04/14/14 — County to eye school building plans

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County to eye school building plans

By Steve Herring
Published in News on April 14, 2014 1:47 PM

"Absolutely ludicrous" is how Interim Wayne County Manager George Wood is describing architect Robbie Ferris' original proposal to build two new middle schools.

Not only is the capital lease method outlined in the contract the "worst option" to use for the project, it would cost $3.4 million more than the traditional design/bid/build method to construct the exact same schools, Wood said.

Also, as worded, the contract would allow the developer's compensation to account for up to 26 percent, or $10.1 million, of the estimated cost of $38.7 million to build the two schools in the Spring Creek and Grantham areas, he said.

On Tuesday, Wood is expected to make his case for Wayne County commissioners to shelve Ferris' proposal to use the capital lease in favor of the design/bid/build method.

He will make his presentation at the commissioners' meeting, which will start with an agenda briefing at 8 a.m. The formal meeting will start at 9 a.m. in the commissioners' meeting room on the fourth floor of the county courthouse.

A public hearing on a request to rezone a lot at 542 N.C. 581 South will be held at 9:15 a.m. The request is to rezone the land from residential to community shopping.

Initially, Ferris had sought to use an operating lease agreement in which he would build the schools, then lease them back to the county. After five years, the county would be able to buy the schools.

However, the North Carolina Local Government Commission said last month that was not a viable option and what was actually being proposed was a capital lease.

An operating lease is considered renting, in which payments are considered operational expenses and the property being leased is not on the balance sheet. A capital lease is more like a loan, and as such the property is treated as being owned by the lessee, so it stays on the balance sheet.

Since that time, county and school officials have been negotiating with Ferris, the president and CEO of SfL+a.

In a letter to commissioners, Wood said he is recommending the design/bid-build method to bid out construction of two high-performance (energy-efficient) middle schools.

The recommendation is based on the Board of Education's promise of $5 million up front and the county's use of certificates of participation, or a similar procedure, in which the county would issue bonds, Wood said. Certificates of participation, basically a mortgage, do not require voter approval.

For the county to benefit from sales tax savings on the projects, the county would need to handle the construction contracts, he said.

In the past, the school board has deeded property to the county during a project so that the county could be reimbursed for the sales tax. Once the project was complete, the county deeded it back to the schools.

Also as part of the agreement, the school board would commit to using $2.2 million annually from lottery and sales tax revenues to repay the financing. Commissioners would agree to pay for any amount over the $2.2 million.

The school board also would pay the operating expenses for the two new schools out of its existing budget.

In other business Tuesday, commissioners will hear from architects interested in being awarded the contract to renovate the former Wayne Correctional Center for use as a county jail. The county plans to ask the state to convey the former prison site to the county and to exempt it from having to renovate the facility to meet more stringent jail standards.

Renovating the old prison is considered a much cheaper option than the county building a $70 million jail.

The current jail suffers from chronic overcrowding that is forcing the county to house inmates in other counties. That cost is expected to hit $900,000 during the fiscal year that ends June 30.

Commissioners also are expected to revisit the proposed consolidation of the East Wayne and New Hope fire departments. The item is part of the board's consent agenda.

Commissioners earlier this month approved a similar merger for the Faro and Eureka fire departments, but tabled action on New Hope and East Wayne after questions were raised during a public hearing.

The consolidation does not change any district lines, close any fire stations, or change how the departments respond.

However, officials from the Saulston Fire Department and county resident Ralph LeGrand questioned why Saulston had not been contacted about merging with East Wayne.

East Wayne Fire Chief Linwood Earl Sauls said he was surprised and disappointed at the last-minute opposition, especially since the issue has been public knowledge for months.

The consolidations have been discussed for years.

The talk became more serious after the mergers were recommended by Pennsylvania-based Volunteer Fire Insurance Services, which was hired by the county to study the operations of the county's volunteer fire departments.