Public hearing: Annual financing impact for $2.5 million Telstar project updated

Some of the original loan payback estimates for a proposed $2.5 million building upgrade project at Telstar changed at Monday night’s public hearing but, said Supt. Dave Murphy, “we think there are ways to make this happen without having any kind of significant impact on the taxpayers.”
    About 30 people turned out for the hearing. District voters will decide on the project in a referendum on Nov. 6, Election Day.
 The work, which would improve air quality and energy efficiency at the Telstar complex, would be funded through two sources: $1.2 million that has been raised in taxes and set aside by voters in recent years for that purpose, and $1.3 million from a federal Qualified School Construction Bond, at an effective interest rate of 0 percent.
    Under the loan approval, the money must be committed to the project by the end of this year.
Problems
    The 45-year-old complex has a variety of ventilation and energy efficiency problems, according to Honeywell, the firm that did an energy audit earlier this year.
    For example, of 45 mechanical ventilation units located throughout the building, only two were bringing in air. To compensate, teachers have been asked to crack windows, even during the winter, to ensure enough fresh air in classrooms full of students.
    At the same time, however, air has also been entering the building in uncontrolled places, such as under the eaves.
    Both circumstances translate to lost heat.
    To address the inefficiencies in energy use and ventilation, the project calls for upgrading ventilation, temperature control, lighting, weatherization, insulation and kitchen refrigeration/heating equipment.
    If the project does not go forward, officials said, costs of keeping the old system running will continue to mount.
    (For more details on the plan, see Sept. 27 Citizen.)
Financing
    In discussion at a School Board meeting last month on the proposed project and its financing, SAD 44 officials noted that in 2014, the district will benefit financially from the fact that the district will finish paying off the Crescent Park School addition. Annual payments have averaged $250,000, Murphy estimated then.
    For the Telstar project, Murphy told the board then, a 15-year loan would impact the budget by the smaller amount of about $100,000 a year.
    At that meeting directors voted to approve sending the project to a district-wide vote.
    But Murphy said Monday the overall savings once the CPS loan is paid off will not be as much as originally thought, because SAD 44 will lose additional state aid funds when the CPS debt is retired.
    The last annual loan payment on that project, which was state-approved, will be approximately $261,000. But after the payments end, state aid is expected to drop by approximately $214,000.
    Based on the current figures, “That would be a net of about $47,000 that we would have to apply toward this project,” Murphy said. “Originally we thought we could cover all of this in the CPS school debt.”  
    He also said the state aid numbers can change from year to year.
    In order to lessen the annual impact on taxpayers, the proposal presented Monday evening was based on a 20-year payback instead of 15.
 Net payments would be approximately $65,000 a year, Murphy said. Although the district would technically have to make interest payments, those funds would be reimbursed to SAD 44 through the loan plan.
    Over the 20-year loan, the district could save up to an estimated $500,000 that would otherwise have to be paid in interest, according to Honeywell.
    Murphy also said the district may be able to arrange financing on the project so that no payment on the principal will be made until 2015, after CPS payments are done.
    SAD 44 will gain more financial ground in five years, said Murphy, when another project will be paid off - the water/sewer line between Bethel and Telstar that was funded entirely locally 10 years ago. When that loan is paid, he said, it will save an average of $55,000 a year.
    There were few questions at Monday’s public hearing, much of which was taken up by a presentation by Honeywell representatives.
    They showed photos of the failing or antiquated systems in the complex and explained how new systems would work.
    Scott Hynek of Bethel wondered if the district would be better served by exploring the possible replacement of the entire school with a smaller, more efficient building.
    But he was told that such a project would cost more than $20 million, and many years would likely pass before SAD 44 could even get on a state list for consideration for such a project.
    When the School Board last month approved putting the project out to a referendum vote, directors also discussed the possibility of applying for another loan in the future to fund a wood pellet boiler that would heat the complex at a significantly reduced cost.  
    On Monday district officials said SAD 44 should also craft a long-term facilities improvement plan.