Funding dilemma delays Sullivan construction - Phase 1 and 2 projects will cost $5.2 million

The Bonsall Unified School District board seemed likely to approve the Phase 2 construction project for Sullivan Middle School at the Feb. 14 BUSD board meeting before receiving advice that the type of construction was an ineligible use of the bond loan which was to fund the work.

Phase 2 would include a two-story building with an estimated construction, oversight, and administration cost of $3.9 million. The project was to be funded by a Qualified Zone Academy Bond loan.

“One of the last hurdles was getting by the tax attorneys,” said BUSD superintendent Justin Cunningham.

The tax attorneys advised that QZAB loans can no longer be used for new construction. The district opted not to use the loan for activity permissible under the previous regulations. “That’s not how we want to do business,” Cunningham said.

Qualified Zone Academy Bonds are a program of the U.S. Department of Education and are administered through state education departments. On Oct. 10, the BUSD board approved a bond counsel contract to assist the school district with legal proceedings, execution, and delivery of a $5 million QZAB issuance. The QZAB program provides low-interest loans; and the BUSD interest rate is expected to be 1 1/4 percent.

The QZAB loan was to be used for both Phase 1 and Phase 2. “We’ll realign our funding options in that we’ll continue with Phase 1 and use a lower amount for the QZAB,” Cunningham said. “We’ll also look at some alternate funding, maybe a COP.”

The estimated cost of the Phase 1 activity is $1.3 million, so the $5.2 million total cost of Phase 1 and Phase 2 would require district funding other than the QZAB loan. The decision not to use the QZAB money for Phase 2 will lead to an investigation of Certificate of Participation or other funding options.

The district’s general fund budget will be used to pay the debt service for the QZAB loan, which will be $328,000 annually for 17 years. Both the new Bonsall High School and Sullivan Middle School will utilize the New Technology Network model in which students interact with local industry and serve internships in order to develop a network in their desired career fields. The New Tech curriculum also utilizes interdisciplinary fields, which require classrooms which can accommodate two teachers and up to 50 students.

“One of the big parts of Phase 1 is to take some of these smaller classrooms and knock out walls,” Cunningham said.

Cunningham hopes to have Phase 1 ready by the beginning of the 2014-15 school year. “We’ll probably get some things done starting on spring break,” he said. “We want to go at it real hard and make sure it’s all done in early August.”

Phase 2 will involve solicitation of architectural requests for qualifications and geotechnical services along with the selection of an architect and a geotechnical services consultant, a schematic design and geotechnical report, completion of construction documents, and review and approval by the state Department of School Architecture prior to construction.

The construction is expected to take seven months, although the lack of a Feb. 14 approval will likely delay the schedule which had a January 2015 construction start date and an August 2015 completion date.