Borough scales back building repairs to reduce bond issue cost

The borough assembly has set a public hearing for its Aug. 23 meeting to consider two ordinances that would seek voter approval to borrow $3.5 million for repairs to school buildings and $8.5 million for rebuild and repairs to the Public Safety Building.

The numbers are down from $4.5 million and $10.5 million in an earlier work plan considered by the assembly, as the borough dropped some items from the repair lists to hold down costs.

Voter approval is required for the borough to issue general obligation bonds to raise money for the work. The debt would be repaid with property taxes and other borough revenues.

If the assembly approves the ordinance Aug. 23, the questions would go before voters in the Oct. 4 municipal election. If voters approve borrowing the money, the borough hopes to obtain $6.5 million in state grant funds to fully cover the estimated $10 million price tag for repairs to all three school buildings. The state program requires a 35% local share.

“We have major maintenance needs at all three schools,” Borough Manager Jeff Good said at the Aug. 8 assembly meeting, where members approved without opposition the school bond and Public Safety Building bond ordinances, setting the public hearing for Aug. 23.

The proposed work at the schools includes new roofs, exterior siding, windows, heating system boilers, a new gym floor and other long-deferred maintenance. The school buildings are 35 to 53 years old.

If the borough does not obtain the state grant, it would continue with as much work as it could afford, focusing on what’s needed most, Good said. “We’re trying to protect the structure.”

Wrangell would go after a state grant under the Department of Education’s major maintenance program, which ranks schools across Alaska based on the most immediate need of substantial repairs or rebuild.

The Legislature decides how much money to appropriate each year to the program, with the funds going out in order of ranking. A high ranking is essential to winning state funding, as the money is limited and the competition intense with more projects on the list than money available.

If approved by voters, work could start in 2024, after the bonds are sold, the engineering plans assembled, the jobs bid out and contractors selected.

The borough currently owes no debt, having paid off its latest school bonds three years ago. If approved by voters, the borough estimates it would pay about 4% interest on the borrowed money, requiring 20 years of debt repayment at about $413,000 a year for work at the schools.

Annual debt payments on $8.5 million in bonds for rebuilding the Public Safety Building would add about $628,000 a year for 20 years to municipal expenses.

The assembly could use earnings from Wrangell’s $10 million Permanent Fund savings account to cover about one-third of the annual debt payments if voters approve both bond issues. Property taxes likely would cover the rest. The borough this year expects to receive almost $1.8 million in property tax payments.

The assembly Aug. 8 amended both bond issue ordinances to specify that any increase in property taxes to repay the debt “shall sunset” when the debt is fully repaid.

Assemblymember Patty Gilbert had wanted to amend the ordinances to provide voters with a maximum amount of any possible property tax increase. “I’d like to have it nailed down.”

The mayor and other members explained the actual tax rate would depend on multiple factors, including the interest rate on the debt and whether the state comes through with money for the schools. Setting a specific dollar amount in the bond issue vote — before the bonds are sold and the work bid out — isn’t realistic, they said.

The borough will distribute information in advance of the election, explaining how much the projects will cost and how the debt could affect borough finances and property taxes.

Work at the 35-year-old Public Safety Building — which suffers from water damage and rot — would include a new roof, siding, insulation and vapor barriers, doors and windows, and replacing an obsolete fire alarm system. “We have to stop that damage,” the mayor said Aug. 8 of water damage at the building.

The cost of accumulated repairs at all the borough-owned buildings was inevitable, the mayor said last month. “We have underfunded our maintenance budget.”


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