Vernon school board approves $70M capital project financing without referendum

At last month’s meeting, the Vernon Township Board of Education voted to authorize the administration to pursue approvals required to finance a $70 million capital project through a county improvement authority.

The 7-2 decision means the district will not have to get community approval for the project via referendum.

According to Board of Education President Jennifer Pellet, the proposed project addresses “critical infrastructure needs” across all six school buildings based on the district’s Long-Range Facilities Plan. The seven major areas of work are roof replacement, HVAC and ventilation, security and exterior doors, ADA and restroom improvements, fire alarm and life-safety systems, public-address and security communications, and high school window replacement.

“These projects address critical aging and failing building systems, including roofs that have reached the end of their useful lives, outdated HVAC and ventilation systems, obsolete fire-alarm and communications systems, security issues, and accessibility needs,” Pellet said in an email. “All have been identified as New Jersey Department of Education’s highest funding priority. The scope of the project was presented, discussed and approved at a previous public board meeting on May 21. The board determined that pursuing the improvement authority financing option provides a legally authorized way to move forward expediently with long overdue and critical improvements.”

The option permitting a county improvement authority to issue bonds for eligible school projects without a referendum was established by the state legislature to provide funding for urgent construction efforts that might struggle to win voter support.

Board members Brian Fisher and Charles Cimaglia voted against going the county improvement authority route at the July 30 meeting.

“The county improvement authority option should be explored if a referendum fails, not as the first choice,” Fisher told Advertiser News prior to the vote. “These projects are much needed and overdue, but we should engage the community for approval. Sussex County does not have a county improvement authority, so we would be paying more to send money out of the county instead of trying to complete it ourselves.”

Pellet said that as things stand now, the referendum route would cost about $1.7 million less in principal and interest over the 20-year financing term than the improvement authority option. However, she said an unsuccessful referendum could delay the project by six to 12 months, which, she said, the architect estimates could increase construction costs by $2 million to $3.5 million.

Fisher is not convinced.

“Honestly, who knows what will happen to that money as it moves around,” he said. “If the referendum were to fail, we could go right to the financing option. It would not take long to make that transition.”

Pellet said two improvement authorities have expressed interest in working with Vernon and timing of individual projects will be established as the financing and design process progresses.

“The estimated project cost is approximately $70 million,” Pellet said. “The project itself would not be fundamentally different based on the financing mechanism. The difference is how the project would be financed and approved. The estimated annual tax impact for the average assessed home is approximately $275 per year over a 20-year term. That figure reflects a $15 annual reduction from the expiration of existing district debt in 2027, netted against an estimated $290 annual impact from the new bonds after incorporating 34 percent in anticipated state debt service aid.”

USA Architects, the district’s architect of record, prepared the Long-Range Facilities Plan and developed the project scope with input from the board and administration.

“The improvement authority that ultimately issues the bonds acts as a conduit, with no independent financial exposure, since the bonds are repaid solely from the district’s lease payments,” she said. “The actual obligation to repay rests with the school district, through its lease payments, in much the same way a referendum bond would work.”

The next school board meeting is scheduled for 7 p.m. on Thursday, Aug. 27, at Lounsberry Hollow School. Executive session begins at 6 p.m.