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Money matters on joint meeting agenda

Supervisors, School Board to talk about PES renovations, intermediate school
Money matters will again be a topic on the next joint meeting between Board of Supervisors and the School Board, set for Nov. 30.
Both boards are planning to talk about the costs and the timing of going forward with two big-ticket projects wanted by the School Board.
The School Board decided last month to request the joint meeting agenda to center on two of their costly projects.
A discussion of a proposed $9.6 million renovation project for Potomac Elementary School will take place, along with talk about converting the mothballed former middle school building into an intermediate school starting in 2012-13.
Superintendent Candace Brown said it would take about $2,250,566 in 2012-13 for startup costs and operating the first-year of an intermediate school.
She also is estimating at least $1,351,703 for annual, recurring operating costs every year after that.

Those estimates were provided to the Board of Supervisors last week.
The former middle school building also needs a new well and new heating-ventilation-and-air-conditioning system, but Brown is hopeful that the building will soon be leased next year by a contractor for government training, which might bring about some renovations by a potential lessee and lease money to go toward bringing in four trailers for the intermediate school being planned for about two years off.
County Administrator Travis Quesenberry also told supervisors last week that he would provide an update at the joint meeting on a planned sports stadium, another of the School Board’s projects.

COST REDUCTIONS     
At last week’s meeting on Nov. 2, Supervisors added their request to the joint meeting agenda.
Supervisors want to know what the School Board has in mind for budget reductions to address the new costs associated with the same two projects.
They also want to know how the School Board would make cuts next fiscal year to address the elimination of more than $2.5 million in federal stimulus funding, which comes to an end for 2011-12.
County Administrator Travis Quesenberry said as part of his 2011-12 budgeting, he was telling county departments, constitutional offices and outside agencies they would be facing “a no-growth budget.”
Chairman Dale Sisson suggested his board share that guidance with the School Board at the upcoming Nov. 30 joint meeting.
Supervisor Joe Grzeika also talked about the elimination of the federal stimulus money, saying, “I guess on that guidance issue, it’s not that clear-cut with the schools. We’ve got a significant amount of stimulus dollars that won’t be there.”
Grzeika said in their talks with the School Board, “We need to be clear what that means.”
Sisson referred to the School Board’s proposed projects, saying he wanted them to address cost reductions for upcoming budget years.
“I think as we look at what we’re facing budget-wise, what’s being proposed here is a pretty significant operational budget increase. So I’d like to hear what cost reductions would be in the works to address such an increase,” Sisson said.
Those would presumably include some reductions by the School Board to address paying for trailers at Potomac for the 2011-12 school year if renovations start by then, as well as startup costs and annual recurring costs for an intermediate school that the School Board wants to open in 2012-13.

POTOMAC RENOVATIONS & EXPANSION    
Out of three prices estimated for renovation options for Potomac Elementary School proposed by an architect, the School Board selected the most expensive, at over $9.6 million.
In addition to complete upgrades to the building’s mechanical, plumbing and electrical systems, it would also pay for various site improvements, building code and accessibility modifications.
And it would also include add six new classrooms, along with other interior renovations to the 1950s section that would increase the size of the art room and create a larger computer lab. Renovations are estimated to take about 18 months.
If funding is identified soon, the renovations could begin in spring 2011 and might be completed for fall 2012-13.
Modular classrooms (trailers) would be needed during the renovation time frame, with students moved out of about an eight-classroom section at a time during the rolling renovation phasing.

FINANCING FOR PES PROJECT COULD PUT COUNTY OVER DEBT LIMIT    
Funding for the Potomac renovation project is uncertain at this time.
The Board of Supervisors last week gave the go-ahead to proceed with an application for a no-interest loan that if qualified and accepted by supervisors would go toward Potomac Elementary School renovations.
But there are hitches in that plan.
There is no guarantee that the project would qualify for all or some of the $10 million being requested through the state’s Qualified School Construction Bonds (QSCBs).
That’s because the QSCB program is a competitive application process, with points awarded for various elements, several of which the Potomac project does not possess.
If the project qualifies for all or some QSCB money, even though interest-free, the county would still have to pay the money back, adding to its current debt load, which is basically maxed out.
Financial consultant Davenport & Company’s David Rose last week provided two financing scenarios for payback of the $10 million, one if all of it comes in from QSCBs and the other if only $5 million comes from QSCBs and $5 million from traditional financing with interest at about 5 percent.
Under the first scenario, the payback would necessitate the equivalent of just under a penny increase on the real estate tax rate over the upcoming fiscal years to pay back the QSCBs.
The QSCB interest-free loan would also temporarily put the county out of compliance with its limit on its debt policy for at least a year of the nearly 20-year amortization.
The county has a 3.5 percent policy limit on debt versus total assessed value that would be exceeded by the borrowing.
If the county were only eligible to get half the money from QSCBs and the rest from traditional financing, the payback scenario would necessitate the equivalent of an increase of 1.5-cents on the real estate tax and it would also put the county out of compliance with its limit on its debt policy for at least two years of the amortization.
If the county does not qualify for any of the QSCB money, the Potomac renovation project could get put off for a while.
That’s because it would be back to the drawing board to figure out when the money could be borrowed, where the $10 million would come from, and how it would be paid back.

Phyllis Cook
Staff Reporter

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