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Timberlane board votes to prepay phase 1 of energy lease to save roughly $1.2 million in interest
Summary
At its June 19 meeting the Timberlane Regional School District School Board approved prepaying phase 1 of the district's $25 million energy lease, using fiscal 2025 funds, a move administrators said will reduce future interest costs by about $1.2 million over the term.
The Timberlane Regional School District School Board on June 19 approved prepaying phase 1 of the district's $25 million energy lease, authorizing a one-time payment of $3,077,415 to reduce long-term interest costs.
Administrators and board members described the payment as an opportunity to reduce the district's debt service over the lease term. The administration told the board the prepayment would produce about $1.2 million in interest savings. The recommendation called for using available fiscal 2025 capital lines first and, only if required, drawing from other budget lines rather than proposing new appropriations.
Board discussion focused on whether prepaying the lease should be put to a public vote and on the mechanics of the payment. One board member asked whether penalties for prepayment were included; administrators said the upfront figure presented to the board includes any prepayment penalty (the penalty amount was described during the meeting as already rolled into the total). Several members argued the action was fiscally responsible despite prior public controversy, while other members noted public concern during earlier discussions about retaining unassigned funds.
Motion and procedural outcome: Mark Sherwood moved to prepay phase 1 of the $25 million lease in the amount of $3,077,415; Paul Sapien seconded the motion. The motion carried.
Administrators said the payment will reduce the annual lease payment going forward by roughly the amount that would have otherwise been paid toward that phase (an estimated annual reduction on the order of the hundreds of thousands of dollars), and that the savings will be realized across the remaining term of the financing. The administration also explained why simply setting funds aside rather than prepaying would yield less benefit: prepaying eliminates interest immediately and avoids future inflationary increases to project costs. The board approved the prepayment at the meeting and administrators will execute the payment and follow up on accounting and reporting.
The board recorded the measure as part of the district's ongoing capital and debt management work; several members said they intended to pursue additional public outreach on major long-term financing choices going forward.
