Alamance County’s commissioners have made moves to squeeze more funds out of a $150 million bond package that the Alamance-Burlington school system secured in 2018 in order to bankroll a collection of high-priority roofing and HVAC projects on the school system’s to-do list.
During a regularly-scheduled meeting on Monday, the commissioners instructed the county’s administrators to obtain the financial information they’ll need to cash in the remaining $19.5 million in bonds that the county has yet to issue out of the school system’s package.
The commissioners have decided to avail themselves of these additional funds in order to begin work on nearly $80 million in roofing and HVAC projects that two consultants in the county’s employ have identified as some of the most urgent maintenance needs currently facing the Alamance-Burlington school system.
Although the additional bond proceeds would cover a mere fraction of the highlighted projects, they nevertheless struck the commissioners as a good way to start gathering the nest egg they’ll need to knock out these projects. The relative availability of these funds also appealed to the likes of commissioner Craig Turner, who emphasized the need to press forward with the projects up for discussion.
“We’ve got to do what we can as quickly as we can to prevent moisture from getting into those buildings,” Turner declared during Monday’s proceedings.
The sense of urgency that Turner expressed had been reinforced by reports that the commissioners received earlier that morning from the consultants they tasked with assessing the school system’s maintenance needs.
Alamance County had initially commissioned these experts with REI and Systems Contractors to inspect both the county’s and the school system’s facilities in the wake of a mold infestation crisis that struck the Alamance-Burlington school system last year. The county’s administrators ultimately asked these consultants to assess all of the roofs and HVAC units that these two institutions maintain, although they also requested a preliminary report on the 20 highest priorities in both roofing and air circulation.
These top 20 lists were initially shared with the commissioners last week during their annual budget retreat. On Monday, however, the commissioners had a chance to hear directly from the consultants who had compiled the lists.
In the case of the roofing priorities, the commissioners received a slightly different inventory of projects from REI”s Ron McKaskel than they had originally seen at last week’s retreat. This revised slate actually contained 22 items, including one in the county’s domain, and bore a total price tag of $35,994,213.
McKaskel nevertheless conceded that funds had already been allocated to complete the four highest priority projects, while the next four items had been contracted out for the preliminary design work. The consultant added that this still left $22,659,867 in unfunded roof repairs and replacements that he urged the commissioners to tackle post haste due to leaks and infiltration at each of the sites.
“You don’t want water in your building,” McKaskel assured the county’s governing board. “You have to catch these things when they start leaking or when they reach their life expectancy.
“My recommendation,” he added, “is that they need to be budgeted to be replaced or repaired as soon as possible [because] the longer you wait, the more expensive it’s going to get.”
The forcefulness of McKaskel’s appeals was matched by the recommendations that the commissioners subsequently heard from Kevin Waters of Systems Contractors. During Monday’s meeting, Waters presented a slate of 21 schools that he said had critical needs for new or upgraded HVAC systems. Topping this list were Graham, Southern, Western, and Eastern high schools – which together accounted for roughly $22.2 million of the nearly $56.5 in improvements that Waters proposed.
Waters informed the commissioners that he had compiled his rankings based on the overall state of the air circulation systems in each school, and not just the condition of their individual components.
“We sent a group of technicians into every one of these schools, and we looked at every piece of equipment,” he added. “Once we go through all the equipment, we look at the system as a whole…We ask ‘can that system bring in outside air?’ ’Can it dehumidify?’…We look at what problems we have caused over the years by adding air conditioning to a school that’s not designed for air conditioning.”
Waters added that the overall cost of these projects might not have been quite as high had his firm merely examined equipment. He added, however, that a more wholistic approach will ensure that the county actually addresses the problems that currently plague these HVAC systems.
The county’s administrators had initially suggested the school system’s bond package at the retreat as a potential source for the funds to pay for some of these higher priority maintenance projects. According to the county’s finance department, the county has, so far, issued $130,485,000 of the package’s face value, leaving $19.5 million in unissued bonds that the voters had authorized when they approved the bond package in 2018.
On Monday, county manager Heidi York informed the commissioners that the county’s current “debt model” can absorb the additional $1.95 million in annual payments that the unissued bonds would require.
As a prelude to issuing these bonds, the commissioners asked York to call in the financial consultant who has helped with the previous bond issues so that he can advise the commissioners on the timing and cost of this proposed return to the bond market.
In the meantime, commissioner Turner inquired about the potential sale of bonds beyond the face value of the school system’s $150 million package. The commissioners have previously resisted the temptation to “take” this so-called “premium,” which investors may offer a bond issuer when interest rates are low enough to sustain the additional debt within the issuer’s ceiling for debt payments. Turner nevertheless said that the county could lay its hands on as much as $22 million if decides to avail itself of this opportunity.