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APPROPRIATION COMMITTEE- STM 2016 -3 Pursuant to a request made by the Chairman of the Permanent Building Committee, consultants from Hill International who had not previously worked on the Lexington projects were hired in January 2015 to conduct a peer review of the Clarke and Diamond designs. The purpose of the review was to test whether the DiNisco designs met capacity goals, satisfied the requirements of the schools' educational programs and were cost - effective compared to other design alternatives. Although Hill identified two alternative design options at Clarke, it was determined that they would not meet educational needs as well as the original design. No design changes were recommended as a result of the peer review process. The current requested appropriation of $62,196,247 will fund the Clarke and Diamond projects to com- pletion. The following table summarizes past and current appropriation requests for the middle school projects: Project Component Appropriation Date of Appropriation Schematic Design /Design Development $2,467,753 March, 2015 Construction Documents $1,951,000 December, 2015 Construction $62,196,247 Requested at STM 2016 -3 TOTAL $66,615,000 Financing With Excluded Debt Because of the school year calendar, and the need for a debt exclusion referendum to finance the majority of this project, work on the middle school project will be split into two phases. The first phase, estimated to cost $4,104,940, will fund renovations that must be completed during the summer of 2016 in order to guarantee adequate space for students arriving in the fall of 2016. The second, more significant phase, estimated to cost $58,091,307, will be completed after the fall of 2016. Debt service for all the appropriations listed in the table above will be part of a debt exclusion question presented to the voters this spring, but the contract for the first phase of renovations must be signed by the first week of April, before the debt exclusion vote, in order to maintain the targeted occupancy dates. The Town cannot execute a contract without guaranteed funding, so the Town is prepared to fund this initial phase using within -levy debt if necessary. The work associated with the second phase of the appropriation will proceed only if the voters approve a debt exclusion. This debt exclusion referendum question will not be limited to a dollar amount. Consistent with state law, it will seek approval to finance the complete costs of this project with excluded debt, thus allowing some leeway for further Town Meeting appropriations in the event of unanticipated cost overruns. History of Debt Exclusions in Lexington A table with a complete history of prior debt exclusions, amounts, and dates is in the Brown Book (Fiscal Year 2017 Recommended Budget & Financing Plan, February 29, 2016, page ix). The most recent debt exclusion, for the new Estabrook School and renovations at the Bridge and Bowman Schools, was ap- proved in 2012. The largest previous amount covered by a debt exclusion, $52,235,000, was approved in the year 2000 for renovations at the High School and the two middle schools. The present middle school projects would be somewhat larger in absolute dollar amounts, but not when corrected for inflation ($52 million is 2000 would be worth approximately $71.5 million in 2016). Property Tax Impacts If, as anticipated, the debt service for these projects is excluded from the limits imposed by Proposi- tion 21/2, local property tax bills will be augmented for the duration of the debt service, in this case about 30 years. The debt service comprises both principal and interest payments, with level payments of princi- pal and a declining interest component as the principal is retired. Assuming that $66,000,000 is borrowed with a 30 -year pay -down schedule, then $2,200,000 would be due annually for principal. The size of the interest payments depends not only upon the amount of princi- 4