Amherst delaying school addition

Lynchburg News & Advance
Published: October 14, 2008

Because of the tightening economy, the Amherst County School Board voted Tuesday to delay a planned 10-classroom addition to Amherst Middle School.

Higher interest rates and uncertainty of bond sales were factors that led the board to vote not to proceed with its bond sale application. The board met in a special meeting Tuesday to formally postpone the project.

“This market, I’m not sure where it’s going to go. I’m not sure when it’s going to be stable,” said Chairman Jones Stanley, later adding, “The times are just too uncertain for us to do this.”

The board planned to apply this fall for a $3 million bond sale to finance a $2.5 million addition to the middle school and about a half a million dollars of repairs to the division’s bus garage.

Municipalities borrow money at certain interest rates and sell bonds to finance capital projects, but the weakening economy is putting a strain on that practice. In mid-September the failure of investment banks, which often purchased bonds, created higher interest rates. When bonds aren’t being bought, rates generally rise.

In a teleconference Friday, Superintendent Brian Ratliff learned that interest rates jumped from 4.3 percent to 5.23 percent in the past month.

“Essentially the uncertainty leads to inactivity,” Ratliff said, later adding, “It’s kind of a nervous market to say the least.”

He also said the increased rates would create a “sizeable increase” in the division’s debt service. All board members agreed with the economic future uncertain they did not want to proceed with the project.

“It’s a little too iffy,” board member William Brown said.

Higher interest rates on the borrowed money can stress localities, which may already be struggling with a tightening economy. For example, the board has already discussed cost-saving measures in the face of a potential sales tax shortfall.

Amherst board members said they plan to revisit the situation in the spring, but most members said they will likely have to wait until the fall 2009 sale.

“Its prudent to delay it,” said Elizabeth Gamble, board vice chairman. “It doesn’t in any way diminish our commitment to it.”

In other news, the board:
- Received an update on damages at Amherst Middle School, which sustained significant flooding Friday.

Ratliff said crews worked all weekend and school opened Monday. Amherst Middle was closed Friday when maintenance staff discovered the basement had flooded and knocked out the school’s power.

“We’re looking at considerable damage,” Ratliff said.

He said a high estimate might place damages at about $200,000.