The Town will borrow for the entire amount of this project. Bonding for the two buildings together saves on fees and limits the payment each year, allowing for continued financial stability for the town.
Normally, large-scale infrastructure projects are paid for through a debt exclusion or override process. This is like placing a hat on top of your tax bill. You are charged taxes for regular operations of the town and then the project costs are in addition to that amount. This is not the design of this project’s funding proposal.
Instead, the Town is including the bond payment within the levy limit. The levy, or the amount the Town is able to tax up to in a given year, can only increase by 2.5% each year. By doing this, the Town is limiting its spending capacity on other items as we see this as our greatest operational need. Over the last three years, the Town has been careful in our expenditures and mindful of its infrastructure proposals, leaving $5.5 million in excess levy capacity over that time. We have passed financial policies and made agreements with the Advisory and Finance Committee about how certain revenues will be attributed to this project and others like it. We are committed to finding grants and other means to contribute toward the project to reduce final costs attributed to the tax base.
To illustrate this point, we can examine estimated costs. Please note, these are illustrative and not actual estimates.
If the bond payment is $3.5 million for the first year, this full amount will be placed within the levy limit. If there is $2 million of space on the levy from last year’s budget and other expenditures (note that this is not excess levy capacity), than only $1.5 million would be “felt” by taxpayers as an additional cost. The $2 million would be absorbed by already allocated funds and purchases, which renders that part of the payment unrecognizable in your current tax bill.
Actual costs for this project are estimates right now. We have identified a range of $48 million to $53 million for the total cost of the project. Estimators are working now to finalize the numbers which will be presented prior to the vote at Town Meeting. Current estimates are being prepared using the following assumptions: $53 million at a 3.5% interest rate – the current rate at the bond market – and assuming a 25-year bond with debt principal payments (this means a larger payment in the beginning of the bond that decreases over the life of the bond). The first year’s payment in this scenario is $3,750,000, amounting to an additional $1.25 to the tax rate.
If $3,975,000 is placed onto the levy limit and there is $2 million of already-allocated space eligible for replacement costs, then the additional to be raised is $1,975,000. Therefore, a resident can expect to see an additional $0.62 per thousand on their tax bill as a result of this project. This would result in the “felt” impact amounting to $248.48 per year for an average taxpayer. Use the debt calculator for individual impact on your property.
Tax Impact Formula
Budgetary costs for this project are estimated within a range of $48 million to $53 million. The increase to the tax rate was projected to be $1.25 per thousand; however, the finance plan of placing the bond payment within the levy provides a revised tax increase of $0.62 per thousand, equating to $250.00 annually per average tax bill average bill.
The formula to calculate the first year tax impact to an individual household can be calculated using the following formula:
Property Assessed Value (AV) = $400,000
First Year Rate (FYR) = 0.6212
(400,000 / 1,000) X 0.6212 = $248.48*
* The proposed finance plan is a 25-year bond with declining payments that will have a reduced impact year over year.
Tax Impact Calculator
Use the calculator in the Excel sheet link below to estimate the tax impact of the proposed Swansea Municipal Complex, Debt Exclusion Election scheduled for November 6, 2023
- Enter your Assessed Value without commas or decimal points in to the form and hit the “enter” key. If you do not know your assessed value, please follow steps 2 through 4 below.
- Click the “Swansea Property Values” link to look up your property value from the online database. Swansea Property Values
- Search for your Property Address using the search bar under “Property Lookup”.
- Click on your address from the drop down window that corresponds to your address (options are prefaced by the word “Address:“).
- Your property’s total value can be found in the property record in the Current Value table under “Assessment”
Tax Impact 25 yr – Proposed Rate <– click here to download the Excel sheet with impact calculation formula