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Debt Exclusion 2023
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A Town-wide Debt Exclusion vote is scheduled for May 2nd, 2023. This vote will determine whether the Town can levy additional property taxes beyond the limits of Proposition 2 and 1/2 in order to pay for the annual debt service costs of a new elementary school located at the Fort River site.
The proposed new Fort River Elementary School will replace the Wildwood and Fort River Elementary Schools with one new school at the Fort River site. The District plans to move the sixth grade to the Middle School. The new three-story school will serve 575 children in grades kindergarten through 5th.
The school will have 21st Century learning environments, with flexible teaching spaces in daylight filled classrooms and shared spaces. It will be home for Special Needs and the Caminantes dual language programs. The cafeteria will include a stage and connection to music rooms. The design will allow for secure after-hours use of the community spaces (cafetorium, gym, library). The building will have safe entrances/exits and be fully accessible. Site plans provide for outdoor learning as well as play. The project will restore and improve drainage of Fort River’s community fields for recreational use by children and the broader community.
Reflecting Amherst’s climate goals, the building will be highly insulated and use all-electric and renewable energy systems. It will be a net-zero building using ground source heat pumps for heating, air, and ventilation and on-site photovoltaic system for renewable energy.
Below, you will find a tool to estimate the tax impact on your property from passage of the debt exclusion and a listing of frequently asked questions and answers. On the right side of this page, please see links to additional information on the design of the school, the Elementary School Building Committee and information on programs available to support residents experiencing financial struggles.
PROPERTY TAX IMPACT
The estimated annual impact of the debt exclusion is $1.01 per $1,000 of assessed property value. It is estimated that the annual impact of the debt exclusion on the FY 2023 average single family residence in Amherst, valued at $446,953, is $451 ($446,953 / $1,000 X $1.01). These estimates are based on current economic conditions and are, of course, subject to change if economic conditions, such as interest rates, change.
Use the tool below or to access it in a new window, click here.
Frequently asked questions
Please use the small arrows to expand the question you would like to see the answer for. To view the entire category at once, please click the category heading or click "View All Questions in This Category" at the end of each category's question list.
- What is Proposition 2 ½ and what is a Debt Exclusion?
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Proposition 2 ½ refers to a Massachusetts law enacted in 1980 that limits the amount of property tax revenue a community can raise through real and personal property taxes. The amount actually raised is technically called the “Tax Levy.” The maximum amount a community can levy in any given year is called the “Levy Limit.” Proposition 2 ½ limits how much the Levy Limit can be increased from year to year.
Under Proposition 2 ½, a community’s levy limit increases annually by two factors:
1) an incremental increase of 2.5% of the prior year’s Levy Limit (hence the name “Proposition 2 ½”), and
2) a dollar amount derived from the value of new construction and other growth in the local tax base since the previous year, referred to as “New Growth.”
Notably, the restriction on raising taxes more than 2.5% is based upon the prior year’s Levy Limit, rather than on the prior year’s Tax Levy. Thus, if in a particular year the Town assesses taxes below the Levy Limit, the next year, the Levy Limit will still rise by 2.5% and new growth over the prior year. In that case, it is possible that taxes may increase more than 2.5 %. A common misconception is that Proposition 2 ½ restricts the amount an individual’s property tax bill can increase.
A community can exceed its Levy Limit for limited reasons and only with voter approval. One such reason, called a Debt Exclusion, allows a municipality to raise funds outside the Levy Limit for the limited period of time needed to repay the debt and interest on a loan for a particular capital purpose.
In our case, the Debt Exclusion would allow funds to be used to repay a loan for the costs of constructing a new elementary school to replace two older schools. The additional amount would be raised outside of the Levy Limit for the life of the debt only. Stated differently, Debt Exclusions do not become part of the base used to calculate the annual 2.5 % increase in the Town’s Levy Limit. Instead, the increase is temporary and lasts only for the life of the bonds.
- What are we voting for?
