The Warsaw School Board moved forward on its building project by approving three resolutions Monday night.
The project includes building a new Lincoln Elementary School and renovating and expanding Washington STEM Academy and Edgewood Middle School.
The school board held a combined 1028 Hearing and Preliminary Determination Hearing on the resolutions, as required by state law.
With the resolutions unanimously approved, the school board now begins the process of getting the building project referendum on the May ballot. The school corporation needs 125 signatures on a petition to put it on the ballot as part of that process, according to Superintendent Dr. David Hoffert. Chief Financial Officer Kevin Scott said the signatures must be registered voters who live in the school district and must be at least 18 years old.
The project resolution states that the “estimated hard costs for the construction are $33,915,000, and estimated soft costs are $5,914,700, with estimated costs of issuance of $3,670,300 less interim lease rental payments of $3.6 million, resulting in total estimated project costs of $39.9 million.”
The preliminary determination resolution states that Warsaw Community Schools published notice of Monday’s hearing Jan. 15 in the Times-Union and mailed the notice to the Kosciusko County Circuit Court Clerk. It also details the information made available to the public at the public hearing and that the lease will be for a maximum term of 22 years with a maximum annual lease rental of $3,415,000. The maximum annual lease rental has been estimated based on an estimated principal amount of $39.9 million in bonds, estimated interest rates ranging from 3.35 to 5.45 percent and estimated total interest costs of $24,348,690.
The third resolution was the declaration of official intent to reimburse expenditures.
Curt Pletcher with Umbaugh & Associates, the financial advisor for the proposed project, reviewed the proposed project budget estimates and the financial plan, structuring of the bonds and estimated tax impact.
For the financing, he said they were looking at first mortgage bonds, with a principal amount of $39.9 million. The existing outstanding debt includes four obligations, Pletcher said, with the debt service payments level out through 2023. Retirement of three of the obligations begin in 2024, so the “existing debt service payments decrease in that budget year.”
If voters approve the proposed building project referendum, Pletcher said repayment will begin in 2016. WCS will still have a decrease in annual payments beginning in 2024.
Summarizing the financing, he said they were maximums. “We’re looking at numbers that are maximums. They can not be increased,” Pletcher stated.
The total project cost of $39.9 million will be paid back in 19 years, 7 months, with an estimated interest expense of $24,348,690 at 5.03 percent interest rate.
“When we talk about maximums, we’re using conservative numbers for the interest rates. Currently, that 5 percent is about 1.25 higher than the current bond market. So if there’s not a significant move in the bond market or an increase in the rates, that interest rate will be lower, that maximum annual lease rental will decrease, so that maximum 13.8 cents will also decrease, so will the impact to the taxpayers,” Pletcher explained.
The estimated impact the $0.138 additional tax rate from the building project would have on a $100,000 home ($32,750 after deductions) would be an increase of $45.20 annually, or $3.77 monthly. For farmground, using the current base value of $2,420 per acre established by the state, would see an additional impact of $3.34 per acre. A $100,000 gross assessed commercial business would see an additional $11.50 monthly tax impact, or $138 annually.
Hoffert started the hearings Monday by explaining the current conditions of the three school buildings. It was an abbreviated version of the presentation he presented at the Jan. 20 and 21 public forums.
He said the process began in 2006-07 with the last building projects, with the idea to come back and look at Washington, Lincoln and Edgewood. In 2008, however, the referendum process was established by the state and the economy took a downturn.
In 2012, the school board commissioned a facilities study with Kovert Hawkins. The architectural firm came back with proposals totaling $111 million. That was reduced to $80 to $90 million by former Superintendent Dr. Craig Hintz. Hintz retired, and the school corporation took a look at its needs instead of wants, and reduced the scope of the undertaking to the $39.9 million project it is today.
Lincoln, built in 1959, has a building capacity of 480, but enrollment is 488. Washington also was built in 1959 and has a capacity of 468, but enrollment this year is 508. Edgewood has a capacity of 570, but had enrollment of 572 in 2013-14 and 557 in 2014-15.
Additional problems at the school include electrical, drainage, safety and security.
(Story By The Times Union)
