Board approves $2 million bond | News | The Press and Standard

by | March 16, 2016 5:00 am

Last Updated: March 16, 2016 at 12:53 pm

By GEORGE SALSBERRY
gsalsberry@lowcountry.com

Members of the Colleton County School Board split when the time came to vote on the proposal to issue bonds to aid in the funding of the Bells Elementary School construction.
When the votes were counted at the Tuesday evening session, board members Charles Murdaugh, P.A. Pournelle, Mary T. Jones, Tim Mabry and Harry Jenkins voiced their support for issuing $2 million in special obligation bonds. Board members William Bowman Jr. and Darlene Miller voted against the move.
Colleton County School Superintendent Dr. Franklin Foster had asked school board members at their March 8 meeting to consider borrowing $2 million to replenish the capital projects fund depleted by cost overruns in the Bells Elementary construction project and the mold problems at Northside Elementary.
The school administration, based on a recommendation from its bond counsel, is asking board members to consider a $2-million special obligation bond that would run for 17 years.
The bond plan would use some of the items at Bells Elementary School as collateral to insure the bond repayment. Foster, in a conversation late last week, said that items used as collateral have a 10-15 year expected life and could be removed from the school building if the district defaulted: school’s heating and air conditioning system, the equipment in the school’s cafeteria kitchen and the LED lights in the building.
The plan, Foster explained, would pay interest only on the bonds, about $70,000 annually, during the 17-year run ($1,190,000 million in total interest) and then make a balloon payment of $2 million when the bond expires in 2033. Total cost of the bond would be about $3.1 million.
Handling the bond’s repayment that way, Foster explained, would not require the school district to seek additional tax money from the county’s property owners.
Foster said the plan is to place the bond’s proceeds into the Capital Projects account to replenish at least a portion of the $3.3 million removed from the account last October to cover higher costs of building Bells Elementary.
Foster said the school district’s bond counsel would not have recommended the bond if they considered it risky.
He said that it was apparent he had failed to adequately explain the plan at the school board Committee of the Whole meeting on March 8 because it had prompted questions from both the media and board members.
The following timeline explains the deficit in the Capital Projects Fund:

June 26, 2014
Members of the Colleton County School Board voted to place a bond referendum issue on the November ballot.
The bond issue, if passed, would generate $10 million.
The school board said $7.5 million would be dedicated to building a new Bells Elementary School.
At the time of the vote, school board members were told recent construction cost estimates for a new Bells school ranged from a low of $6.9 million, to a midline proposal of $8.2 million, to a high of $10.7 million. The cost differences were directly proportional to the proposed size of the new facility.

Nov. 4, 2014
Colleton County voters went to the polls and overwhelming supported the school district’s $10 million bond referendum: 6,707 for and 3,724 against.

January 2015
The school board voted to hire Charleston architects Liollio Architecture to handle the Bells Elementary design work at a price of $438,400. Liollio previously handled the design of the new high school and Cottageville Elementary, as well as the renovation of Forest Hills Elementary School.

Feb. 24, 2015
School board members approved issuing Mitchell Construction Co. the contract to serve as the construction-manager-at-risk, a variation of the typical general contractor.
Mitchell would be paid $10,000 for its pre-construction services: establishing a bid estimate for the work and then $335,500 for the construction phase.
The work covered by the bid estimate established a base price for the construction work that would eventually become the guaranteed maximum price.
The construction manager-at-risk contract meant Mitchell would assume responsibility for having the work come in at, or below, the estimate. The company would also be required to have the construction finished and the new school building ready for occupancy by August of this year.
If the work came in over budget or completion was delayed, Mitchell Construction Co. could face financial penalties.

May 1, 2015
School officials opened the bids on the Bells project and found that they were well over the estimates that had been established by representatives of the architectural firm hired to design Bells, Liollio Architecture, and the project’s construction-manager at risk, Mitchell Construction Co.
The estimates placed the price at $7,062,274 on the portion of the construction to be overseen by Mitchell.
When the bids were opened, school officials learned that the price based on the bids increased to $8,792,725.
In the months following that news, school officials —  again working with representatives of Liollio and Mitchell — began pruning the initial plans, seeking to decrease the bid prices.
Their work pruned approximately $900,000 from the construction work overseen by Mitchell, bringing the construction contracts down to $7,825,305.
But that figure was just a subtotal of the subcontractors’ work.
Adding a number of other items not covered by the bids such as the cost of preparing the bonds for sale, asbestos removal and early site preparation, pushed the total project cost for Bells Elementary to $9,691,733.01.

Oct. 13, 2015
School administrators came to a special session of the school board with more bad news.
To cover the expanding costs of Bells Elementary, the school district would have to take $3.3 million from the district’s Capital Projects Account to cover the additional costs.
Board members approved a fund transfer which reduced the amount of money in the Capital Projects account from $4.9 million down to $1.6 million.
At the same time, they learned that the increased costs were going to bring Mitchell Construction’s guaranteed maximum price up to $9.6 million.
The price, school administrators told board members, was not the total cost of the project now. The total had climbed to $10.8 million.

Feb. 25, 2016
The bills came in for handling the mold outbreak that closed Northside Elementary School, and the school board was forced to pull $510,843 from the Capital Projects Account to pay the bills. The state-run insurance coverage for the building informed the school district the repair costs were not covered.
Back in October, when $3.3 million was pulled from the Capital Projects Account, school officials believed the $1.6 million remaining was enough to handle any unforeseen emergencies. Now the unexpected Northside expenses depleted the account down to $1.1 million.

March 8, 2016
Foster proposed borrowing an additional $2 million. If approved by the board, $400,000 will be used for furniture and kitchen equipment at Bells, bringing the total cost of the project to $11,200,000 — a 49% increase over the amount approved by voters.
The remaining $1.6 million will be used for system-wide capital projects.

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