By Alan Burke
---- — PEABODY — In a unanimous vote, with nary a word of comment, the City Council on Thursday night took the first step toward authorizing $92.6 million in spending for a new Higgins Middle School.
But if you feel like saying a few words on the topic, now’s your chance. The vote authorized the city to advertise a council hearing on May 23 that gives anyone the opportunity to get their 2 cents’ worth into the multimillion-dollar debate. A final City Council vote on the project will be taken at that time, according to Finance Director Patty Schaffer.
Whatever you’ve got to say, however, it’s not likely to change anything. The proposal to build a new school has been thoroughly debated over the past months, at both the council and the School Committee. Backed by an enthusiastic Mayor Ted Bettencourt, the plan has encountered virtually no serious opposition.
Further, the spending is already underway with a design completed. Of course, thanks to input from the Massachusetts School Building Authority, the city’s share of the bill will amount to $49 million. But don’t start celebrating yet. Tack on another $36 million for the estimated cost to the city of borrowing the money.
After taking the vote, City Councilor Dave Gravel conceded that it’s a rare responsibility to be in a position to spend nearly $100 million and that councilors take it very seriously. On the other hand, he’s hopeful that the eventual bill will be lower than now projected. He cites Schaffer’s estimate that the city will borrow at a rate of 4 percent.
She has acknowledged that this is a “conservative” estimate. In the recent past, the city has borrowed at rates near 2 percent.
In fact, thanks to the city’s Aa1 bond rating and a favorable climate for borrowing, Gravel is hoping the actual rate will be closer to 3 percent.
“I don’t think you could have a better time for borrowing,” he said.
“We’ll be thrilled with 3 percent,” Schaffer said.
Schaffer said the cost could hinge on when the city actually borrows the money. Borrowing on such a project is generally spread out over a matter of years. The first borrowing is slated for $9.1 million in June 2014.
Yet, it might develop that the city is better off to borrow more money now, even before it’s needed, in order to get the best rate for the city. Waiting could mean that rates will climb in the interim.
“It’s very complicated,” Schaffer said.
Another helpful development is the new policy of the School Building Authority. In years past, cities and towns were asked to spend for school construction upfront and then wait for reimbursement. Today, the state pays as the project proceeds.