There were a few interesting topics discussed at last night's board meeting. The Board was given some high school financing options and we also discussed the possibilities of relocating the 6 tennis courts that will be displaced.
During the architects update we were given a presentation on the Mechanical, Plumbing, Fire Protection, and Electrical Systems. You can find that document here. There was some good information in this presentation regarding some of the technologies we are expecting to use. Other than that, it was a nuts and bolts type presentation.
We were also presented with four options to relocate the tennis courts that will be displaced by the current design. You can view the entire document here. There are good pros and cons presented for each option. Please look through that link yourself and think of what you would prioritize. For me, the top three priorities are to 1) keep the courts on the high school campus, 2)keep the courts together as a unit, and 3) to have parking spaces next to what should be the main building entrance on Horsman.
Option One separates the courts on either side of Horsman Drive and does not allow for much parking near the new main entrance on Horsman. Option two keeps the courts together but has them facing a non-optimal direction while eliminating all parking near the main entrance. Option 3 keeps the courts on campus by moving them behind the rockpile and also allows for maximum parking spaces near the main entrance. However, this does eliminate a number of parking spaces and potentially reduces the area in which our marching band practices. Option 4 relocates the courts to Markham Elementary school.
Given the above options I would choose option 3. If this is the option chosen then I would expect that we are early enough into the design process to figure out a way to add back as many parking spaces as possible through this project while also figuring out an alternative practice space for our marching band. The combination of having parking where we need it (near the main entrance), having the tennis courts all together, and keeping the courts on campus make me believe that this option is the best one. During the meeting last night I asked Dr. Steinhauer to take the lead in figuring out alternative practice spaces for our teams during the construction phase of this project. Hopefully we will have some options shortly.
The other topic of interest was the financing options for the high school project. You can view the presentation here. As you may know, this project is too large to fit under our current debt limit. This requires us to do two floats of bonds to fund this project. In 2006 prior to Act 1, the Board passed a resolution to allow for the floating of $69 million of pre-Act 1 Debt. This means that when that bond is floated, the millage increase required to pay for that debt will not be counted against our Act 1 maximum allowable millage increase (which has been about 4% per year). The structure and payment of those bonds has already been set. The only thing about those bonds not set is what interest rate we would get when we go to auction.
The second set of bonds is where things get a little trickier. The presentation linked to above really is a discussion of the options regarding floating these bonds at a level payment (like your mortgage) versus a wrapped issuance (like an interest only loan for the first number of years). It has been my contention from the start that we ought to have a level payment of the debt. Pushing out the principal payments simply burdens taxpayers with $10 million in additional interest payments (see page 5) and burdens future boards with lowered borrowing capacity since the debt would be repaid at a slower rate.
Having the bonds wrapped simply puts us in the same position where we are now. In 2005 we wrapped the $55 million in elementary school construction bonds. To this date we have paid down very little in principal on those bonds. If memory serves me correctly we still have almost $54 million in outstanding debt on those bond floated back in 2005. This means that our current borrowing ability has been restricted by that wrapped bond schedule. It also means that our taxpayers will be paying excessive interest on those bonds because the principal has been pushed back to the later years of the debt service. As long as we keep wrapping bonds, the district will continue to burden taxpayers with millions of dollars of unnecessary interest costs.
While I have no doubt that we will have the ability to go to the market for the first $69 million in bonds and also the second $47 million, I do have concerns about the Act 1 limitations on the second bond issuance. As I mentioned before, the first bond float is exempt from Act 1. Even if millage needs to increase above an Act 1 limit, we will not be forced to referendum. However, with the second float, that might not be the case. If we did a straight float at $47 million that resulted in over a 1 mill increase, then along with any other kind of budget changes, I would expect that our 2011-2012 budget would be over the Act 1 millage increase limit. It would be the worst of all scenarios to have to go to referendum at that point in the high school project to get the final $47 million to complete a two-thirds completed project. I did ask our financial adviser about this and he admitted that it "could" be an issue. But he also said that there are ways around this. Essentially, what he said is that there are ways to avoid the Act 1 referendum at that point which would include structuring the bonds in such a way that they have minimal up-front impact on millage- essentially recommending that if we were expected to exceed Act 1 limits then we should just wrap the bonds to avoid a referendum.
Why are we trying so hard to avoid a referendum every time we turn around? It seems to me that if we know that the taxpayers would vote down a project of this size (or $500,000 more), then we ought to be planning to do a project of significantly less size and scope.
More on that in a future post.
Thanks for reading.
James
