Interested In Interest?
The ballot question states the request of a principal amount not exceeding $90 million. The District will, of course, not be borrowing the money interest-free, but will be paying interest just as someone does with their own mortgage. Just like with a home mortgage, interest can be significant. Bonds are competitively bid and we will not definitely know the interest until the bond sale takes place (only after and if the referendum passes), though our Financial Advisors/Bond Attorneys have projected the maximum interest.
As an example, please search for an amortization or mortgage calculator online and you'll quickly see how much is paid over the life of a loan. For your convenience, we did that for you and the below photograph shows the possible interest rate for a homeowner financing a $300,000 home over 20 years at 5.25%. It shows that over the life of that loan, the homeowner will pay $485,000 in principal and interest ($300,000 morgage + $185,000 in interest). In this example, the interest amounted to more than 60% of the mortgage.
Relating this example to the projected interest we'd pay on the $90 million (if approved by voters), it's not unreasonable that the interest on the $90 million has been projected to be about 60%, or $54 million. It should also be noted that our Financial Advisors/Bond Attorneys included the interest in what the cost to taxpayers would be for the $90 million bond referendum-again that's $20/year/$100,000 home on a primary residence for 20 years (4% tax base); $30/year/$100K value (6% tax base). A homeowner with a $300,000 home would pay an additional $60/year. This is a tax on all property to include homes, cars, etc.