Feb 9 2011

School Board’s Construction Work Runs into Cash Crunch

On February 9, 2011, the School Board will be presented with a powerpoint presentation on the use of bridge financing options to complete the final phase of school remodeling and seismic retrofitting.  Due to a delay in $4.9 million in State funding, the Board has a choice between delaying its final phase of work at Beach School or utilizing bridge financing to proceed with work on the current schedule.  Delaying work is estimated to increase District costs by $460,000.  Obtaining bridge financing appears to increase District costs by $630,000 – $725,000 over the initial two years.  Additional options, such as a lease, will be discussed.  View powerpoint presentation.

The District recently received authorization to issue $10 million in subsidized school construction bonds known as Qualified School Construction Bonds (QSCBs).  Issuance of these QSCBs, scheduled for June, will enable the District to address its cash flow needs for construction and to complete Wildwood, but not to complete Beach construction.

The $10 million in QSCB bonds represent the final portion of the total $56 million in bonds authorized by Measure E to fund school construction and renovation.  Issuing QSCBs, which are subsidized by the federal government, rather than regular bonds, will save Piedmont taxpayers millions of dollars in interest.  Repayments for this last $10 million bond issuance will be kept at the $60 per $100,000 assessed value repayment level prescribed by Measure E.

Repayment of the new QSCBS, plus existing Measure E Seismic Bonds, plus all prior bonds issued by the District, is structured to stay under $155 per $100,000 assessed valuation for the next 10 years, and at $60 per $100,000 assessed valuation thereafter.  (See presentation page 3 below.)

School bond assessments are separate and distinct from school parcel tax assessments (averaging $3,000 per home) and general property taxes (roughly 1.3 percent of assessed value).

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