Duplin weighs new way to fund facilities
By Matthew Whittle
Published in News on July 27, 2007 1:45 PM
Meeting again to discuss facilities, Duplin County's boards of commissioners and education focused on one intriguing financing option -- capital leasing.
It's a possibility that captured the interest and the attention of the school board back in March, and the commissioners last week.
But members of both boards said they are not completely sold on the idea yet -- not even after listening to another hour-long presentation Thursday morning.
"We need more information. We don't know enough about it yet. We need to know more, and the public needs to know more," school board member Hubert Bowden said.
Commissioner Harold Raynor agreed. He also said that with such a new concept being considered, he would like to hear more than one person's opinion about it.
So far, architect Robbie Ferris of Shuller Ferris Lindstrom and Associates has been the only one to address either board. Since presenting the program to the boards, he has also touted his firm as one of the leaders in getting the state legislature to grant this capital leasing program as a school financing option.
"There's got to be some other architects and contractors just as good as him," Raynor said. "I'd like to have more than one opinion."
Commissioner L.S. Guy, however, while agreeing both boards need to learn more about capital leasing, said he was comfortable with whomever the school board chose to present the idea.
"Inviting architects to come in and talk about school buildings -- that's their job. They brought this architect to us because that's the one they selected," he said.
Capital leasing is an option that has only been around for a year, and while no school systems are currently taking advantage of it, there are several considering the possibility.
The biggest reason to go that direction, Ferris explained, is because of the flexibility in funding it provides.
"We fund all the upfront soft costs, which can be pretty significant," Ferris said. "Lease payments begin when you move into the building. And owners are not stuck with an outdated budget."
It also, he added, can allow the developer to build better high performance schools by taking advantage of tax credits and energy-saving features. School systems also can include provisions for routine maintenance in their contracts.
Of those benefits, though, the one he spent the most time focusing on was the energy savings.
"Energy will, far and away, be your biggest problem in 30 years. Energy will be the driver in your budget," Ferris said, explaining that through the use of solar panels, though, "the building will actually generate more electricity than it uses."
That is especially beneficial, he continued, if the state General Assembly and Gov. Mike Easley approve a Senate bill to allow the public utility companies to buy green energy back at a higher premium -- 21 cents per kilowatt/hour, as compared to the current 10 cents per kilowatt/hour the school system is purchasing it at.
And primarily because of that savings and revenue generation, he said, capital leasing has the potential to save the county nearly $16 million -- $4.4 in present value -- over the course of the 40-year lease.
Still, not everybody is sold on the idea, and members of both boards requested more written information and definable numbers.
"I think we need to analyze some specifics," school board member Jennings Outlaw said.
Other options might include more traditional methods such as general obligation bonds -- backed by the county's taxing power and secured through a public referendum -- or certificates of participation -- similar to a house mortgage and secured through a vote of the board.
But before any decisions are made, the two boards also need to discuss the facilities plan itself.
The plan, which was approved by the school board in June, features three primary components: The building of a new high school to consolidate the students at James Kenan High School and students at East Duplin from the B.F. Grady area; the replacement of E.E. Smith and Warsaw middle schools with a consolidated middle school at the former James Kenan High School; and the construction of a new elementary school in the B.F. Grady area and the renovation of Charity Middle School.
Not everybody, though, is pleased with the proposal.
Outlaw voted against it and commissioners Raynor, Cary Turner and David Fussell have all raised questions about it. Guy also noted that it's going to have to be discussed at some point.
"Today was supposed to be exactly what we did, but there's no way we can forward till we talk about that (plan)," he said. "We need to do it sooner rather than later."
Bowden also acknowledged that "there's still some work to be done."
But, even though the commissioners are scheduled to discuss school facilities at their Aug. 6 meeting, neither board had a time frame in mind for when to talk about them together.