County to borrow nearly $40 million

By Andy Winemiller -

From left, Doug and Andrew Carter, of D.E.C. Associates Inc., and Finance Officer Sarah Bowen explain the county’s plan to issue about $40 million in debt.

Andy Winemiller | The News

DOBSON — County officials have presented the priorities for spending $40 million in borrowed monies.

At Monday’s meeting of the Surry County Board of Commissioners, county commissioners discussed how the county will spend $10 million which is set to be borrowed in the upcoming fiscal year and another $30 million in the following fiscal year.

The plan, for which county commissioners hired a financial consulting company to help develop, was to use $10 million in borrowed monies in the 2017-18 fiscal year to address the capital needs within Surry County government. In the 2018-19 fiscal year, the board had planned to borrow $30 million to address the capital needs of the county’s three public school systems.

D.E.C. Associates Inc., a Charlotte-based financial consulting firm, helped commissioners formulate the plan to borrow the monies. If the financial models presented by the company’s representatives hold true, the county has the capacity to borrow $85 million over the next five years without requiring a tax increase to service the debt.

On Monday, Finance Officer Sarah Bowen presented a proposal for how to spend the borrowed dollars.

The proposal would include allocating $2 million toward the project to renovate the historic courthouse in Dobson.

County officials have considered using the second floor of the building to house the operations of the county board and county administration. The Surry County District Attorney’s office is located on the first floor of the building.

Four million dollars would go toward the purchase and renovation of the Dobson Plaza property, a former grocery store adjacent to the Surry County Government Center which the county recently purchased for $1.5 million.

Bowen explained that, while the first $10 million was expected to be used for general government needs, Bowen explained a portion of those monies would be used to address the needs of the three school districts.

In order for the schools to have everything in place to use the $30 million which will be issued in the 2018-19 fiscal year, all design work for the projects must be completed in the upcoming fiscal year, said Bowen.

Thus, the proposal before commissioners outlined spending $127,400 for design fees for a new administration building for the Mount Airy City Schools, about $1 million for design fees associated with projects to renovate three elementary schools in the Surry County Schools and nearly $800,000 in design fees for the renovation of Elkin High School’s gymnasium and to construct a gymnasium at Elkin Middle School.

The estimated $1.8 million needed to turn the county-owned Pike Building on Riverside Drive into a center for the operations of the Mount Airy district is also included in the $10 million debt issuance.

Board Chairman Eddie Harris noted elected school board members set each district’s priorities, but he was concerned about spending money on the design fees for a middle school gym, a $322,785 portion of the design fees which would be allocated to the Elkin district.

“Three hundred twenty-two thousand dollars seems like a commitment to the project. I’m not sure we can commit to those sorts of numbers right now,” said Harris of the middle school gymnasium, which is estimated to cost about $6 million.

While the $7.5 million for the high school gym renovation is included in the spending plan for the 2018-19 fiscal year’s $30 million, monies to build a gym at the middle school are not.

Bowen said if the design work for both gyms were lumped together, school officials believe they will see a discount in the fees.

However, Harris said he’s willing to forego a little savings to avoid committing to a project for which funding has not been identified. The design plans could be outdated by the time funding becomes available for the project.

Commissioners came to a consensus to omit the middle school gym design fees from the plan, bringing the planned expenditures using the borrowed monies to about $9.5 million.

With the $30 million issued in the 2018-19 fiscal year, county officials plan to tackle four major projects. The plan is to allocate about $6 million each to renovate Dobson and Franklin elementary schools and nearly $7.5 million to pay for renovations at Mountain Park Elementary School.

Nearly $7.8 million is estimated to be spent at Elkin High School to renovate the gymnasium. The gym will gain its compliance with the Americans with Disabilities Act by way of an addition.

No money is planned for a renovation to the career and technical center at Mount Airy High School or to replace the heating and air conditioning systems at the school.

The proposed dollar-figure for the schools debt issuance is about $27.5 million.

“The big question mark has been construction costs,” said Doug Carter of D.E.C.

Carter said other public entities with which he has worked have witnessed construction costs rise above estimates.

“The models are conservative enough to allow flexibility,” noted Carter, however.

Bowen also presented a calendar the county will need to follow if it plans on following through with borrowing the monies. It begins “ASAP” with engineering and architectural plans and projects executing the bond purchase agreement for the first iteration of debt in March.

Carter said the debt should be issued once a year because of the costs associated with the procedure. There’s also a preferred time to borrow money.

“The spring is best because you generally see lower interest rates then,” Carter told the board. “It’s also traditionally the start of the construction season.”

From left, Doug and Andrew Carter, of D.E.C. Associates Inc., and Finance Officer Sarah Bowen explain the county’s plan to issue about $40 million in debt. left, Doug and Andrew Carter, of D.E.C. Associates Inc., and Finance Officer Sarah Bowen explain the county’s plan to issue about $40 million in debt. Andy Winemiller | The News

By Andy Winemiller

Andy is a staff writer and may be reached at 415-4698.

Andy is a staff writer and may be reached at 415-4698.

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