Peters Township School Board has approved advertising for bids for construction of a new high school.
The bids will cover all aspects of the project, “everything from moving the dirt to the paint and carpeting,” school district spokesperson Shelly Belcher said following the board’s March 19 meeting.
The new school, which will be built on the western portion of the former Rolling Hills Country Club, has a targeted opening for the start of the 2020-21 academic year and a price tag in the $90 million range.
In August, the district took on $43.67 million in bond debt service toward the project, and the board voted unanimously at its most recent meeting to authorize issuing another $50 million in a combination of general obligation bonds and notes. Part of that amount is to go toward refinancing existing debt.
Michael Zubasic, managing director at PNC Capital Markets LLC, told the board that the purpose of the refinancing “is to operate within the constraints of the overall millage impact that you had set forth, which is 1.50.”
“Fortunately, with current interest rates where they are, we can accommodate what is necessary to complete the projects and stay within that budget parameter,” he said.
A schedule for increases in school district real estate taxes related to the high school project calls for .25 mills in each of the four years beginning with 2017-18, .3 mills in 2021-22 and .16 mills for 2022-23. The cumulative increase is 1.46 mills by the final year, with the corresponding impact of an extra $438 annually to be paid by an owner of property valued at $300,000.
“This has a limited impact on our residents, our taxpayers,” school board member William Merrell noted.
In April, the board authorized up to $89 million in borrowing, but further action was necessary, according to Zubasic.
“We had to go back because we didn’t have the debt capacity at the time to do the full amount,” he explained. “But with another year’s passage, now we’re in a position to do that.”
He said that interest rates on general obligation borrowing have risen slightly since the original authorization, to some degree attributing the occurrence to ramifications of federal tax reform.
“For example, the tax rate being cut on corporations,” Zubasic said, explaining that “some of the institutions who buy bonds, the tax-exempt break that they would get from the interest isn’t as beneficial to them now, because they’re paying less taxes.”
On the positive side, the higher rates mean that the district is earning more on its investments, “which is a good thing for us in the big picture,” the Rev. Jamison Hardy, who chairs the board’s finance committee, said.
The district selected general obligation debt, which allows for payments on principal and interest using any source of available revenue, as the most cost-effective of four alternatives reviewed.
“The general obligation alternative offers the school district the benefit of lower interest rates and less costs of issuance,” a report prepared by project architect Hayes Design Group and partner Weber Murphy Fox states.
The district has been filing necessary documents with the Pennsylvania Department of Education for possible reimbursement of an estimated $8 million to $10 million toward the project through the Planning and Construction Workbook (PlanCon) process.