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Mt. Lebanon to borrow $34.75 million for high school renovation

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Wednesday, Aug. 21, 2013, 9:00 p.m.
 

Mt. Lebanon school directors will borrow $34.75 million to finish paying for the district's $109.65 million high school renovation, and an uptick in interest rates means slightly higher tax bills for property owners.

The owner of a home valued at $100,000, for example, will pay $59.40 over three years.

The district broke up financing for the nearly four-year renovation, which includes adding science and athletic wings, renovating the main academic wing and fine arts wing, demolishing two wings and converting a gymnasium into an airy central court and cafeteria.

A goal of raising money to offset the second bond issue hit a snag last year, when consultants told the district they couldn't raise $30 million in time to affect the bonds.

Financial adviser Tim Frenz said a bond sale on Monday went well, but the lowest bidder's interest rates were slightly higher than his prediction last week when the school board authorized the bond sale — so resulting tax increases will be higher.

“Interest rates, in general, are higher than they were the week before,” Frenz said. “This was a good time to get into the market, as rates are only going to get higher.”

The district decided to “wrap” the bonds around existing debt, so it would pay more principal on new bonds as it pays off the old.

That means the district will pay more interest over the 20-year life of the bonds, but its total annual debt payments will be a steady $10.5 million.

The district borrowed slightly more than the $32.75 million needed to complete the project so it can phase in the 0.594 tax increase at about 0.2 mills per year starting in 2014-15.

Board member Scott Goldman, the only member to vote against finalizing the bonds, favored a level-payment structure that would result in larger up-front payments for the bonds and a larger tax increase, but a shorter life for the bonds and millions less in interest payments.

Frenz said he did not re-run the analysis to compare the costs of a level structure to a wrapped structure at the higher interest rate, because the board majority directed him to pursue the wrapped structure.

“The increased millage rate is not the result of the structure — it's a result of higher interest rates,” he said.

In other action on Monday, the board unanimously approved a 4 percent pay raise for Superintendent Timothy Steinhauer, bringing his salary to $163,776 plus benefits. The raise is retroactive to July 1.

“We are a high-performing school district and we expect a lot of our staff,” said board President Elaine Cappucci. “The one staff member of whom we expect the most is our superintendent.”

She said Steinhauer met or exceeded six goals the district set for him, including shepherding the high school renovation, operating district finances responsibly and increasing student achievement rates.

Matthew Santoni is a Trib Total Media staff writer. Reach him at 412-380-5625 or msantoni@tribweb.com.

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