If passed at the March 7, 2024 school board annual meeting, the town will float a 20-yr municipal bond in July, 2024. The New Hampshire Municipal Bond Bank bundles all community bond debt into one offering which is then offered to the public. We are not issuing our own debt. Currently, the interest rate is estimated to be $3.5%, but this rate may change up or down. The warrant article indicates that interest in the first year is $102,500 but this is for the six months from July 2024 to January 2024. The way the warrant article is written, it is implied that the annual interest payment is about $100k but it is about triple that number. The total first year payment will be either $344k or $295 (estimated).
There are two ways the school board can choose to pay for this bond, “level principal” or “level debt”. Here is the payment schedule for the two scenarios.
Level Principal – Higher payments at the beginning, lower at the end, $344k annual payment at the beginning, $198k at the end.
– Total of payments = $5,504,270
– Total interest paid = $1,497,592
Level Debt – Higher payments at the beginning, lower at the end, but a much slower decrease than above, $295k annual payment at the beginning, $275k at the end.
– Total of payments = $5,663,170
– Total interest paid = $1,656,052
As a quick note of comparison, the lease payment would have total payments of $6,664,000 and total interest of $2,657,000 over 20-yrs