Mount Greylock to Pay Less Than 3 Percent on Building Bond
WILLIAMSTOWN, Mass. — The Mount Greylock Regional School Committee Monday agreed to borrow $30 million at an effective interest rate of less than 3 percent.
The district officially offered the municipal bonds to pay for its share of an addition/renovation project on Monday morning, and within minutes it had six bidders vying for its business, district treasurer Richard Jette told the committee.
“With [Janney Montgomery Scott LLC], it came in very favorable,” Jette said. “We were projecting interest rates of 3.5 percent, and it came in under 3. There’s plenty of room to finance the project and pass along savings to the towns.
“This is very good news. The process went well. I think only one other community in the country was selling bonds today, so we had a good bidding pool.”
A favorable market and a strong bond rating left Mount Greylock in perfect position to finance its share of the $63.9 million project on favorable terms.
Janney offered Mount Greylock a premium of more than a million dollars to obtain the bond. Over the course of 30 years, the district will end up paying back just $28.98 million in principal for the $30 million in borrowed funds.
The district will pay just 2.96 percent interest on that $28.98 million.
“It went exceedingly well, really,” Jette said. “I think we hit the market at just the right time.”
After confirming with Jette that there was no downside to accepting the bid with the lowest true interest cost, the five members of the seven-person committee present for Monday’s special meeting voted unanimously to award the bond to Janney.
Although Monday’s bond represents the bulk of the district’s borrowing on the project, the district from day one has envisioned a second bond toward the end of the project once the actual cost of the renovations and new three-story academic wing are known.
Consequently, the debt service schedule on the $30 million bond was “front loaded,” to allow the district to absorb an additional bond of a few million dollars without increasing the tax impact to the member towns, Lanesborough and Williamstown, during the repayment.
For example, in 2020, the district’s principal plus interest payment will be $1.9 million. The next year, it drops to about $1.5 million.
“The first three years, we kept it pretty close to the amounts the School Committee approved at budget time when we were looking over how much needed to be applied to the project,” Jette said. “We don’t know what the final [bond] issue will be. We’re guessing around $4 million.”
The sale agreed to Monday night will be finalized on Oct. 13. The bonds will be payable on June 15 each year to follow.
Much of the nearly $64 million school building project is being funded by the Massachusetts School Building Authority, which receives 16 percent of revenue from the commonwealth’s 6.25-cent sales tax.
Representatives from the MSBA will be in Williamstown on Friday at 2 p.m. for a ceremonial ground-breaking at Mount Greylock.
Tags: MGRHS, MGRHS school project, Mt. Greylock High School,
