Letter to the editor submitted by BET members David Weisbrod and Leslie Moriarty
We all know that a pillar of our Town’s reputation is the excellence of our schools. Quality education is a principal reason young people are attracted to Greenwich. Yet we are facing a crisis in our schools because of the aged infrastructure of so many of our facilities and deferred investment over many years in these crucial assets.
The average date of the original design of the Town’s public schools is 1953—66 years ago! Of the sixteen major buildings, thirteen are more than 55 years old. Per KG&D Architects, since 2003 the school district has spent less than $15 million per annum on capital maintenance and at times less than $5 million when a district of our size and age should be spending $20 million a year to maintain the existing infrastructure. Major updates are needed for core and next generational models. We can no longer kick the can down the road.
There is growing consensus in Town that we must address the issue; with Town leaders now considering various options of how to execute the school rebuilding plan in a sensible, sound way.
Essentially there are three financing routes we could take:
1-We could fund exclusively through property tax increases but this would be jarring to our residents and a major negative for newcomers considering Greenwich as a place to live;
2- We could rigidly rely on the existing “modified pay as you go” approach (two years of bond anticipation financing followed by bonds with maximum five year maturity), but this would either result in prolonging the investment plan for many years into the future or ballooning the amount of Town debt, triggering unacceptable breaches in our debt service ratios; or
3- We could fund components (e.g. the replacement of Central Middle School, the
improvements to Julian Curtiss, Old Greenwich and Riverside Schools) with longer term
debt (up to twenty years) matching the life of such new construction. This would spread
the cost over the life of the investment.
As Town leaders debate how to proceed, it is becoming increasingly apparent that a combination of the above financing routes needs to be considered, along with a sensible execution model to avoid bunching of investments in a single year. The BET Debt and Fund Policy Committee has generated a financial model that provides interested parties a tool to alter each of the above variables, to see the effect on the debt policy limits that are currently in place and to determine how alternative financing options for school infrastructure rebuilding might impact the Town’s ability to comply with policy constraints.
The introduction of bond maturities of up to twenty years could be one prudent tool to help address critical infrastructure needs while maintaining a predictable and steady level of property taxes. Extended maturities should be considered if, and only if, the life of the asset being financed matches the maturity of the debt. This has been the approach of virtually every major corporation as well as governmental entities and would not weaken Greenwich’s fiscal position in the eyes of the credit rating agencies.
Fixing interest rates for the life of a project at the time of borrowing reduces the market risk currently being faced by the existing multiple series of financings. However, beyond the fiscal soundness of such an approach, there is the simple issue of fairness to current taxpayers. Future residents should share in the costs of improvements, from which they
will benefit, rather than placing the full burden on current residents via immediate and
potentially volatile property tax increases.
Any proposed approach must be tied to our commitment to maintaining a level of debt that preserves compliance with sound financial policies. We believe there is consensus within the Town to limit overall indebtedness, which is tied to preservation of the Town’s AAA credit rating. Greenwich is widely acknowledged to have a “fortress balance sheet” and that too is an attraction that newcomers to our Town notice. Under no circumstances should we jeopardize this competitive advantage.
Still, nine municipalities in Connecticut with AAA ratings incorporate longer term debt as part of their liability tool kit, and in fact, Greenwich does as well. With respect to Nathaniel Witherell, sewer improvement bonds and when the Town purchased the
Pomerance estate, Greenwich utilized longer term debt. All of these financings occurred without a trace of any adverse impact on the Town’s financial discipline and without impairing the Town’s AAA bond rating. Limiting aggregate Town indebtedness is the critical fiscal constraint that has served to maintain our strong credit rating. There is widespread consensus to continue such constraint going forward.
In short, if we all acknowledge the need to address our critical infrastructure deficiencies as expeditiously as possible, then extending payment terms over a longer time horizon should be accepted as one of a number of sensible, efficient and non-disruptive tools to achieve capital improvements that will preserve our schools for the benefit of our children and grandchildren.