By TRAVIS MORSE email@example.com
---- — MT. VERNON — Mt. Vernon Township High School officials are investigating multiple options for raising more revenue in light of cost overruns with the new school project.
The main alternatives include issuing $4 million in remaining par amount bonds, extending the district’s tax cap borrowing for up to 20 years or selling alternate revenue bonds.
Whether the district pursues any of these options will depend on if or how much funding is needed for the new school project, said Superintendent Michael Smith.
Smith said he expects a decision to be made on the funding options by the end of January, after the MVTHS Board of Education has had further meetings with FGM Architects.
“Until we get this whole bid thing sorted out, we won’t know if or how many of either of them (to choose),” Smith said.
As it stands now, the project is about $6 million over budget, due to construction bids coming in higher than anticipated in several work categories.
District consultants have developed roughly $3.5 million in cost-saving measures that would help offset the budget overrun if implemented. Even with the measures, though, the project would still be about $2.5 million over budget.
The McCarthy firm has been working with the contractors who submitted bids to come up with ways to cut costs. Some of these measures involve the use of different construction materials.
However, it’s possible FGM Architects will have to redesign portions of the school to reduce the cost, which would require a rebidding of some of the work categories.
Tim King, the school district’s financial adviser, made a presentation on the funding options at last Thursday’s special meeting of the MVTHS Board.
King said his remarks were intended to inform the district about its options, not to favor one choice over another.
“At this point, I’m just providing information,” King said. “There’s no right or wrong. It’s whatever the board thinks makes the most sense.”
A bond referendum in 2011 asked voters to approve the issuance of $19.8 million in bonds for the new school.
King said the district has only sold $15.8 million of its authorized par amount for these bonds. As a result, the district has the capacity to issue an additional $4 million in bonds, King said.
Smith said of the three alternatives being considered, issuing the $4 million in bonds would likely be the safest choice.
These bonds, King said, would not result in a tax increase for local property owners.
The next option would be to extend tax cap borrowing for up to 20 years.
This involves reissuing more bonds under principal and interest rate amounts that were set in 1998, when tax caps were put in place, Smith said.
The reissued bonds would then be payable in the 2021 to 2033 time period, after existing bonds have been paid off, King said.
The last option, selling alternate revenue options, is likely the least desirable, Smith said.
Alternate revenue bonds are those that have to be paid back from a source other than property tax revenue. Potential sources include a local home rule tax, a county school sales tax, donations, grants or a district’s operating fund.
In these tough economic times, finding a reliable source of funding for these bonds could prove problematic, Smith said.
“It could be a little bit treacherous with the unknowns and everything,” Smith said.
The MVTHS Board has scheduled a special Building Committee meeting for 3:30 p.m. Dec. 30 to continue discussions on the new school project.