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Schools approve central office lease

EAST SPENCER — The Rowan-Salisbury Board of Education approved a lease agreement Tuesday with the city of Salisbury for a new central administrative office.
The vote was 5-2, with Chuck Hughes and Josh Wagner saying they wanted to hold off a little longer. The agreement doesn’t yet include a start date, because the school board doesn’t know when the building at 312 S. Main St. will be ready for use.
Gene Miller, assistant superintendent of operations, said the earliest move-in date will be in October 2014.
He also said the state’s Local Government Commission will not have to approve the school system’s lease agreement, as previously reported.
On Monday evening, the city of Salisbury submitted its plans to the LGC for approval of a 15-year loan. The school board’s lease will have a term of 35 months, or just under 3 years.
“That is the reason we are able to enter this lease without county approval, and without LGC approval,” Miller said. “For 36 months or more, it would have required both.”
Also allowing the school board to bypass the LGC is the fact that the school system will not be taking ownership of the building — or paying toward ownership — at any time during the 35-month lease.
At the end of the lease, Miller said the school board could choose to buy the building. It would have to get permission from county commissioners, though, and the current Rowan County Board of Commissioners has opposed plans for the downtown office.
Wagner asked if the LGC would consider the lease agreement when making a decision on the city of Salisbury’s application.
“No, they’re not using the lease other than to say to the LGC, ‘We have a potential lessee,’” Miller said. Wagner also asked if there was an advantage to signing the lease before project is approved, but his question went unanswered.
Miller said Salisbury expects to hear back from the LGC by the beginning of September, and city council plans to award a construction contract Sept. 6.
Marand Builders of Charlotte submitted the low bid of $6.9 million for the building, along with a $346,000 for a decorative dome, a custom desk for the Board of Education and special data wiring. The total of $7.25 million is still less than the $8.5 million originally estimated for the project.
Last week, Salisbury City Council awarded a financing contract to STI Institutional and Government Inc., a subsidiary of SunTrust.
With a 3.12 percent interest rate over 15 years, Miller estimated that payments would be $390,000 for the first year, $459,000 for the second year and $693,000 for the third year and beyond. Those payments can be partially funded by the $250,000 that the board is expected to save each year through consolidation, he said.
“After 15 years, the indication is that they would give the building to the school board,” Miller said. “That’s not in writing, because it can’t be… but we would hope that the building would become the Board of Education’s building.”
Miller said the school board would not only pay for insurance on the contents of the building, but also on the building itself, which is unusual for a rental agreement.
“They want to be able to say it’s not costing them money for us to be in this building,” Miller said, referring to the city of Salisbury.
Hughes said it concerns him that the school board would be insuring a facility that it doesn’t own.
“That, to me, binds us somewhat to the building,” he said. “I don’t know if that would be a problem for the LGC.”
Hughes made a motion to postpone signing the lease until the next meeting, to give board members more time to read it over. His motion failed without a second.
Wagner then moved to wait until the city receives a response from the LGC. Hughes seconded, and Jean Kennedy voted with them, but the rest of the board voted it down.
Finally, Kay Wright Norman made a motion to approve the lease as presented. The document was approved 5-2, with Wagner and Hughes opposed.
“I guess we’ll know what’s in it after we pass it,” Hughes said.
Contact reporter Karissa Minn at 704-797-4222.
Twitter: twitter.com/posteducation
Facebook: facebook.com/Karissa.SalisburyPost

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