Despite rising costs, new Franklin High School still on track
Around $150 million in capital improvements are on the table in Macon County. File photo
Despite increasing cost estimates, Macon County is in a good financial position to move forward with both the Franklin High School project and the Highlands School project.
A minority of commissioners, still wary of the price tag, were unwilling to vote on key decisions that will keep the projects on schedule.
“My vote is a ‘no’ until I get to the bottom of this,” said Commissioner John Shearl.
Last month County Manager Derek Roland presented the proposed 2024-25 budget to the Macon County Commission, detailing the county’s ability to pay for significant capital improvement projects without the need for a tax increase.
“We’re looking at fiscal year 25 as an opportunity to make approximately $150 million in capital improvements here in Macon County because of this financial position,” Roland reiterated during a joint meeting of the Macon County Commission and Board of Education.
About $146 million of those capital improvements will go toward the new Franklin High School project and the Highlands School project. So far, the county has spent approximately $4.1 million in architect and planning fees for the FHS project, and $200,000 on architect and planning fees for the Highlands School project.
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When the commission and the school board convened for their joint meeting last week, there were a couple key votes that needed to take place in order to keep work on the projects on schedule. The boards also needed to come to a consensus agreement about the price ceilings for both projects. Both projects require work over the summer while students are out of school.
“Months ago, on both projects we decided to go with a CM [construction manager] at risk delivery method,” said Roland. “That allowed our architect to pair up with these building contractors, to really get into the numbers, and really get into the plans and establish what they feel to be ceilings for each of these projects.”
Expenditures on the Franklin High School project have increased to a guaranteed maximum price of $137.6 million, or about $10.6 million above the last estimates in February. The Highlands project has increased about $2.5 million over the last price discussed in February.
“With the $13.2 million increase, while we’re increasing $13.2 million in total expenditures, we’re only going to be borrowing $5.5 million more as we’re going to finance the Highlands project in its entirety from the fund balance revenues that come in the form of that $20 million fund balance transfer,” said Roland. “That will pay for the Highlands project; there is no financing that will be tied to the Highlands project.”
The county will only be financing money for the Franklin High School project. It will have to finance $75.6 million for a term of 20 years. At an interest rate of 3.75% — the rate that the county could get for debt financing as of May — that will be a total debt service of $106 million.
“From now through September, there is market volatility there,” said Roland. “So this rate can fluctuate up, this rate can fluctuate down, but right now in May, if we were to go to market, we’d get 3.75% [interest rate].”
At that rate, the county can pay for the new high school, fund the Highlands project through fund balance and retain a 40% fund balance. The county can absorb up to a 4.2% interest rate without having to deplete capital reserve funds. This financial outlook does not include possible revenues from the proposed quarter-cent sales tax that voters will see on the ballot in November.
“That additional revenue just helps all these pictures,” Roland said. “Should that move forward, all this improves dramatically.”
In order to keep up with the high school construction schedule, during the joint meeting, the boards needed to come to a consensus on the $137.6 million maximum price, approve an amendment to the architectural contract for $238,081 and approve a $411,644 contract for summer work by Carroll Daniels Construction. The boards also needed to approve the $8.5 million ceiling for the Highlands project and an architectural amendment of $16,463 to move forward with summer work.
The Board of Education approved everything necessary to move ahead with work. The county commission approved funding for summer work by Carroll Daniels Construction and the architectural amendment for LS3P by a 3-2 majority with Commissioners Paul Higdon and John Shearl voting against.
The county commission was set to reconvene at 6 p.m. Tuesday, June 4 to continue discussion on the projects.
