Jonesborough hoping to finance school plan through bond issue

Jonathan Roberts • Sep 8, 2019 at 12:00 AM

Jonesborough’s plan to lease its proposed K-8 school to Washington County would see the town avoid paying any principal payments on the loan until the project is completed.

According to town attorney Jim Wheeler and town administrator Bob Browning, the proposal — which would see the county make annual lease payments of $2.362 million — would have the town pay for the entire project with a single bond issue.

Wheeler says there’s no limit to the amount the town can issue a bond for, and that the payments will only be made on what is used to construct the school.

Browning said the final decision “hasn’t been made yet,” and said how the town funds the project depends on the preference of the Washington County Commission.

“We have the capability of funding is through Rural Development through the USDA, and we have done a lot of projects with Rural Development (funds),” Browning said, adding that if they fund the project through the USDA, the length of the lease would be at 40 years, rather than 20. Annual costs for a 40-year lease would fall around $1 million to 1.5 million rather than the $2.362 million that’s currently on the table.

“It doesn’t matter for us (how it’s funded), so long as it’s financially viable for the county,” Browning said. “It wouldn’t really make too much difference, but at the same time if it makes them nervous that they’ve got a 40-year note instead of a 20-year note, then we’re going to end up accommodating the county.”

In August, Wheeler told the Press that the county has set aside seven pennies on its property tax rate to fund the school project. Each penny generates more than $300,000 annually, and would give the county $2.637 million a year — also providing the county with $275,000 per year for other capital projects. Neither the county or Jonesborough have announced the need for any tax increases to fund the school.

Browning said the bond is typically structured in a way that would not only see no principal payments until the project is completed, but also have the town only paying interest payment on money that’s been used, rather than the entirety of the bond.

Jonesborough has estimated the project would cost around $32 million, but town Mayor Chuck Vest said during a special called meeting of the Board of Mayor and Alderman on Aug. 22 that they “expect to try and get that down to the $28-30 million range.”

Both Browning and Wheeler, who also serves on the County Commission, said they anticipate more details about the lease documents will be revealed when the Washington County Budget Committee meets on Wednesday at 9:30 a.m.

“When it gets to the Budget Committee then that’s when we’ll have more serious discussions about how the financing mechanism is put together,” Browning said.

“It’s possible that there could be some minor changes, but not substantive changes,” Wheeler said. “I don’t know that those will be completely ironed out by the time it goes to the Budget Committee, but anything that would relate to the financing is already in there.”

How it compares to Boones Creek

The 48-acre lot eyed as the school’s future location is expected to cost significantly less to prepare for construction of the school buildings than the $28 million Boones Creek school, which opened in August.

According to Wheeler, preparing the lot for construction (grading, retaining walls, building access roads, utilities, etc.) and constructing the athletic fields — which the town would retain ownership of — would cost just over half of what Boones Creek did.

Estimates for Jonesborough’s property sit at $6.7 million — more than half of which is attributable to construction of the athletic fields. That figure includes the purchase price of the land, estimated construction costs of the athletic fields and hard costs for things like grading and setting up utilities.

Boones Creek cost $12 million to ready its 56-acre footprint, a large portion of which coming from grading and retaining walls alone. Per acre, Jonesborough’s cost is projected at $138,708, while Boones Creek cost $209,451.

“The main difference is … this land is relatively flat compared to (Boones Creek),” Wheeler said. “Not only was this the best location, but it was also one of the least-costly to develop.”

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