The Tyrone Area School District is still considering whether or not to finance or pay cash for an upcoming building project which involves renovations and expansion at the middle/high school building.
The estimated cost of the project stands at about $10.3 million when construction and soft or associated costs are combined. The district has been planning to use money from its cash reserves to pay for the project.
However, superintendent Dr. William N. Miller explained he had met with the district’s financial advisors on Monday to discuss the possibility of financing.
Miller’s comments came during a presentation about the financial aspects of the project by a representative of Hayes Large Architects of Altoona at last night’s school board meeting.
“The information that was presented was financing on a cash basis,” Miller told The Daily Herald. “That could change because we are still looking at funding the project if it is a financial advantage to the district.
“The concept we are looking at is a wrap around,” said Miller. “This is wrapped around an existing debt, we would borrow at a variable rate and invest at a variable rate.
“With the projection that interest rates are going up, it would be to our advantage to do that because we have the money to invest,” explained Miller. “This has been brought up before, but it now seems more plausible than borrowing at a fixed rate and investing at a fixed rate. We can get out at any time. We don’t have to pay on this on a long term basis.
“This is not a new form of financing, it’s just a new approach for us to discuss further,” said Miller.
He also explained where the idea will go from this point.
“There was no action on it tonight,” said Miller. “As soon as we are satisfied with it as a feasible plan, we will give it to the finance committee and to the board. This would occur in the next couple of months. We still have time to do this because of the way the project is proceeding.”
Miller explained bids for the project wouldn’t be dealt with for a period of time which would allow the district time to decide how it would proceed on funding the project.
After Miller’s comments, the Hayes Large representative, Brian Hayes, continued his explanation of what is known as Plan Con D and then explained Plan Con E to the board.
In laymen’s terms, the accounting estimates in terms of costs were explained to the board in the review of Plan Con D. The design development of the project was set forth in Plan Con E.
The information is detailed in document form which now will be sent to the Pennsylvania Department of Education as part of a series of documents which must be reviewed and approved by the department for the project to go forward.
Last night, the school board approved both Plan Con D and E.
Hayes explained if bids for the project come in much higher than expected, it could trigger a second public hearing on the project. An Act 34 Hearing was held earlier this year to explain the project and seek public comment on it. The threshold figure to trigger a second hearing is eight percent above the current project estimates.
After the meeting, Dr. Miller also mentioned another possibility mentioned by Hayes. The project would have to go to a public referendum should the cost of construction plus fees but minus site development costs exceeded approximately $10 million.
“If the project would come in at a much higher figure, more than $10 million, it would require an referendum on the project,” said Miller. “We don’t expect that, however there is an issue with steel prices going up significantly and everything else going up. Those are just qualifiers if this project comes in higher than the original estimate.”
Construction costs for the project are currently at $8.9 million with soft or associated costs estimated at almost $1.5 million. The project is expected to increase the building by more than 56,000 square feet which will include classrooms a multi-purpose room/gymnasium, cafeteria, kitchen, two locker rooms, an art room and science lab room. The increase will amount to more than 25 percent of the current building size according to previous information released by the district.
The project is also designed to create a middle school program with grades 5 through 8 which the district believes will provide a better educational opportunity to its students.
If there are no unexpected delays, the project is expect to begin later this year and be completed in 2006.
