Hearing set for IW borrowing money
On Sept. 10, Isle of Wight taxpayers will have the opportunity to weigh in on whether the county should take on $57 million in additional debt to fund the building of two new schools.
That’s the date Isle of Wight County’s Board of Supervisors has picked for a public hearing on the matter, which will be held at 7 p.m. in the auditorium of Westside Elementary School.
The school, located at 800 W. Main St., is one of two slated to be replaced in the next few years. Isle of Wight County Schools also plans to replace Hardy Elementary with a new school modeled after Florence Bowser Elementary in Suffolk, capable of housing more than 800 students.
For Westside, which is currently grades 4-6, the plan is to build a new middle school on Turner Drive — one capable of housing more than 1,100 students in grades 5-7 — and then repurpose the existing Smithfield Middle School/High School complex into one big grades 8-12 high school.
To fund this, Isle of Wight’s Capital Improvements Plan Committee is recommending that the Board of Supervisors take on $64.3 million in new debt, $57 million of which would be for the two new schools. The remainder would be for other projects in the county’s five-year capital improvements plan. Assuming the county moves forward with the timeline its financial advisors from Davenport & Company have proposed, $28.1 million of this borrowed money would become available to the county by October this year, $27 million of which is intended to replace Hardy. By 2022, when the new Hardy is slated to open, an additional $36.2 million in borrowed money would become available to the county, about $30 million of which would be intended for replacing Westside.
The new debt service would likely require a 5-cent real estate tax increase, which the county is planning to stagger into effect over the next several years. The current plan calls for 4 cents to be added to the county’s 85-cent-per-$100 rate beginning in 2022. Then in 2025, another penny would be added, bringing the rate to 90 cents. By 2028, this could be dropped to 88 cents and then back down to 86 cents by 2029.
But this could change for better or worse based on what final cost estimate the county receives for building each school and what interest rate it receives on the money it borrows. Davenport representatives say interest rates are currently below 1.5% after having risen sharply during the early months of the COVID-19 pandemic.
At the start of 2019, Isle of Wight County had the eighth-highest debt per capita in Virginia, with its annual debt payments reaching a high of $12 million that year. If no new money was borrowed, these payments would drop steeply by 2028 and be paid off in full by 2044. Based on current estimates, Isle of Wight’s annual debt payments would rise to a new high of $15.5 million by 2027 and not return to 2020 levels until 2031 if it borrows the amounts proposed. The county would be debt-free by 2044.