Tax Impact

The exact tax impact to any Winchester resident of the WHS reconstruction is yet to be determined, because the terms of all of the borrowing to be undertaken (length, interest rate, etc.) have not yet been established. However, you can begin to calculate the impact to your taxes of $60 million of actual borrowing that the town has undertaken thus far (toward the town’s estimated total $85.4 million cost). This, along with the town’s estimates in 2013, will help to provide a sense of what your actual final tax increase might be.

To understand your tax impact, you will need to know the assessed value of your home. By entering the owner’s last name and/or the street name in the left column of the ASSESSOR’S DATABASE you can learn the assessed value of your home.

Tax Impact of WHS Override – Reference Guide

Assumptions are as follows:

Total (Maximum) Project Cost: $129.9 million
State Reimbursement: $44.5 million
Local Funds to be raised by Debt Exclusion Override: $85.4 million

Payment on borrowing will first occur for fiscal year ending June 30, 2016.

Cost will ramp up as funds are spent as construction progresses. During this time, the town will secure BANs (Bond Anticipation Notes) to cover the cost, and the taxpayers will bear only the cost of interest on that borrowing.

2013 Pre-Override Estimate (reflects borrowing of $87 million): In 2013, in order to assist Winchester voters in evaluating the proposed override question, the following estimates were provided for the tax impact of the WHS project (commencing fiscal year ending June 30, 2018):

$1.10 for each $1,000 value of your home:
For a home valued at $750,000, this would be $825 annually (750 x $1.10).
For a home valued at $500,000, this would be $550 annually (500 x $1.10).
(etc.)

Assuming no growth in assessed value, this amount would be charged annually on the resident’s tax bill for the duration of the bond (25 years in this example), and remain level in amount.  To view the assumptions underlying this estimate, please CLICK HERE.

Impact of Actual Borrowing to Date (reflects borrowing of $60 million thus far): In summer 2015, the Board of Selectmen voted to borrow funds anticipated to cover project costs through June 2016 in light of favorable interest rates. The town therefore borrowed $60 million at a rate of 3.38%. The impact on the tax rate of this borrowing is as follows:

$0.73 for each $1,000 value of your home for fiscal year ended June 30, 2017:

For a home valued at $750,000, this would be $548 annually (750 x $0.73).
For a home valued at $500,000, this would be $365 annually (500 x $0.73).
(etc.)

$0.75 for each $1,000 value of your home for fiscal year ended June 30, 2018:
For a home valued at $750,000, this would be $563 annually (750 x $0.75).
For a home valued at $500,000, this would be $375 annually (500 x $0.75).
(etc.)

For each subsequent fiscal year, the tax impact of this $60 million of borrowing will decrease, due to the fact that the Selectmen elected to borrow on an equal principal basis (vs. level debt). CLICK HERE to see the annual impact on the tax rate for each of the years from 2017 through 2046 of the $60 million borrowed thus far.

To see the terms underlying this borrowing, as well as to learn more about the difference between “equal principal” and “level service” borrowing, CLICK HERE.

How does a debt exclusion override work?   A debt exclusion override is a temporary increase in taxes to pay for a specific debt – typically a capital expense such as a building renovation or repair.  It is not permanent.  When the project has been paid for, the temporary increase will be revoked and taxes reduced.  See, e.g., http://www.mass.gov/dor/docs/dls/publ/misc/levylimits.pdf.