County considers bridge loan for school project

By Hannah Wever
Review Staff Writer
Published: December 4, 2008

With just a few weeks remaining before the contract for construction of a new middle school is awarded, school officials are considering obtaining a bridge loan to pay the winning bidder on the project.
County officials got an update on the progress of the new middle school from members of the Orange County School Board at a Nov. 25 board of supervisors meeting.
In a faltering economy, school officials are reluctant to bank on the sale of Virginia Public School Association (VPSA) bonds to fund construction costs at the new school. So instead of gambling with interest rates on the bond market, school board members are advocating a bridge loan to pay expenses until the bond market levels out.
“I guess the school board’s position is we can buy some time on the bond market, let it settle down a little, by using a bridge loan,“ Orange County Board of Supervisors Chairman Mark Johnson summarized.
According to middle school construction project manager Henry Miller, nine bidders are prequalified for the project, and all nine are expected to bid. A pre-construction meeting in which sealed bids will be publicly opened was originally scheduled for Dec. 11. Miller said he anticipates breaking ground on the new school in early January 2009.
Supervisors were supportive of the possibility of using a bridge loan-and funding projects with bridge loan money is something county and school officials have done in the past.
“When we built [the new Prospect Heights and Locust Grove] middle schools we used a bridge loan,“ Orange County School Board Chairman Jerry Bledsoe explained.
And renovations to the Orange County courthouse were paid for with bridge loan funds, Johnson added.
District 5 Supervisor Lee Frame said without a guarantee of a favorable interest rate on sold bonds, the county could find itself unable to pay for school construction.
“What I don’t want is to find ourselves in a situation where we’ve committed to a bid and VPSA comes in and says interest rates are obscene-and then we’re stuck,“ Frame said.
The Orange County Board of Supervisors will vote on whether to pursue a bridge loan or the sale of bonds to provide funding for new middle school construction at their Jan. 6 worksession.