County begins soliciting loans for downtown central office buliding
Published 1:00 am Thursday, December 4, 2014
Construction on the Rowan-Salisbury School System’s central office may only be a few months away.
On Wednesday, county government began the process of financing the largest portion of the Rowan-Salisbury School System central office, when it published a request for loan proposals.
The request, published on Rowan County government’s website, asks for loan proposals in the amount of $6.5 million. The loan would represent a significant majority of the money used to construct the central office building. The city of Salisbury is pitching in $500,000 in cash and about $150,000 in in-kind services. Other monetary contributions include $875,000 from the Robertson Foundation and $150,000 from philanthropist Fred Stanback.
Rowan County finance director Leslie Heidrick said the loan would be paid for over the course of 15 years through tax dollars specifically earmarked for school system capital improvements. More specifically, the tax comes from amounts allocated through two half-cent taxes.
The county’s projected closing date in the request for proposals is Feb. 12, 2015, which would mean loan payments end in 2030.
Once money from all funding sources is added together, Rowan-Salisbury School System Assistant Superintendent of Operations Anthony Vann said getting construction completed would be tight financially, but still possible. The total price tag is $7.98 million.
“When we total everything together, we have enough to cover it, but the project is going to be tight,” Vann said.
The county’s request sets Dec. 17 at 10 a.m. as the deadline for loan proposals to be submitted. Immediately after the deadline, there will be a public opening of bids.
Heidrick said the county commissioners would consider approval of a loan during the first regularly scheduled meeting in January. The next step is approval by the state’s Local Government Commission, according to Heidrick.
But commissioner Craig Pierce said an important task must be completed before the application is even submitted to the LGC, which must approve loans taken out by local government entities. The school board must sign over all property for the central office to the county, Pierce said.
“When you talk about putting stuff in people’s name, all the land has to be surveyed into one plot,” he said. “That’s not been done yet. Until all the parcels of land have been surveyed and put into one plot, we will not even send the application (to the LGC).”
Vann confirmed the central office property has not been surveyed. He said the school system plans to discuss it in January, but Vann said he hasn’t been an active participant in conversations about the property being surveyed.
Pierce also expressed concern about the LGC approving the loan because of the way it’s structured.
“My only concern is the way we had to calculate the payback,” he said. “We’re sending in a loan application that is not a usual application.”
The unusual part about the the proposed structure of the central office loan is that the county wouldn’t make any payments on the principle, or borrowed amount, for the first two payments, Heidrick said. Instead, the county would only pay the interest in the first two payments. The loan’s structure came as a specific instruction from county commissioners during a mediation process between the schools and commissioners as a way to fit within the current budget.
The county’s request for loan proposals suggests a total of 30 payments over the 15 years. The proposal lists the principal payment amounts at $232,142.86.
None of the payments would occur in the current fiscal year, according to Heidrick. If the LGC approves the loan in February and the county closes on Feb. 12, the first payment would occur in August, she said.
With the LGC approval and loan finalized, Heidrick said, the school system could sign off on a construction contract and begin physical work on the central office building. Before a funding sources is finalized, Heidrick said the school system could only do certain kinds of work on the central office building, such as architectural drawings.
The $6.5 million loan would add to the nearly $10 million in debt being paid this year by the county on the school system, according to the fiscal year 2015 budget. Debt owed by the county on the school system represents more than half of the county’s total debt service paid during the 2015 fiscal year.
The North Carolina State Treasurer lists Rowan County’s total debt at $83.38 million as of June 30, 2013.
With $6.5 million added to the total debt, Pierce said it causes concern about how repairs would be funded in emergency situations.
“God forbid, but say there’s a fire at East Rowan High and the school burns to the ground. County commissioners have to build a school back,” Pierce said. “We’d already have all our money tied up, but we don’t have a choice but to build the school. That’s why I say we’re really stretching ourselves out there to do this.”
Pierce added that he would prefer to finish the central office and move on to other issues in Rowan County.
“If the school system wants to build on the property, I don’t think anyone has a problem with that,” he said. “But we’re not about to circumvent any of these procedures. We want to make sure we’ve got everything ready before we even send this application in.”
Vann also said he was ready for the school system to get started on the final phases needed to build the central office.
“There’s been an array of people that have come together to make this happen,” he said. “I’m very excited to see this coming together.”
Contact reporter Josh Bergeron at 704-797-4246