Refinancing will save $33,000 a year for Shiner schools
Friday, July 15, 2005
Barry Halvorson, Victoria Advocate Reporter

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SHINER - Shiner public schools will save about $33,000 per year in payments after a plan to refinance funding for the construction of a new Shiner public school campus was approved this week.

The Shiner public school district board approved refinancing the personal property portion of the funding by a 3-2 margin Wednesday. Trustees Gloria Reindl and Michael Huser voted against the measure.

Reindl raised questions about the district's being permitted to use the personal property funds as originally intended to purchase such items as air conditioning and light fixtures. She told the board she had requested the Attorney General's opinion on whether or not the district could use the money that way.

Chancellor Financial President Bill Caraway reminded trustees that, when he was a member of the state Legislature, he wrote the original law concerning such lease- purchase arrangements. Chancellor Financial is the Austin-based company selected by the district to handle the financial arrangements.

"The AG's office has had several different opinions on that," he said. "But I wrote the law and I know what the legislative intent was and that was to allow entities the greatest amount of flexibility possible in spending those funds."

After the meeting, he said that ,under the law, if something is defined as personal property by the trustees, then it is personal property as defined by the law.

Caraway said the new agreement would extend the term the district had to pay back the funds to the holder of the loan note, AIG.

He said the main benefit of refinancing was to give the district additional budgeting flexibility while generating the same amount of money for the project. Under the original agreement, the district would have made annual payments of $249,886. Under the agreement approved Wednesday, those annual payments drop to approximately $217,000. The district still has the option of paying off all or portions of the note early as its budget will allow.

The drawback is the higher interest rate, 4.75 percent compared to the original 4.0 percent. The arrangements also allow for a readjustment of the rate after five years.

"You got a great interest rate originally," Caraway said. "And under the current conditions, you got another very good rate."

Caraway could not immediately say how much the district would have to pay over the life of the loan compared to the original contract.

"It will drop our annual payments by around $33,000," Superintendent Trey Lawrence said.

In other action, the board voted to enter into a contract with Project Architect Jim Singleton of JSA in Bryan to prepare bid documents for the building project. Singleton said that he was dropping his normal architect and engineering fees from 6.5 percent to 5.5 percent for the project. He also recommends a separate civil engineering contract, which would charge the district less than his company's normal fees.

"It's my way of buying into the project," he said. "It is going to be tough to do in the budget we have but it can be done, but the contractors will have to buy into it."

Singleton also presented the board with an artist rendering of the master plan for the campus. The classroom building design remained virtually the same with elementary school rooms on the bottom floor and high school and junior high classrooms of the upper floor of the two-story building. The other half of the campus, which includes the gym, cafeteria, science, performing arts and vocational classrooms has been slightly altered, with the science portion moved to the south rather than to the west of the gym.

Under the new proposal, the cost of construction is estimated at between $86 and $88 per square foot, said Singleton. "We're continually trying to simplify and improve on the design," he said. "We're going to be right at $7 million in the construction budget."

The consultant for the project, Ken Leach, unveiled the proposed project for the schedule. That calls for the district to advertise for proposals for contractors from July 20-27, a meeting with contractors on July 28 and receiving proposals on Aug. 4. Approval of the construction contract, except for pricing of subcontract bids, is set for Sept. 14 with subcontract bids submitted for approval Nov. 22. Construction would be from December 2005 through November 2006 with move-in the following month.

Barry Halvorson is a reporter for The Victoria Advocate.
Contact him at 361-798-3888, or by e-mail at hvilladv@vicad.com.

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