Once the second pipeline crossing through Bowling Green City Schools is functional, it could pay $2.9
million annually to the school district.
And that could mean the high school projects may be funded with no additional tax dollars.
The $2.9 million is the estimated value of the second Rover pipeline, released by the Ohio Department of
Taxation and the Wood County Auditor’s Office, according to Cathy Schuller, school district treasurer.
“This news was completely unexpected as it relates to a second pipeline which is identical to the first
pipeline in the district,” she said.
The first pipeline currently produces around $758,000 yearly to the district.
The funding would start in January.
Schuller made the announcement at Tuesday’s school board meeting, after stating that dropping interest
rates could save the district $13 million on its proposed elementary project. The Nov. 5 ballot issue is
to build one consolidated elementary school. It will be funded by a 1.6-mill property tax that will
collect $20 million, and a 0.25% traditional income tax that also will collect $20 million.
The pipeline money could potentially be used to fund the high school projects that are not part of the
tax issue, with no additional cost to taxpayers, Schuller said.
“This would essentially allow us the capacity to update all of our buildings at the same time, which was
mentioned as a deficiency of the current ballot issue by a community member at the last board meeting,”
she said.
The annual payment on the $40 million elementary project will be $2.38 million. The proposed high school
projects would cost around $38 million, according to numbers provided by Fanning Howey Associates.
“This is excellent news for the district,” Schuller said said.
As per a resolution passed in May 2018, the pipeline money will be used for capital projects – not
salaries. Additional options for this new money include:
• Paying off the existing debt on the middle school, which has a current balance of $3.99 million.
• Going toward payment of the bonds from a 2007 project that has a current balance of $21.33 million.
• Subsidizing payment on the new bonds for the proposed, new elementary school.
As for the pipeline money, Schuller said that the values are subject to appeal, so it possibly could be
April before the outcome is known. Depreciation is estimated at 3% per year.
There are risks involved, however, with this additional money, she said.
The law could change, lowering the tax rate on public utility property; the state’s funding formula could
change to account for the additional local income, creating a drop in state aid; and if the company goes
bankrupt or the pipeline is taken out of service, the funding will stop.
“This should not be considered permanent funding,” Schuller said, adding that it does not replace the
need for operating levies. “It is far too soon to determine if this money is reliable. We absolutely do
not want to rush into any decisions and subject ourselves to any risk.”
As the board learns more, it will work with the district’s financial consultant to analyze and develop
the best option that is the most fiscally responsible for taxpayers.
“It is certainly good news,” said board member Paul Walker.
Board member Bill Clifford reiterated what Schuller said.
“This would not go toward any operating (costs); it would be capital only,” he said.
As for interest rates on the sale of bonds for the new elementary school, they have dropped from 4.25% in
November to 3.01% in August. At that time, savings in interest on the project was $10 million.
A check on Tuesday showed a rate of 2.59%, Schuller said.
Based on the 2.62% rate from earlier this month that she based her presentation on, if the bond issue
passes in November, that could save up to $13.26 million in interest payments over the 30 years of the
loan, she said.
“If we locked it in now, we could be looking at saving $13 million in interest costs. That’s to the
taxpayers,” Schuller said.
The cash equivalent is $9 million, so it would drop the cost of the project to $31 million, she said.
That could create a situation where the board reduces from 30 years the term of the financing or collect
a lower property tax rate than the 1.6 mills now being requested.
“The options are open now as we get lower and lower,” Schuller said.
As for the 0.25% income tax, that will mean it will be over-collecting and that extra money can be used
to reduce the term of the financing or apply the funds toward the principal payment.
It is too soon to make any decisions, Schuller said, adding that interest rates are volatile and could
either continue to drop or go higher.
“Interest rates are erratic and difficult to predict. One tweet could change everything. There’s no way
to tell how long these rates are going to last.
“The best time to finance any facility project is when these rates are at a historic low,” she said.
