With rising interest rates and escalating construction costs, the Finance Committee is wrestling with the tax impact of approving more funds for the Middle School.
A special Town Meeting has been called for Jan. 19, 2022 to put a new number to a vote. Since it is excluded from the limits of Proposition 2 ½, a follow up vote is required at the ballot box.
Last winter, the town approved $102.8 million to build a new middle school on the grounds of the Sanborn Building.
But since then, design and construction estimates swelled the number to approximately $108 million, and there is no commitment that estimates will not go higher.
Recent hikes in interest rates mean the tax bill will be higher than originally planned.
A public hearing on the special Town Meeting warrant will be Nov. 17.
The FinCom set the median assessed value for a Concord home at $971,200 and based its calculations for tax increases on that.
The increase in the tax bill to cover the original appropriation of $102.8M was estimated to be $1,128 in FY25, $1,104 in FY26 and $1,081 the following year.
For those calculations, an interest rate of 3.75 percent was used.
But taxes increase significantly if the town approves a middle school costing $108 million and uses an interest rate of 5 percent.
For Fiscal years 2025, 2026 and 2027, the FinCom estimates a tax increase of $1,357, $1,325 and $1,294 annually based on the $971,200 median assessed home, using a 5 percent interest rate.
Current thinking is that the warrant article will seek approval for a far higher number, estimated at $115 million. The exact figures are not finalized.
“That number is outrageous,” said FinCom member Kathy Cuocolo. “The facts have changed. We can’t keep increasing the tax burden.”
Gail Dowd, chief financial officer, said the town “needed to do something about the building size.”
If the warrant article is voted down at Town Meeting, or if it fails to get enough support at the ballot box, the school Building Committee will have to start from scratch and design a whole new school since the $102.8 that was approved will not fly anymore.
To cut some $5M from the current design would mean eliminating or reducing the gym and auditorium.
Peggy Briggs, FinCom chairperson, said the budget figures “haven’t moved since June,” when so-called value engineering cut the price tag from $108M to $102M. The new numbers ate up the savings, she said.
“We are treading water,” said Briggs.
The town will get a 90 percent estimate on Jan. 13, a few days before the meeting. “Those should be close to bid numbers,” said Dowd.
But committee members lamented the lack of options.
“There is no plan B. It’s back to the drawing board,” said Dowd.
School Building Committee members have said the design that was approved for $102.8M could not be built today and still meet the educational plan that the town expects.
FinCom member Lois Wasoff said the town was forced “to take it or leave it” with the revised number.
“It’s a hit to our taxes or no school. We haven’t pursued any alternative paths,” said Wasoff.
Using an estimate of $115M, taxes on the $971,200 median home for a 3.75 percent interest rate for FY25, 26 and 27 would be $1,281, $1,255 and $1,229 respectively.
At a 5 percent interest rate, the numbers are an estimated $1,461, $1,427 and $1,393 annually.