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Palmerton leans toward borrowing $5 million for several school projects

Published October 08. 2010 05:00PM

Palmerton Area School District could borrow $5 million to afford a litany of projects.

That appeared to be the direction favored by a consensus of school directors at a board workshop on Tuesday.

Henry Sallusti, the district's financial adviser, told the board he had prepared six borrowing options for the district that ranged from $2.5 to $5 million.

Sallusti told the board the district would be able to keep its $1.6 million a year in debt service without impacting the amount of the loan payments for the next eight years.

As of 2019, it would decrease to $1.2 million, if the district were not to borrow, said business manager Lisa Vignone. From 2020-2023, it would be about $670,000, Vignone said, and from 2024-2026, about $470,000, at which point the district would be done with its debt service.

All told, that would amount to over $18 million in debt service, Vignone said. The overall debt service that would be paid would be $24.7 million over the next 16 years, she said.

If the district were to borrow $5 million, the debt service for 12 years would be about $1.6 million, Vignone said. The remaining four years would be about $1.2 million, she said.

The board then heard from representatives from Performance Roofing Systems, which said it could replace the high school roof for $900,000, complete with a 30-year warranty. Or, it could replace the high school roof for $600,000 with a 20-year warranty.

The board also heard from Rob Sarnowski of Barry Isett & Associates about the possibility of grant writing.

After Sarnowski's presentation, Director Clarence Myers said he would like to explore solar energy grants, to which Director Susan Debski concurred.

Superintendent Carol Boyce said she would recommend the district attempt to pursue grants.

"We could defray any of the projects by bringing grants in," Boyce said. "It is a win-win for everybody."

After more discussion, Director Michael Ballard suggested the district should borrow $5 million.

Director Tina Snyder said that while she agreed the district must borrow, she didn't believe the district would be able to utilize the full $5 million mark.

However, Debski said she disagreed with Snyder's assessment.

"We are so overwhelmed with how much needs to be done that I fully believe we would utilize fairly close to that figure to get this district where it needs to be," Debski said.

Ballard said the option was a no-brainer.

"We have the opportunity to borrow money at this rate," Ballard said. "Let's take it."

At that, Boyce polled the board members in attendance as to how much they would want to see the district borrow.

Along with Ballard and Debski, Myers, as well as Director Darlene Yeakel and board President Barry Scherer, said they favored the $5 million. Director Carol Dwyer said she favored $2.5 million, while Snyder said she was not in favor of the $5 million.

It was then agreed there would likely be a motion on the agenda at the Oct. 19 board meeting to borrow a certain amount of money.

Last month, a review of the board's project priority list showed the repair of the roof was clearly at the top of its to-do list.

In June, Alan Behnke of Tremco Roofing, said the cost to restore the high school roof would be about $583,090, and would include the restoration of the boiler room roof. Or, he said, the district could replace the roof at a cost of about $2 million.

Behnke also noted at that time the weightroom roof is also in dire need of repair, and added that it couldn't be done until the bleacher system is addressed. He said the cost to replace that roof would be about $133,076.

The district could also have done a combined project that would cost $350,000; $200,000 for the bleachers, and $150,000 for the roof, Behnke said at that time.

Next on the board's project priority list was the generator at S.S. Palmer Elementary; the junior high school gym floor, tiles and bleachers; Parkside Education Center building repairs; and high school renovations.

Projects that rounded out the top 10 were the junior high boiler; oil tank removal; tennis courts; S.S. Palmer steps; and the high school hot water boiler.

In all, the list of 23 projects on that priority list came in at $1,641,039, said Boyce, who cautioned the figure was a best guess estimate at that time.

In August, the board reviewed a potential three-year expenditure supposition created by Vignone at the behest of the board. The supposition presumed level funding on all department line items, as well as a 3 percent increase in salary and 5 percent increase in benefits in each of the next three years.

It also presumed a category known as other, which refers to the other agencies with whom the district does business, such as the Carbon Lehigh Intermediate Unit, outplacement providers where some of the district's students receive services, and places with whom the district has educational service contracts, whereby the district anticipates a possible 10 percent increase.

Boyce said at that time the district had lost $23,000 in grant funding it was counting on in the 2010-11 school year in the educational areas, and added that it appeared the only way it will be able to afford to pay for any major facilities and buildings and grounds projects is through the bonding process.

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