As promised, Monday night’s work session of the Northampton County Board of Supervisors Meeting included a presentation from Davenport & Company, the County’s financial advisors, about the feasibility of beginning the process of constructing a new high school.
Doug Gebhardt, Vice President of Davenport, presented the Board an overview of Northampton’s financial health. Despite a heavy debt load, currently Northampton’s financial metrics are healthy overall and are inline with comparable counties of size and wealth.
Gebhardt then presented three options to fund, what is now expected to be, the $40.5 million required for the construction of a new high school. Option one would be a level debt service structure, where the funds would be borrowed and paid back evenly over the next 20 years. The total cost after every penny is paid back is projected to be $61 million, with a 4.22% interest rate and a projected tax increase of 14.1 cents per $100 of value. Option two is a two stage plan, where the County would pay interest-only from 2020 until 2025 and then begin to pay off the principal beginning in 2026. This plan is projected to cost the County $63.9 million at a 4.19% interest rate and a reckoned tax increase of 6.7 cents. Both options one and two would be paid off in full in 2041. Option three would involve a short term bond financing anticipation note, at 3.52% interest, followed by the actual bonds being issued in 2024 at 4.71% and a $71.8 million tab to the County, with an anticipated 4.8 cent tax increase. Option three would not be completed until 2046. Gebhardt also added there are several costs and fees associated with issuing bonds not included in these numbers. Each plan would likely double the County’s overall debt load, and result in close to 25 cents of every dollar brought in going towards debt service. The presentation also assumed no other new debt before 2041.
At the end of the presentation, Northampton’s Finance Director John Chandler asked Gebhardt to discuss what the County could afford to borrow keeping the debt service at current levels. Although these are very rough numbers in need of more research, Gebhardt speculated the County could afford to borrow $1.4 million in 2020, $4.2 million in 2022, $3.2 million in 2024 and roughly $15 million in 2026 for a total of $23.8 million total.
Following the presentation, the board members shared their thoughts on the analysis of the three scenarios presented before them. Board member Dave Fauber stated that he does not see the need for a new school. This past weekend Fauber was able to walk through Northampton High School and felt it was well built and not in poor enough condition to necessitate a new school.
Board Chairman Spencer Murray chimed in expressing his inability to see Northampton County borrowing $40 million. Board member Robert Duer and Murray then went back and forth discussing how much of a tax increase they believe taxpayers will tolerate. Murray felt with health insurance premiums rising as much as 24%, tax payers couldn’t stomach any tax increase. Duer felt a two-cent increase is likely to be as high as they would be able to go.
Murray then encouraged the School Board, all of whom were in attendance, to prioritize the available funding to maintain the existing school building.