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Bond sale for Chambersburg high school expansion put on hold

September 25, 2008|By DON AINES

CHAMBERSBURG, Pa. -- An example of how Wall Street jitters and Washington, D.C., indecision have created uncertainty on Main Street played itself out Wednesday night when the Chambersburg Area School District did not approve the sale of $45.8 million in bonds needed to complete the high school expansion.

The school board postponed the bond sale until the market for municipal bonds improves. However, that will not bring the $73.8 million construction project to a screeching halt, according to Business Manager Rick Vensel, who said the district has enough money on hand from an earlier bond issue and reserve funds to continue building into the summer.

"Our market, the municipal market, is frozen," said Brad Remig, the managing director of Public Financial Management Inc. "There's still a little bit of uncertainty about how Congress will proceed and how the program will unfold," he said of the $700 billion bailout of lending institutions proposed by the Bush administration.

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"We could have gotten some proposals, ... but they would have been at noncompetitive rates," Remig said of interest rates on the bonds. He counseled waiting until markets settle and then "jump into a known market."

Vensel said the district's advertisement for bids on the bond issue is good for 30 days and if the situation remains unsettled, the district could re-advertise and act later.

"It won't happen," Vensel said when asked if a collapsed market could jeopardize completion of the school. If the outlook were that uncertain, the board would have approved the sale Wednesday night, he said.

"Could we piecemeal it if we had to?" Superintendent Joseph Padasak asked.

Remig answered that the $45.8 million could be broken down into smaller bond issues, if necessary.

"This may be the most difficult market since the Great Depression and the market needs time to adjust and see how the government bailout plan will play out and bring cash (i.e. liquidity) back into the market," Remig wrote in a Tuesday e-mail to Vensel.

Time also is needed to see how the market will function with major players, such as Lehman Brothers, either bankrupt or bought out.

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