January 24 Referendum - Frequently Asked Questions
#1 — What are the referendum costs and tax implications?
This referendum requests voters to approve a $13,770,000 bond which will go towards the renovation of roofs, HVAC equipment, art rooms, science labs and classrooms. Approximately 80% of construction will take place at the elementary school with the remaining 20% taking place at the high school and parking lots.
The following breakdown shows how the principal and interest will be repaid:
State of New Jersey $7,380,506 Sending District Share of Interest $894,984 Interest Earnings $333,984 Manasquan Taxpayers $13,922,751
The biggest take away that affects you is that every year the bond is being repaid, your debt service tax bill will be LESS than the 2022 median of $518.68. (See our tax calculator to see the impact on your own property's assessed value.)
#2 — Was the Fieldhouse project a Referendum and why was it built before these improvements?
The fieldhouse was NOT a referendum. It was a joint project between the Borough and the School District to construct a multi-purpose facility that both could use for their programs. The Borough bonded the money for the fieldhouse so that it could be repaid within the district’s annual operating budget and therefore did not result in an increase in taxes.
Had this project been put to a referendum vote, and passed, at the time the fieldhouse bond was issued, it would have resulted in a significant increase in taxes due to the prior debt still being paid off. This project was timed so that it could be accomplished without increasing taxes.
#3 — How will the referendum affect taxes for Senior Citizens?
The Referendum will NOT have a negative impact on taxes for eligible senior citizens, as the Property Tax Reimbursement Program (Senior Freeze) has protected senior citizens and disabled persons from property tax increases since 1998. If you are a senior citizen or disabled person and have questions about your eligibility for this program, we encourage you to contact the NJ Division of Taxation at 1-800-882-6597 or visit their website for more information.
#4 — If this referendum does not pass what are the consequences?
The projects included in this referendum are essential to the safe operation of our schools. Without a referendum, if the district were to finance these projects individually over 26 years, the Manasquan taxpayers would be responsible for 100% of the costs with no state aid. As a result, taxes would increase significantly because the projects would be paid for through the school budget.
#5 — Is it cheaper to do these improvements using the school budget rather than this referendum?
There are two primary reasons why passing a referendum and issuing bonds to fund this project is more cost effective than absorbing them into the general budget:
- First, only construction funded through the referendum process is eligible for debt service aid from the State of New Jersey. The debt service aid program reimburses school districts up to 40% of the cost of bond repayment, including principal and interest. For the proposed project, this amounts to $7,380,506 in aid to offset the financial burden borne by Manasquan taxpayers.
- Second, projects funded by school districts through the general budget may only be financed for a maximum of five years. If the district were to fund the proposed construction over the same 26-year term of the proposed bond through the general budget, it would amount to approximately 5 separate 5-year rounds of shorter-term funding. Not only do short-term loans typically require higher interest rates to service, the district would also experience escalation in construction and design costs as each phase was completed subsequently.
The absence of any state aid coupled with the increased costs of borrowing and construction would result in significantly higher costs to the Manasquan taxpayer to complete this project if it were to be paid for out of the operating budget.
#6 — If this referendum passes, the average tax impact on a home currently assessed at $639,003 (median Manasquan home value) is $169.06 per year for 26 years. Isn’t this a tax increase?
- With the benefit of the retiring debt combined with the new debt, the average debt service tax rate will actually be lower than the 2022 rate every year of repayment.
- The annual decrease in debt service tax on the median home will range from $6.20 (2029) to $371.58 (2050) compared to what was paid in 2022.
- To sum it up, taxes will actually decrease for all homeowners over the repayment period of the bond (average decrease of $110.54 for the median homeowner).
#7 — Can you provide the specific numbers that support the premise that this referendum will not cause an increase in taxes?
The chart below shows the school construction tax bill paid by the median homeowner ($639,003 assessed home value) that was paid in 2022 followed by every subsequent year during the proposed bond repayment period.
'22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 $ 519 465 462 505 498 500 500 512 507 505 501 495 488 482 475 470 467 461 460 450 431 420 408 396 169 164 158 153 147
Use our tax calculator to estimate tax impact on your home
#8 — How will you ensure we receive the best interest rate on our bond? Will our taxes go up if interest rates increase in the future?
Much like other purchases made by government entities, bond interest is subject to competitive bidding. The district is required to finance the bond through the financial institution who offers the lowest interest rates at the time the bids are accepted. As is the case with most mortgages, the interest rate on the bond is fixed at the time the loan is accepted. During the repayment period, if it becomes advantageous to the taxpayer (i.e. interest rates decrease from the originally fixed amount), the district may refinance the loan to receive the lower rate, but may never extend the repayment period.