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In essence, a new elementary school. Technically, we are voting on whether to authorize the Town to raise the amount needed, outside of the Levy Limit, to make principal and interest payments on a 30 year loan. Each year, the Town would add to the total amount of the Tax Levy the specific amounts needed for that year to pay the annual principal and interest payment. If no debt exclusion were used, the Town would need to absorb the costs of those annual payments within the Levy Limit. Based upon the size of the project, it is the Town’s position that raising such funds within the Levy would limit the availability of funds for Town operations and other projects.
A “YES” vote would allow the Town to levy the additional taxes needed to repay the money it borrows to construct a new elementary school.
A “NO” vote would not allow the Town to levy additional taxes to construct a new elementary school.
- When is the election?
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The election date is Tuesday, May 2, 2023, with voting hours from 7:00 AM to 8:00 PM at all of the Town’s voting locations.
Please visit the Elections page or contact the Town Clerk's office for more information about the election.
- How much will the debt exclusion increase my taxes?
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The estimated annual impact of the debt exclusion is $1.01 per $1,000 of assessed property value. It is estimated that the annual impact of the debt exclusion on the FY 2023 average single family residence in Amherst, valued at $446,953, is $451 ($446,953 / $1,000 X $1.01). These estimates are based on current economic conditions and are, of course, subject to change if economic conditions, such as interest rates, change.
NOTE: The estimated impact above is for a property assessed at $446,953. Properties with lower assessed value will see a lower impact while properties with a higher assessed value will see a higher impact. Please use the tool above to find your specific property.
- When will I start to see higher taxes and when will it end?
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The increase to taxes is estimated to begin in 2025 and terminate by 2056. The increase in the first few years will be lower as the building is under construction and will reach its peak level in 2029.
- What will happen if the debt exclusion does not pass?
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The Town will not be able to proceed with building a new elementary school as trying to fund the cost of the project within the Levy Limit will significantly reduce the amounts available for Town operations and other projects. In addition, the plan to renovate or replace the Fire Station, Jones Library, and Public Works facility will need to be reevaluated. One potential outcome is that the Town will need to invest in temporary repairs to the existing buildings which are aging and in poor condition.
- Can the Town use the additional funding from the debt exclusion for anything other than repaying the money borrowed to build the new elementary school?
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No, the Town can only levy additional taxes to repay the debt for the new elementary school.
- What is the estimated total cost of the new elementary school?
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Construction and equipping of the new elementary school is estimated to cost a total of $99.2 million including the feasibility study. This figure derives from two independent cost estimators that each projected the cost of the new building and then met to reconcile any differences between their two estimates and arrived at a single cost estimate. The estimated cost of the project includes contingencies for future cost escalation.
- Is the Town getting any grant money to reduce the cost to the Town?
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Yes, the Town has been accepted into the selective Massachusetts School Building Authority (MSBA) program and the MSBA is providing a maximum facility grant to the Town to reduce the cost to the Town, projected to be $40.5 million. The Town’s share of the cost of the new elementary school is projected to be $58.8 million before applying any other funding sources.
- What else is the Town doing to reduce the cost?
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The Town has aggressively sought ways to reduce the impact of the project on taxpayers.
Early on, the square footage of the building was reduced by approximately 8,000 while still providing adequate space for all of the educational programs. This reduction is significant given estimated construction costs per square foot in the $800 range.
Next, the Elementary School Building Committee (ESBC) reviewed project costs and identified over $5 million of cost saving measures from the initial estimate.
The Town has partnered with Eversource to generate a maximum of $1.6 million of energy incentives/rebates and the Town Council has approved a Community Preservation Act grant in the amount of $700,000 to offset the cost of the fields.
Town officials worked with its State Legislators to advocate for an increase to the grant from the MSBA. These efforts resulted in over $3 million of additional grant funding.
Most recently on April 3, 2023; the Town Council voted to appropriate $5 million from its Capital Stabilization Fund to reduce the impact of the debt exclusion on tax payers.
- Why is the School Building project so important?
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Both Fort River and Wildwood Elementary schools have significant structural and functional issues. This project allows the Town to address the facility needs of both schools with a single new elementary school that improves the learning environment. The MSBA only accepts a certain number of schools into its grant program each year. If a debt exclusion is not approved for this project, it will be years before the Town is again accepted to participate in the program. As we have seen since the last attempt to replace these schools, delays also mean higher costs.
