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Caroline school work could increase tax rate by 9 cents

The tax rate to pay for $25 million worth of renovations to two schools in Caroline County will rise by 7 to 9 cents, a financial consultant told the Board of Supervisors.

That could cost each homeowner in Caroline about $95 more in taxes annually.

Last Tuesday, 81 percent of voters approved a bond referendum to renovate Caroline High School and Madison Elementary School.

Courtney Rogers, the county’s financial consultant from Davenport & Company, presented options to the board Thursday night.

The board authorized Rogers to bring back proposals for financing the entire project at its Dec. 9 meeting.

Voters authorized the county to spend $26.3 million—$21 million on Caroline High School, $4 million on Madison Elementary School and the remaining on the cost of issuing the bonds.

The board could consider borrowing $25 million, at one time or in segments.

Rogers told the board that most localities in Virginia repay school construction projects over a 20-year period, especially in the case of renovations and repairs.

He projected that to borrow $25 million, a 20-year bond issuance at 5.5 percent is roughly 8.6 cents added on to the tax rate, and one at 4 percent would add 7.6 cents to the tax rate.

Each penny on the real estate tax brings in about $250,000 for the county, according to Rogers.

The median price of a home in Caroline County is $119,809, according to Commissioner of the Revenue Sharon Carter. The county’s tax rate is now 72 cents per $100 of taxable value.

A median real estate tax bill, based on the median home value, is about $863. With an 8-cent tax increase, it would rise about $95.

That would make the median real estate tax bill about $958.

The county could begin borrowing the funds in early 2014, to start construction in the summer of 2014.

The first debt-service payments would begin in the fiscal 2015.

Rogers outlined a few options for the board.

One option would be to get the bonds through a bank. Under that option:

  • It would not require a bond rating, which the county does not have.
  • It may require more than one issuance, due to the size, and the county may not get a fixed rate for the full 20 years. However, the upfront issuance costs are low.

The county could go through Virginia Public School Authority pool financing. Under that option:

  • This issuance would be combined with other school projects from around the state in a pool financing.
  • However, it is only issued two times per year: April–May and October–November. The next issuance would be next year.
  • There is a limited ability to refinance and it can only be done when the entire pool is refinanced.
  • There’s an annual fee charged for the use of the pool.
  • The county could use VPSA’s bond rating of Aa1/AA+.

The third option is that the county could issue the general-obligation bonds through a public sale.

  • If this option is selected, the county could refinance at any time.
  • It would require the county to obtain a bond rating.
  • This option has the highest upfront cost of issuance, whereas the other two options have low upfront issuance costs.

Regardless of which option is used, the county wants to move quickly on the projects.

The School Board at its Monday meeting authorized the county to put out a request for proposals for architects and engineers to work on the projects.

The capital improvements committee will then review the applications, interview the top two applicants and then make a recommendation to the School Board.

The School Board and the Board of Supervisors hope to meet in a joint session soon but have not yet set a date.

Robyn Sidersky 540/374-5413


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