Mt. Lebanon School District prepping for second round of financing for reno
The Mt. Lebanon school board is gearing up for a second round of financing for its high school renovation. At its July 15 meeting, the board directed Janney Capital Markets and bond counsel Houston Harbaugh to prepare for a $32.95 million issue in August.
To date, $75 million of the $109.6 million project budget has been funded through a 2009 bond issue. The district also has $1.7 million available in a capital fund for project-related asbestos abatement.
Tim Frenz, director of public finance at Janney Capital Markets, presented two possible structures for the issue. Both would wrap the payments around the district’s existing debt. One would be a $32.95 million issue that would cover the full amount needed to fund the rest of the project. The alternative would use nearly $3 million in cash reserves to reduce the issue to $30 million.
Additional cash could have come from either the district’s general capital projects account or leftover fund balance from previous years.
Frenz explained that the wrap structure will increase the total cost of the issue, but reduce debt service on an annual basis, thus easing the yearly tax burden on residents. He compared the trade off to a home buyer choosing a term for her mortgage. “Yes, I want a 15-year mortgage to save interest in the long run, but I may not be able to afford that payment,” he said.
School board members generally preferred to borrow the full $32.95 million to preserve the district’s reserves.
“When you look at the numbers, the .06 difference in millage is insignificant,” said board vice-president Larry Lebowitz. “No one likes to pay more in taxes, but I think we would all sleep better at night knowing we have more of a cushion.”
Director of fiscal services Jan Klein estimated the district will need the money in October or November 2013. According to the timetable Frenz laid out at the meeting, the bonds would be auctioned in August and the issue funded by the end of September.