The Town has not addressed replacement of aging municipal facilities over the past 30 years and, as a result, has a backlog of facilities in poor condition requiring temporary improvements. As a result, any delays in this project will compound the facilities challenges facing the Town.
- Are there any other financial benefits from this project?
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Yes, the School Department has projected over $1 million of operational savings as a result of moving from three elementary schools to two. These savings derive from lower utility and maintenance costs, more efficient use of staffing, and lower administrative costs.
- Why are our taxes so high?
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Amherst has a unique challenge. It has approximately 40,000 residents but only about half live on taxable property because of the tax-exempt nature of the colleges and University. The Town provides infrastructure, roads, sidewalks, recreational facilities, public safety services and more to all of these residents but does not get an equivalent amount of tax money. This puts more stress on the Town’s operating budget and its taxpayers.
Town officials are advocating to its State Legislators to reevaluate the State’s Payment in Lieu of Tax Program (PILOT) and specifically to examine the impacts of State Owned Land on Amherst.
- I can’t afford to pay more taxes. How can the Town help?
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Town officials continue to seek additional funding sources, such as private donations and tax credit payments related to the Inflation Reduction Act legislation, to further reduce the impact of the debt exclusion.
There are several tax relief and exemption programs in place for the following groups of taxpayers that qualify:
o Seniors
o Legally Blind Individuals
o Veterans
o Surviving Spouses
o Minor Children of Deceased Parents
o Individuals Experiencing a Financial Hardship
For more information on these programs, please visit https://www.amherstma.gov/106/Exemptions
The Town also offers a tax work off program for qualifying seniors. More information on this program can be found here: https://www.amherstma.gov/586/Tax-Work-Off-Plan
- It seems like the Town is taking on a lot right now. Why?
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The Town has not addressed any of its aging facilities over the past 30 years and several facilities are currently being considered for replacement or renovation. Town officials are working to tackle this challenge now, as delays will result in higher project costs.
- What is the Town’s budget and why does it need additional funding for the elementary school?
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The Town’s budget was $90 million in FY23, and it includes several millions of dollars for capital improvements. These funds go towards road repairs, new sidewalks, small facility projects, vehicle replacements, technology equipment, sustainability improvements, etc.
The Town is planning to use funds within the existing budget to repay the money borrowed for renovation of the Jones Library, new Fire Station in South Amherst, and the Public Works facility. It is not anticipated that these projects will require a debt exclusion as the Town intends to fund these projects within the Town’s Levy Limit.
- What has the Town done to make sure they are stretching every tax dollar as far as possible?
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The Town is planning to replace three buildings within the Levy Limit and without any additional taxes from a debt exclusion (library, fire, DPW). The plan has been in place for several years and requires maximizing funds available for capital improvements, operating as efficiently as possible, and building up reserves. One goal of the school building project is to use tax dollars more efficiently by leveraging economies of scale that come from operating two elementary schools rather than three.
- The Town has free cash and stabilization funds. Why not use these funds to reduce the cost of the new elementary school?
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These funds generally fall into two buckets: 1) rainy day funds and 2) capital funds. Rainy day funds are needed to protect the Town against economic downturns or unanticipated emergency expenditures. These funds help the Town maintain a strong bond rating which in turn results in a better interest rate when it goes out to borrow funds. Town officials do not advise using any of the rainy day funds.
Town officials are building up capital funds to pay for a new fire station. By using capital funds for the fire station, the Town will not need to borrow money and will save millions in interest costs. If these funds were used for the new elementary school, the new fire station would be delayed unless the funding was handled differently.
UPDATE: On April 3, 2023; the Town Council voted to appropriate $5 million from its Capital Stabilization Fund to reduce the impact of the debt exclusion on tax payers. The Town will seek to replenish this appropriation from the Capital Stabilization Fund by pursuing new federal tax credit payments for energy efficiency improvements at the proposed new elementary school.