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School board considers alternative for funding new School for the Arts

March 07, 2007|by ERIN CUNNINGHAM

HAGERSTOWN - The Washington County Board of Education is considering a funding option for the Barbara Ingram School for the Arts that could cost millions of dollars in interest.

But officials said Tuesday that it could be cheaper than or comparable to the cost of the project if it were funded with county dollars.

The partnership with the Maryland Economic Development Corporation (MEDCO) would finance the project with bonds that the school system would pay back at a 5 percent interest rate. The purpose of the corporation is to assist in the expansion, modernization and retention of existing Maryland business, and to attract new business to the State, according to information on a state Web site.

It was established in 1984 to develop property for economic purposes that serve the public interest.

According to information presented to the board, the project's capital cost is estimated at $9 million. But a state tax credit and state grant funds would bring the amount needed to $7 million.

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"We think we've crafted something that's probably going to produce a facility at a lower cost than if it was financed by the county," said Kevin Quinn, of Wye River Group Inc.

Options include a 20-, 25- or 30-year lease on the building, with monthly payments being made by the school system.

Robert Brennen of MEDCO said that the Washington County Commissioners asked the board to find alternative funding for the school.

The Barbara Ingram School for the Arts is scheduled to open in January 2009.

Brennen said that capital costs paid by the school system would be kept as low as possible by maximizing a number of grants, credits and low-interest loans. Tax exempt financing would be used for the remaining capital costs, he said.

A partnership with MEDCO would require that the City of Hagerstown, which currently owns the former Henry's Theater, lease the facility to a local nonprofit corporation that would serve as the facility owner/lessor, officials said. This arrangement would allow the project to be eligible for grants and credits, and the school system would pay the nonprofit, which would make payments to MEDCO.

Chris South, chief financial officer for the school system, said officials were talking with local nonprofits about this opportunity.

Jacqueline Fischer, a former board member, said during Tuesday's business meeting that while she is in favor of the school, she had concerns regarding the funding option.

"I am most concerned with the overall cost of borrowing the $10 million needed for the project," she said. "The interest on a 20-year bond would cost the taxpayers approximately ($6 million), while the interest on a 30-year bond would be over $10 million according to the documents prepared by the Maryland Economic Development Corporation ...."

Fischer is a past chairwoman of the board facilities committee and the former liaison between the board and the school for the arts project.

She recommended reducing the term of the lease to 15 years, saving about $2 million in interest.

Board Member Bernadette M. Wagner said the board hopes to reduce the amount that would need to be borrowed by asking County Commissioners to use money from a reserve fund. She said that private fundraising is another option.

Schools superintendent Elizabeth Morgan said there are many opportunities for private citizens to donate money to the Barbara Ingram School for the Arts in return for naming rights to a number of galleries and studios in the school.

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