Borough considers whether to borrow money for building repairs

The borough assembly is considering whether to seek voter approval to sell $10.5 million in bonds for the first phase of rehab work at the rot-damaged 35-year-old Public Safety Building, and $4.5 million in bonds to help pay for roof, siding and boiler work at school buildings that range in age from 35 to 53 years old.

Repayment of the bonds would come from municipal revenues, particularly property taxes.

The assembly was scheduled to meet in a work session Tuesday evening to discuss the proposal, followed by the regular meeting where members were to vote on setting a special assembly meeting for Aug. 8 to introduce an ordinance putting the question before voters.

If approved after a public hearing at the Aug. 23 assembly meeting, the bond issue question would be on the Oct. 4 municipal election ballot. General obligation bond issues, which are repaid by tax revenues, require voter approval.

“We’re trying to preserve what we have,” Borough Manager Jeff Good said last week of the needed repair work at the buildings.

The borough has no debt; it paid off the last of its 2011 school bonds three fiscal years ago. The borough owns the school buildings and is responsible for major maintenance work.

The work at the school buildings is estimated at $12.9 million, with the borough looking to win a spot on the state’s list of major maintenance projects with the potential for 65% state funding, subject to Wrangell’s ranking on the statewide list and legislative appropriation.

The community last received funding through the state’s major school maintenance program in 2006, according to material submitted by the school district to the assembly. “Funding under the major maintenance grant program is competitive,” the district reported.

If the Alaska Department of Education rejects Wrangell’s application for funding, or the Legislature fails to fully fund the list, “the borough will have to reduce the scope of the project to just the critical structural elements of the high school and middle school,” according to a summary prepared by Borough Finance Director Mason Villarma for the assembly.

The debt would be issued through the Alaska Municipal Bond Bank Authority, a state agency that sells bonds for smaller communities at a better rate than the municipalities could get on their own. Based on discussions with the agency, the borough is estimating 20-year bonds would come with an interest rate of about 4%. At that rate, repaying $15 million of debt could cost about $1 million a year.

If the assembly goes ahead with the proposal, voters could accept or reject either of the two bond proposals, approve both or reject both. If either one or both are approved, the assembly next June would set the property tax rate sufficient to cover repaying the bonds, and construction work could begin in 2024, according to Villarma’s report to the assembly.

The first phase of rehab work at the Public Safety Building would include a new roof, siding, doors, windows and structural framing rebuild due to water damage, and upgrades to the elevator, fire alarm and heating and ventilation controls.

At the school buildings, “major building components …. are past their useful lives, including roofs, fire alarm panels, siding and boilers,” the district reported. New roofs at all the schools and high school gym are estimated at a total of $2.8 million, not counting contractor mobilization costs or overhead expenses.

Other repairs on the work list include window replacement, a new gym floor and paving the parking lot at the elementary school, lighting upgrades and new floor coverings at the schools.

 

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