With the advantage of a AAA bond rating, the Watchung Hills Regional High School district has arranged $12.5 million in financing through a bond sale in preparation to begin a list of repair and construction projects approved by regional voters in September.
One of the largest projects on the list, the replacement of building's original steam pipes, more than 50 years old for about $2.1 million, is anticipated to begin in April, said Watchung Hills Business Administrator Tim Stys.
The rating from Standard & Poor's was received by the school district was received as the school district was about to seek a competitive rate on the bond market in November, Stys said.
Stys said the district borrowed the full $12.5 million, even though the state has promised to reimburse about $5 million of that amount for improvements at the aging school facility.
That would leave taxpayers in the sending towns to share about $7.5 million to be paid for by selling 15-year bonds, school officials said during public presentations prior to the Sept. 24 referendum vote.
The arrangement is for the school district to sell bonds to borrow the full amount and then receive aid payments for 40 percent of the debt service on an annual basis, with the money to be exclusively used to offset payment on the bonds, Stys said.
"The bond sale yielded positive results," Stys said in an email. The lowest rate received was provided by Roosevelt & Cross at 3.09023 percent, he said.
The anticipated state aid will the cost of the total amount borrowed for local taxpayers, he said.
Stys said there are not many public entities with a AAA bond rating. "The AAA rating theoretically makes the bonds more attractive to investors, thus making the bid more competitive, which theoretically drives the price down."
According to school district figures released the week before the referndum vote, the impact of the project on regional sending districts would be: Long Hill Township, another annual $46 in property tax on a home valued at $383,929; in Warren Township, another annual $53 on a home valued at $643,250; and in Watchung Borough, another $48 in a home valued at $628,724. Green Brook sends students to the high school on a tuition-paying basis.
Other items on the list include more than $6.2 million for the replacement of sections of roofing, $1.4 million to repave the front and rear parking lots, almost $1.2 million to redesign the food service facilities, and more.