Board weighs ways to fund gymnasium project
The Morgan County School Board discussed possible ways of providing matching dollars for the Building C (gymnasium) project at Berkeley Springs High School at a May 14 workshop.
The West Virginia School Building Authority recently awarded Morgan County Schools a $2.2 million NEEDS grant for gymnasium building renovations estimated to cost $4.2 million.
The school system was also awarded an $824,000 no-interest Qualified Zone Academy Bond (QZAB) loan for the project.
The remaining local match needed is $1,176,000.
Building renovations include moving the weight room to the first floor, creating new classrooms, installing new lighting and replacing heating and air conditioning systems, plumbing, interior doors and windows.
Other work includes improvements to the locker and shower rooms, entrance foyer and storage and office areas, as well as replacing electrical, fire alarm and telephone systems, bleachers, upgrading data cabling and other exterior work. The building will also be made handicapped-accessible.
The original project estimate of $4,972,953 was lowered with the removal of a $772,953 roof replacement that wasn’t considered necessary. Roof repairs have been made to the building.
School Treasurer Nancy White presented several funding options for the board to consider last week.
One possibility is a bond issue, which could be shorter term and for just the $1,176,000 project, or a higher bond issue that included improvements at other schools. White noted that a shorter term bond may not be as appealing to investors.
Bond issues require seeking public support in a bond election.
A second scenario is not having a bond election and expanding the lease/purchase of equipment for the project, which would mean an annual payment of $140,000 for 10 years.
Another alternative to a bond election is increasing the special levy rate to 100% for Fiscal Year 2014 (which would raise around $359,990). This money could be added to the capital projects fund balance of $325,000, as would retiree health benefits liability money ($413,000) when it’s available and the estimated carryover ($78,010).
White said the future implications from choosing this last option was that there would be no contingency funds, so no other capital projects could be tried.
A bond issue in the November General Election would require 50% approval for passage and would cost $2,500 for the ballot set-up, White said.
There would need to be an additional levy of taxes each year to raise the amount needed for the debt service.
A financial advisor, bond counsel, Standard & Poors rating fee and other requirements would cost $70,000 to $75,000 when the bonds were sold, no matter how small or large the bond issue was, she said.
Cost to homeowners
White calculated the tax effects of a bond repayment for different bond issue scenarios versus a special levy rate change to 100%.
For a $200,000 home assessed at $120,000, the estimated special levy increase from the 93.8% rate to a 100% rate would mean an additional $34.08 in taxes annually.
That $34.08 special levy increase would be in addition to the homeowner’s $29.24 increase from this year’s rate hike.
The estimated annual bond repayment amount for that same homeowner would be $18.48 for a 10-year $1.76 million bond levy; $26.40 for a 15-year $2.5 million bond levy; $45.84 for a 20-year $5 million bond levy; and $53.52 for 15-year $5 million bond levy.
The annual no-interest Qualified Zone Academy Bond (QZAB) loan payments for the project would cost about $55,485 for 15 years. The first payment would be due one year from the closing, which would occur in about three months, White said.
A 10% in-kind partner was needed for the issuance of the loan, which had been CNB for previous QZABs, she said.
The school system is continuing to pay off two previous $1 million QZAB loans for other school renovations projects at $114,182 annually.
The final annual payment ($57,442) for the first QZAB loan is in April 2016. The final yearly payment ($56,740) for the second is in June, 2018.
The school board will proceed with advertising for architectural design bids to get a better idea of estimated construction costs before making any decisions about how to fund the rest of the local match.
They are also looking into requesting a delay in the construction timeline.