SALISBURY — City Council is considering borrowing more money than originally discussed to build a new downtown central office for Rowan-Salisbury Schools.
After Rowan County commissioners backed out of the project in February, the city agreed to consider borrowing $8 million on behalf of the school system to construct a 62,000-square-foot building at 329 S. Main St.
City Council will think about bumping that up by $370,000 when members meet at 4 p.m. Tuesday in City Hall. They are expected to set a public hearing for July 16.
If the council agrees, city staff plans to ask the state to approve debt of up to $8.37 million, according to Assistant City Manager John Sofley. The total is higher than the previously discussed $8 million, which did not include a contingency fund or architectural fees, Sofley wrote in a memo to City Council.
Sofley said he expects the building construction to bid for $8 million. Normal contingency for a project that size would be 5 percent, or $400,000, Sofley said, but because much of the site work is done, he lowered that to 3.25 percent, or $260,687.
He included $114,313 for architectural services.
The decorative dome on top of the building would cost $125,000, which the Blanche and Julian Robertson Family Foundation has indicated it would fund, Sofley said.
Sofley will ask City Council to consider adopting a lease-purchase resolution for financing construction of the central office. The resolution allows staff to talk with the state Local Government Commission and financial institutions, Sofley said.
“It is not approval of the project itself,” he said.
As the city evaluates the feasibility of constructing the building, it is critical to determine the ability to secure financing at a reasonable rate, Sofley said.
“This resolution will allow staff to determine if we can secure a financing package that will meet our needs,” he said.
Projected architectural services, the cost of the dome and a contingency fund are included in the resolution amount of $8.5 million.
The public hearing is a required step in the lease-purchase financing process.
The city and school system have worked in partnership since Rowan County commissioners withdrew their support for the downtown central office. Commissioners rescinded a $6 million pledge, citing environmental contamination at the site, which used to host a gas station.
The city has since cleaned up the contamination at a cost of $55,871. The state covered $430,060.
A lease-purchase agreement between the city and school system would not require the county’s approval, Sofley said.
Under state law, a city is authorized to build office buildings, expend funds to promote economic development, issue debt for both office buildings and economic development and enter into leases, he said.
State law also allows both cities and school systems to enter into interlocal agreements and school systems to enter into leases. Some leases require approval by county commissioners, while others do not, Sofley said.
By state law, the school system can’t borrow money and would pay back the city over 20 years using state sales tax revenue earmarked for capital outlay.
Sofley said the city’s estimated financing interest rate range for the debt is 2.5 percent to 3.75 percent. Estimated annual debt payments range from $560,000 to $620,000. Construction would start in September, and the school system would take possession of the building in October 2014, when the lease would begin.
Also on Tuesday’s agenda:

• Mayor Paul Woodson will proclaim July 13 as Chickweed Day. Chickweed is a music concert and fundraising event for the Family Crisis Council of Rowan County.
• City Council will consider granting a special use permit for general retail at 612 W. Innes St., which is zoned residential mixed use.
A used bookstore called The Final Word plans to move into the location, which used to be an insurance office. Owner Elizabeth Pope told the Salisbury Planning Board she is expanding her Charlotte-based business to Salisbury.
The planning board voted unanimously to recommend that City Council grant the special use permit but limit retail use of the property to bookstores only, to protect a nearby neighborhood. Other office-type uses still would be allowed.
City Council will hold a public hearing.
• Residents can comment during a public hearing about the city’s application for a 2013 Justice Assistance Grant for $32,917.
The Salisbury Police Department would share the grant with the Rowan County Sheriff’s Office.
• City Council will consider appointing a steering committee for the East Innes and Long Complete Streets Study, which will include study of turns at the Square.
• TW Telecom has asked the city to install about 643 feet of fiber in the public right-of-way in the 200, 300 and 400 blocks of North Lee Street to provide service to 221 N. Main St. The company would pay the city a yearly tax of 10 cents per linear foot of cable installed, for a total of about $64.30 annually.
Staff recommends approval. City Council will consider the request.
• Staff will update City Council on construction of the Second Creek Waste Water Treatment Plant Elimination Project.
• City Council to consider an appointment to the Rowan-Kannapolis ABC Board and various boards and commissions.
• Salisbury Parks and Recreation Department will host free Movies in the Park Friday at City Park. Pre-movie activities begin at 8 p.m. The movie will begin about 8:45 p.m. Bring a blanket or chair to watch “The Lorax.”

Contact reporter Emily Ford at 704-797-4264.