates and construction costs per square foot.

 

Cathy Canavan, a Narragansett resident who ran unsuccessfully for State Representative in District 34 is present and comments that the prior School facilities project was defeated at $85 million, and on the elderly and families’ ability to afford the proposed project.

 

Roberta Mulholland is present and questions what has changed since fall of 2020 when it was said that the Town’s top bonding capacity was $85 million.

 

Discussion ensues relative to bonding capacity before and after the Town-wide property revaluation.

 

Joe Martin, South Shore Village is present and comments that there is growth in this Town.

 

Greg Sweet is present and comments on property valuation and debt limits.

 

Libby Nestor is present and comments in regard to supporting public education with tax dollars and a School facilities project to attract and keep young families.

 

Marc Levitt is present and comments that a High School is a shining light of our collective culture, and that there are still insecurities resulting from the COVID-19 pandemic.

 

Dorald Beasley is present and comments on the size of a proposed High School auditorium, the school budget, enrollment and per pupil costs, and utilizing the current building for affordable housing instead of demolishing it.

 

Carol Vetter, School Committee member comments that this project is our opportunity to bring students back by building a new high school, saving out of district tuition costs, and taking advantage of the highest State reimbursement rates.

 

Maura Gazzero is present and comments on eligibility for State reimbursement, and in support of a school bond.

 

5.         Councilwoman Rose commends all work put into this school facilities project, and agrees that a new High School is needed. She supports the $125 million project for the High School, and believes that the voters won’t support a bond for $150 million due to uncertainties with the elementary schools.

 

Councilwoman Bergner agrees that a new High School is needed and comments that although $125 million is a historic amount to borrow she supports that project.

 

Council Vice President Marran comments that the Council needs to focus on the High School to show they are united, there may be other ways to fund the deferred maintenance, and that the cost is significant. The taxpayers will decide, but he supports the $125 million project for a new High School.

 

Councilwoman Alley agrees that a new High School is needed, the Council should be united in their decision, and that $125 million is the right amount for the Town project.

 

Council President McEntee comments that the $150 million project is the best bang for your buck in the long term, agrees that we must have a new High School and that the Council should be united behind the project.

 

Discussion ensues, and it is

 

UNANIMOUSLY VOTED: to direct the Town Manager and Finance Director to work with Bond Counsel to draft language for enabling legislation to be submitted to the General Assembly to authorize the placement of a Bond Referendum Question on a ballot specific to a bond request not to exceed $125 million to support a new High School facility improvement project.

 

UNANIMOUSLY VOTED:  to adjourn at 8:46 PM.

 

 

Susan M. Flynn, CMC

Town Clerk