At the Newcastle Board of Selectmen meeting on May 22, Helen Telfer, chief financial officer of Lincoln Academy, appeared with Steve Ward of The First and Jim Saffian of Pierce Atwood, to discuss the proposed bond issue of $10 million using Newcastle’s municipal bond ability as a conduit.

Last fall, Lincoln Academy began exploring a possible municipal bond though either the Finance Authority of Maine or the municipal bond capacity of the town. The school held several conference calls with town attorney Peter Drum, and in February approached the town manager and selectmen to see if they would help it get a bond to refinance debt at the lower municipal interest rate.

If successful, Lincoln Academy would save about $40,000 – $70,000 annually on bond service, a sum the school plans to spend on faculty salaries and other classroom operations. The bond would be retired in 20 years, resulting in the realization of $800,000 to $1,400,000 over the lifetime of the bond.

The bond would have three uses. The first and largest is the refinance of the existing bonds. Second, it would let the school purchase a single family house for a learning center for the school’s special needs students. Third, it would add to the endowment for future repair and construction, Telfer said.

Municipal bond measures can be used for public benefit programs, such as schools, under Internal Revenue Service rules.

The town would not incur any liability for the bond, Drum has said.

According to a discussion between Saffian, Telfer and Chairman Brian Foote, because the town can only borrow up to $10 million annually through the lower municipal rate, a possible agreement between the school and the town may be for the school to pay the difference between the lower interest rate and the ordinary rate if the town should, before the end of the year, require a bond measure for some emergency bonding. On Jan. 1, the town could refinance at the lower rate, so the agreement would only relate to the period between the time the bond is issued, likely in mid-summer, and the end of 2017.

Selectmen and the school will look at a revised agreement before the next board meeting, when a public hearing will take place, on June 12.