Mt. Lebanon to borrow $35M for high school renovation
The Mt. Lebanon School Board authorized officials to borrow up to $35.15 million on Monday to finish financing the district's high school renovation project, a move that virtually guarantees tax increases of at least 0.18 mills a year for the next three years.
At their monthly, nonvoting discussion meeting, a majority of board members directed Tim Frenz, managing director at Janney Capital Markets, to seek bidders Monday on the second round of bonds for the $109.65 million project.
They asked Frenz to structure the deal so the district pays more over time but reduces the size of tax increases.
By “wrapping” the bonds around the district's existing debts, which means paying more principal on new bonds as old bonds are retired, the district will pay about $5.6 million more over the 20-year life of the bond but will have to raise taxes by just 0.55 mills rather than 0.85 mills, Frenz said. The annual payments will balance out to about $10.3 million a year.
The district will borrow slightly more money so it can make interest payments and phase in the tax increase, rather than raise taxes all at once or pay for the phase-in with the district's reserves.
Board president Elaine Cappucci said she would rather the district hang onto its reserves, which could pay for other things such as a pending grievance with the teacher's union that could cost the district nearly $1 million should the union win.
“We'd have less in the reserves for other things like capital projects — we'd mentioned the rifle range — OPEB (retiree benefits), or the grievance,” she said.
The district's reserves and “conservative budgeting” also were factors in its favorable AA-1 credit rating from Moody's, Frenz said, ranking the district equal to Upper St. Clair School District and a notch above Peters and Fox Chapel.
Scott Goldman was the only board member who said he'd prefer a “level” payment structure, requiring the district to pay a flat $2.2 million a year for the new bonds over 25 years, because that would save money over time. Others on the board disagreed. Board members Dale Ostergaard and Ed Kubit were absent.
Board member Josephine Posti emphasized that the district will have the ability to borrow up to $30 million for future projects without running into its state-imposed debt ceiling.
“I want people to understand that we're not pushing ourselves to the brink with this bond,” Posti said.
The board could give final approval and sign off on the borrowing at its Monday voting meeting.
Matthew Santoni is a staff writer for Trib Total Media. He can be reached at 412-380-5625 or email@example.com.