posted by Mike Madison at 3:12 PM /
My Pittsblog and University of Pittsburgh colleague Chris Briem has a post up at his Null Space blog today on real but hidden costs of municipal finance:
1. Interest rates in the municipal bond market may be strikingly low, which makes the prospect of the Mt. Lebanon School District borrowing $110 million or $150 million or something other massive sound relatively appealing. Money seems cheap. But bond insurance, which may be a mandatory part of any offering, is expensive and difficult to get, and the bond insurance market is, as Chris has written before, on the brink of collapse. I'm not suggesting that the Mt. Lebanon School District would not be able to float a bond issue, if one were approved by the Board and/or by the voters. But this is a sometimes hidden cost that has to be reckoned with.
2. Super-low Treasury rates mean that public authorities will be seeing less revenue than expected as proceeds of invested tax money decrease to near-zero. Again, I don't know where the School District stands in this regard, but this may be a budget shortfall waiting to happen.
1. Interest rates in the municipal bond market may be strikingly low, which makes the prospect of the Mt. Lebanon School District borrowing $110 million or $150 million or something other massive sound relatively appealing. Money seems cheap. But bond insurance, which may be a mandatory part of any offering, is expensive and difficult to get, and the bond insurance market is, as Chris has written before, on the brink of collapse. I'm not suggesting that the Mt. Lebanon School District would not be able to float a bond issue, if one were approved by the Board and/or by the voters. But this is a sometimes hidden cost that has to be reckoned with.
2. Super-low Treasury rates mean that public authorities will be seeing less revenue than expected as proceeds of invested tax money decrease to near-zero. Again, I don't know where the School District stands in this regard, but this may be a budget shortfall waiting to happen.
Labels: mt. lebanon school district
2 Comments:
What is the municipal Earned Income Tax (EIT) growth on a month-by-month basis since the end of last June? This will give you the school's EIT growth too because they are both on a percentage basis.
Also:
Costs associated with paying principal and interest on any voter-approved debt incurred under Act 50 - The Local Government Unit Debt Act - quailfy for an exception. Voter approval must have obtained prior to requesting a referendum exception.
So, even when the Board approves a referendum by the end this month, I don't expect the district to apply for that exception until the referendum passes.
Until we see a solid proposal for a swimming pool with 10-16 lanes, new 1 and 3 meter springboards, and a new much deeper diving well, combined with a classroom and weight room and Fine Arts dance studios that exist in sunlight for better ergonomics and learning environment, and state-of-the-art acoustical sound improvements in both auditoriums plus other improvements I will mention from time to time I don't understand how we are competitive on the building price with other districts costs with our costs near $150 million.
Dan Remely owns his own real estate development business and Alan Silhol is a real estate attorney for American Eagle. Their professions demand they know when prices are too high. Dan explained the ball-park estimates he used for other renovation were based on the construction manager's estimates.
Dan and Alan were able to suggest the high school costs be cut by $60 million versus the estimates. Assuming he is close, a new 25 meter by 25 yard pool with a separate diving well, 10 lanes plus 6 lanes in the diving well could be built for for about $10 million. That leaves a $50 million difference for the board to explain.
David Houston revealed he thinks the costs of the project were distributed in a booklet for board discussion on December 18 when he was denied admission to a board meeting with the architects.
Cal Lynch showed for a private board facilities meeting when I was on the board and we admitted him. It was what we thought was the right thing to do for our neighbor and under the law.
I will be interested to see the explanation or the non-explanation of the building cost differences from Dan and Alan.
I also want an explanation from President Silhol why he felt compelled to read a statement in a public meeting about why the the December 18 meeting was conducted to bar Mr. Huston?
Also, we need more detail why He and Dan arrived at the HUGH COST CUT they did.
I would like to hear from Mr. Huston if he retained an attorney to file a lawsuit or just complied with the new board Policy on appeal under the Sunshine law. If he only complied with Policy why would the school board pass a policy requiring a lawsuit to appeal a denial under the Sunshine Law? Was Hamlet right about something in Denmark?
No matter, we have many months to ask these same questions of the Board Members and Consultants. Hopefully, those who want to follow a new building agenda will choose the path of explanation and civility to your neighbors rather than stonewalling, distributing misleading information, and name If the latter path is followed we are free to draw an adverse inference on the Referendum and we don't have to explain our vote if they don't properly explain their actions.
I urge each of you to listen to what IS and IS NOT SAID and Done in the months ahead. Sometimes what is not said is more revealing that what is said.
In the meantime I have some other suggestions for improvement in the building program to improve the athletic and instructional program for children. I am listening to your thoughts and I hope you are listening too.
Keep the Faith,
John Ewing
Former Facilities Committee Member
I have not hired an attorney or filed any lawsuit. I have utilized the school district's open records policy. The open records officer has replied to all requests in a timely manner. The full board has had secret meetings with the architect and construction manager, but Mr. Silhol stated the board has been open and honest with the taxpayers. We still don't have the two month old information the board received in the 18-DEC-2008 secret meeting. How can anyone who attended the dog and pony shows at the grade schools make an informed decision and answer the four questions asked by the board? If the issue goes to referendum, will the electorate be provided with the same information the architect and construction manager presented the board? How will we know which way to vote?
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