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It may have come with a lower interest rate but the unforeseen variables of a Build America Bond pushed the Los Alamos Public School board members to approve pursuing tax-exempt bonds to finance the construction project at Los Alamos High School.
Duane Brown, a bond attorney with the Modral Firm in Albuquerque, and Kevin Powers of RBC Capital Investment in Albuquerque, spoke to the board during its regular meeting Tuesday night at Mountain Elementary School.
The Build America Bond, or a qualified school construction bond, is part of President Obama’s American Recovery and Reinvestment Act and the state, municipality or county issues these debt securities to finance capital expenditures. The requirement, Business Services Director John Wolfe told the Monitor Wednesday, is that only American products are used in the projects.
Wolfe continued to explain that the bond is authority provided by the state. The district still needs to sell the bonds.
One of the big considerations Brown and Powers presented to the board is that if the district pursues a qualified school construction bond, it is bound to follow the IRS rules, which have not been finalized.
Plus, Wolfe said any delay caused by waiting for the rules to be completed could impact the construction project.
Costs could go up and the contractor, who already ordered materials and lined up a crew, could loose their workers. Additionally, if the project is pushed to the winter months that could result in more delays, Wolfe said.
Herb McLean, bond construction manager, added it would “just be a roller coaster effect.”
It would delay not only the actual construction but also the architects, FTB, he said.
Superintendent Gene Schmidt commented that they want to show a product to the community and even if they saved money with the Build America Bonds, that could be eroded by potential costs from other areas.
Therefore, Brown and Powers recommended turning to tax-exempt bonds.
Even though tax-exempt bonds come with a higher borrowing cost, the appeal, Wolfe said, is that when the bonds are sold, the proceeds are received right away.
In other business regarding the new high school construction project, McLean said everything has been moved out of the A, B, C and D wings and items have been place in trailers. He added that 60-70 percent of things could be reused in the new spaces.
A fence has been erected and abatement for asbestos and lead began Wednesday.
The project is expected to be completed November 2011 and classes should be moved into the new space by 2012.