Warren mulls middle school loan
By Alex Bridges
FRONT ROYAL — Warren County might not need to raise taxes to build its new middle school.
The Board of Supervisors heard from a consultant Tuesday who advised them of the financing options available for the school. The board then held a public hearing because the county may borrow up to $45.5 million to cover the project cost. School Board Chairwoman Catherine Bower spoke at the hearing in support of the project.
Supervisors did not take action at the meeting, deciding instead to wait until their Oct. 7 meeting when the county’s financial consultant expects to provide the board with more information.
The county plans to build the middle school at the northern end of the future Leach Run Parkway in the town limits.
Warren County has been working with Richmond-based financial consulting firm Davenport & Company on the finance options. Senior Vice President Ted Cole gave the board a presentation about how the county could pay for the school. The consultant and county officials are looking at ways to structure the payments to limit the need to raise taxes, if needed at all. Currently, Davenport estimates a half-cent increase or less in the tax rate.
“We think we can get this done within the planning model without any budgetary impact with a 25-year financing [plan],” Cole said.
County Administrator Douglas Stanley concurred.
“I think what Ted’s saying is either we’ll find [the money] in the budget or we’ll structure it, maybe the first year’s interest only, the other 24 years you pay off the principal,” Stanley said. “Assuming the meals tax doesn’t fall through the floor and everything else holds true, we won’t need a tax increase to be able to fund it.”
The county could use money collected from the meals tax, the enterprise zone and the Dominion Power plant to cover the debt payments, according to Davenport.
“I think the School Board would hope the project comes in under bid and we could use some of that money for another one of our projects down the road,” Stanley said.
The architect should complete the building plans in the next week or two, Stanley said. The county then could put the project out to bid later this year or early next year.
Delays in the project, which also depends on Leach Run Parkway, likely led to the cost increasing, Stanley said.
Significant changes that affected the budget:
- Increase in construction cost per square foot from $180 to $204
- Increase in square footage of building space from 151,000 square feet to 154,800
- Increase in project contingency from $815,400 to $1,578,495
- Inclusion of town water and sewer tap fee cost of $1,103,419
- Inclusion of auditorium — $2,128,200
- Cost of land purchase — $1,565,000
The county could get a loan rate of 3 to 4 percent — lower than an earlier estimate of 5 percent, and Davenport calculated annual loan payments of $2.5 million to $2.6 million depending on the financing option the board picks. Interest would bring the total cost to $66.3 million if paid off by 2040.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org