The borough assembly has taken the first step toward seeking voter approval for borrowing up to $15 million to pay for long-needed repairs at the Public Safety Building and school buildings.
The assembly last week voted to hold a special meeting Aug. 8 to introduce an ordinance placing the question on the Oct. 4 municipal election ballot. A public hearing on the ordinance would be held Aug. 23.
If approved by voters, work could start in 2024, after the bonds are sold, engineering plans put together, the jobs bid out and contractors selected.
The borough currently owes no debt, having paid off its latest school bonds three years ago.
“We’re really risk adverse,” Borough Finance Director Mason Villarma told the assembly at its July 26 meeting, when members agreed to schedule the special meeting for Aug. 8 to start consideration of the ordinance.
“It’s OK for an appropriate amount of debt service,” Villarma told the assembly.
The borough estimates it would pay about 4% interest on the borrowed money. And while that’s higher than last year’s rates, it’s low by traditional measures.
But interest rates are rising on bonds, mortgages, car loans and most everything else. “You’re not going to see interest rates this low on municipal financing for three to five years,” the finance director said.
Bond debt generally is repaid from tax revenues, and assembly members discussed how the public would react to that prospect.
“That’s my quandary,” said Assemblymember Patty Gilbert. “Everybody loves the schools,” she said. Convincing voters to approve debt for repairs to the Public Safety Building will be a harder sell, she said.
Everyone who supports the bonds will have to do “a real good job of selling” the proposal to voters, Gilbert said.
The cost of accumulated repairs at the buildings was inevitable, Mayor Steve Prysunka said. “We have underfunded our maintenance budget.”
The plan presented to the assembly last week — which could be changed before going to voters — would include two separate bond proposals: $10.5 million for the first phase of repairs and rehabilitation to the 35-year-old, water-damaged Public Safety Building, and $4.5 million as the borough’s 35% match on a $12.9 million repair plan for all of the school district’s facilities.
Wrangell will seek $8.4 million for the school work from the state, under the Department of Education’s major maintenance program.
“Everyone in the state is competing” for those maintenance dollars, which are subject to legislative appropriation, Tammy Stromberg, the Wrangell School District business manager, told the assembly. There are almost 100 projects on the list, she said.
Districts apply for a spot on the list, and the department ranks the districts based on need and an assessment report of their facilities.
Flush with revenues from high oil prices, the Legislature this year appropriated $100 million to the program. Gov. Mike Dunleavy vetoed down the spending to $37.5 million.
The major maintenance grant program is the community’s only opportunity for state money, Stromberg said.
The state used to offer a program where it would reimburse municipalities for around two-thirds of the cost of paying back bonds for school projects, but the Legislature imposed a freeze on that program in 2015 to reduce state spending. State reimbursement of new debt would return for bonds sold after 2025, though lawmakers could extend the freeze.
“We have to keep maintaining the buildings,” or the borough is digging itself into a deeper hole of deteriorating facilities and higher costs, Josh Blatchley, head of maintenance at the school district, told the assembly.
The school work would include new roofs, fire alarm panels, exterior siding and boilers, window replacement, a new gym floor, paving the parking lot at the elementary school, lighting upgrades and new floor coverings at the schools.
Annual debt payments on $15 million in municipal debt would exceed $1 million a year, depending on the interest rate. The borough this year is budgeted to take in almost $1.8 million in property taxes.
The borough could reduce the annual debt payments by scaling back the work at the Public Safety Building or the schools.
The mayor also discussed at last week’s meeting the option of using some of the investment earnings from the borough’s permanent fund to help reduce the repayment burden on property taxes.
The savings account is projected to end the fiscal year next June with almost $10.6 million. The borough has been withdrawing $250,000 a year from earnings on the account to help pay for public services. Based on five-year earning and inflation projections, the borough assembly could appropriate about $380,000 in earnings a year from the fund.
The fund has been used in past years to cover debt service, Villarma said.
The largest users of the Public Safety Building by space are the police and fire departments, the jail and state court offices. The borough is budgeted to receive about $527,000 this fiscal year in state payments for the jail and court space. The mayor and assembly members expressed concern that the borough needs to fix the problems at the building and keep the court system under a long-term lease — both for the revenues and to have a court office in town.
Major repairs are needed at the Public Safety Building because of water damage and rot, Amber Al-Haddad, the borough’s capital facilities director, said last week. “The principal problem is the deteriorating exterior structure.”
Much of the budget would go to new siding, insulation and vapor barriers, doors and windows, and replacing an obsolete fire alarm system.
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