Apr 21, 2017 By Harry Funk 3 min read

Even though the decision of whether to build a new Peters Township High School has yet to be determined, the school board has authorized a potential bond issue of up to $80 million.

Also during the April 18 meeting, board members voted unanimously to authorize issuing a maximum of $9 million in general obligation notes to restructure existing debt to the district’s financial advantage.

Daniel Taylor was the only director to vote against the former measure.

“It’s concerning to me that we are authorizing to borrow money prior to actually having a plan as to how much that building is going to cost,” he said.

The Rev. Jamison Hardy, chairman of the board’s finance committee, explained the measure’s purpose.

“We are looking at taking advantage of interest rates and entering the market at a specific timing,” he said.

“I’ve been talking about this for a year because of my concern about interest rates, and since we’ve started to talk about this, we’ve have a 50 basis points, or one-half of a percent, increase in the federal funds rate.”

The district, though, is not obligated to borrow any money and, in fact, is limited in its capacity to do so.

“The Internal Revenue Code would prohibit the district from actually borrowing money without an identifiable project,” Lisa Chiesa of bond counsel Clark Hill told the board.

She said that the practice of approving authorization for future bond issues is not uncommon.

“For a couple of other larger projects that I’m working on for school districts, they are taking the same approach, where they sort of put a big number out there, then issue the bonds as required once they need the money, basically,” Chiesa said.

The $80 million figure represents the maximum amount of debt that Peters Township School District can incur, without going to referendum, under state law. The Local Government Unit Debt Act sets the limit based on the average of the district’s total revenues for three full years, a number that will increase with the passage of time.

Board members have discussed the possibility of borrowing about $46 million in the near future, and then perhaps issuing a second series of bonds in 2019.

“Our goal would be, at worst if we can, to try to catch a market in the next two years that’s very similar to what you have with the first one,” Mike Zubasic, managing director of the public finance division of PNC Capital Markets, told the board at its April 10 finance committee meeting.

At the same meeting, Hardy stressed the advantages of the flexibility that the board’s action affords.

“We can choose our entry point in the market, and that is a big deal,” he said. “A lot of investors will talk about, you can’t time the market. That might be true when you’re investing, but when you’re borrowing, you certainly can time the market, because when the rates go down, you borrow.”

Proceeds from a bond issue could go toward purposes other than a new high school, which, if pursued, would be built on the former Rolling Hills Country Club property along East McMurray Road.

“Any properties that we own, we can use this debt that we’re going to be incurring with this bond to repair or maintain,” Hardy said. “Anything.”