Hempfield moves forward with borrowing plan for school construction

Hempfield Area School Board members are moving forward with a bond issuance that will cover the costs of a multi-million dollar high school project.

The board voted unanimously this week to issue a bond that will not exceed $156 million. Funds will be used to tear the school down to its structural system and replace everything as new, as well as to cover some costs of capital projects identified at various school buildings.

“Looking at everything we’re doing, I think we’re doing our due diligence and doing the best job that we can do as a group,” board member Scott Learn said during a special meeting last week. “There’s been a lot of work put in by several board members here and I appreciate their time.”

According to business manager Wayne Wismar, the $156 million figure includes $110 million in project funds, around $8 million in refinancing costs, about $17 million in capitalized interest — or borrowing to make future payments on the new bond, allowing the district’s debt service payment to remain level — and $750,000 in issuance costs.

He noted that it is common for the “not to exceed” number to be about 20% higher than the actual borrowing to allow for flexibility in interest rate changes.

Board members for most of the past month have honed in on the project cost as they debated the scope of the renovation.

The project is expected to cost between $97.4 million and $109.9 million. Officials also identified $12 million in capital projects at other district buildings, although the majority of those projects do not need to be immediately addressed, Wismar said.

During the special meeting last week, board members narrowed project costs down to either $110 million — which accounts for costs at the higher end of the high school project — and $127.5 million, which would cover the costs at the high school and at other district buildings.

“When we talked about the $127.5 (million), it comes out to a 33 year bond and I personally didn’t feel comfortable with strapping a future board with those terms,” said board member Mike Alfery. “With the $110 million, that allows us to do the option we chose for the high school. It also allows us to begin to address some of the asset protection we have in the outlying elementary and middle schools.”

As of Monday, the term of the $110 million project size was 25.5 years with an all-in true interest cost of 3.78%.

Board member Jerry Radebaugh agreed with Alfery, noting that keeping the term at 25 years will allow the district to get the high school up and running.

“In two to three years we can reevaluate where we’re at, how much the school is actually costing us as we’re going through the project to be able to potentially do a second bond issuance toward the end to finish off the school,” Radebaugh said. “I think that may comfort the board here and the public that we’re being more conservative with the number that we’re looking at.”

Members unanimously agreed to move forward with costs of $110 million.

Officials are planning a public workshop to further discuss how the funds will be split to pay for the high school and capital projects.

“I’m really happy that this is where the board is considering because I think it’s going to give you a lot of flexibility,” said Alisha Henry, managing director at PNC. “You’re going to have a lot more information in a couple of years that everybody mentioned as far as operational savings, the high school will be bid, you can look at the asset protection checklist a little bit more closely.”

Board president Tony Bompiani added that the board is trying to do what is right for the district as they move forward with the project.

“We’re just going to do the best we can, and we all feel this is the best we can,” Bompiani said.