A Palmerton Area School District resolution passed Wednesday night without opposition authorizes up to $18 million in general obligation bonds to finance renovations and improvements to the high school.

Bond settlement is scheduled for July 9, according to a presentation earlier this month.

Before the vote, Assistant Superintendent Ryan Kish walked the board through why the authorized ceiling exceeds the actual project cost.

“The financing motion references a borrowing amount of up to $18 million; however, the actual project cost is less than that amount,” Kish said. “Under Pennsylvania’s DCED requirements, the district must establish a not-to-exceed borrowing limit within the parameters resolution to provide flexibility during the bond sale process. This allows our underwriters to structure and place the bonds in the most favorable way for the district.”

The estimated borrowing amount, Kish explained, is intentionally increased by approximately 20%. That cushion, he added, allows underwriters to adjust individual bond maturities and maximize interest rate savings as market conditions shift during final pricing. The district will only draw what it needs.

“After the bonds are finalized, bond counsel will file the appropriate documentation with the DCED, removing any unused borrowing authority,” Kish said.

The project includes a two-story addition to the east side of the high school featuring a new secure vestibule, five classrooms and a combined counselor and nurse’s suite; and a separate, approximately 11,000-square-foot district administration building to be constructed on the west side of the high school gymnasium.

The board voted 5-3 on April 22 to award more than $12.9 million in prime construction contracts, which Kish said would total $14.9 million once all costs are included — coming in $112,827 under the budget presented by KCBA Architects in December. E.R. Stuebner Inc. of Reading received the general construction contract at $8,931,000; Billitier Electric Inc. of Allentown the electrical contract at $1,764,618; and JBM Mechanical Inc. of Nazareth both the mechanical contract at $1,560,000 and the plumbing contract at $657,000.

District solicitor David Conn echoed the financing explanation and added that the structure works in the district’s financial favor.

“It’s always prudent to round up a little bit anyway, and you’ll get more favorable financing in terms of that higher amount,” Conn said. “But at the end of the day, you’ll only pay the financing obligations for the money you draw out of it, and what you withdraw will just be what you need for the project.”

The district is pursuing what its May 5 budget presentation described as a two-step financing plan, structured to take advantage of a provision in federal tax law allowing tax-exempt issuers to sell up to $10 million in Bank Qualified Bonds per calendar year — a designation that qualifies the district for lower interest rates.

The new debt is projected to add $305,991 to the 2026-27 budget and matures in 2045.

A formal pre-construction meeting is scheduled for May 27, bringing together general contractors, architects and key district staff to discuss timelines, budgetary controls, and safety and quality standards.