Board OKs $10M bond for Knapp

Elementary school upgrades have been discussed since 2016

LANSDALE >> The North Penn School Board has taken the next step toward renovations at another district elementary school.

The board voted unanimously Oct. 18 to approve a $10 million bond borrowing meant to fund renovations to Knapp Elementary School.

“I think we can all agree that Knapp is in some dire need of some renovations, so it is a project that we need to proceed with,” said school board President Tina Stoll.

Knapp has been a discussion item for the school board since the fall of 2016, when parents from Knapp, Gwyn Nor and Oak Park elementaries raised concerns with high temperatures due to a lack of air conditioning. After the board evaluated different types of systems and received no bids on a first attempt in March 2017, a contract was ultimately awarded in December 2017 for new air conditioning systems at Gwyn Nor and Oak Park, as the board has discussed a larger project at Knapp.

Bond advisor Wes Hall of PFM Financial Advisors told the board that recent changes to national interest rates by the Federal Reserve have impacted the market, but should have minimal impact on the district’s results.

“Rates have been creeping up a little bit. The Federal Reserve increased short term rates by onequarter-percent in September,” he said.

“Really, while they increased the rates on the short term, it doesn’t have a huge impact on your borrowing rates, since you’ll be locking in a long term rate,” Hall said.

The $10 million in new debt will be wrapped around North Penn’s current outstanding obligations, Hall told the board, producing a first maturity of Sept. 1, 2019 and a final maturity of March 1, 2034.

“We’re basically going to wait until your debt begins to drop off, and then begin amortizing the principal payments, he said.

Closing on the bond borrowing is scheduled for Oct. 29, and the board voted unanimously to approve a parameters resolution, authorizing Skrocki to finalize the borrowing if those parameters are met on that date.

Bond counsel Rhonda Lord described the terms of that parameters resolution, saying it commits the district

to paying down the borrowing on paperwork filed with the state.

“it’s your budget covenant, that you’ll put enough in the budget every year to pay the principal and interest on the bonds,” she said.

District staff and the school board are planning a special facilities forum on Nov. 13 to give the public an update on upcoming capital projects, and Skrocki said the Knapp project will be discuses that night. Skrocki added that board members were welcome to attend the bond sale on Oct. 29, and watch how market conditions impact the final result.

“It’s really quite interesting to see the activity. It’s

like an Ebay auction, sort of, and there’s a lot of activity right near the end,” he said.

Board members and the public should also be aware that the state’s ongoing budget troubles have meant a moratorium on PlanCon reimbursement funding from the Pennsylvania Department of Education, which has provided in the past funds to reimburse the costs of large projects like the school renovations.

“There is a moratorium through June 2019, basically telling us it’s unlikely the state will fund any new money for PlanCon anytime soon,” Skrocki said.

“In the past, between 5 and 10 percent would be

paid by the state for the building projects, for the debt service, but it’s unlikely to happen anytime soon,” he said.

North Penn’s school board next meets in its capacity as the board finance committee at 6:30 p.m. on Oct. 29, at the district Educational Services Center, 401 E. Hancock St. The board will also hold a special facilities forum at 7 p.m. on Nov. 13 at Pennbrook Middle School, 1201 North Wales Road.