Q1: Replacing and Updating our HVAC Systems at Four Schools
Q1: Replacing and Updating our HVAC Systems at Four Schools
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Question 1 will read: Do you favor authorizing the School Board of Maine School Administrative District No. 15 (the “District”) to issue bonds and other evidences of indebtedness in the name of the District in an amount not to exceed $8,914,073, including $6,522,445 of grant/loan funding through the State of Maine’s School Revolving Renovation Fund (“SRRF”) Program to pay costs of indoor air quality renovations and improvements at Gray-New Gloucester High School, Gray-New Gloucester Middle School, Burchard A. Dunn School, and Memorial School (the “Project”)?
A. SRRF Program Funding. The Maine Department of Education has awarded the District $6,522,445 of Project funding through the State’s SRRF Program, which provides funds as a combination of a grant and an interest free loan:
1. Loan Principal Forgiveness: As a grant under the SRRF program, the Maine Municipal Bond Bank will forgive 47.34% of the loan principal (up to an estimated $3,087,726).
2. Interest Free Loan: The District will only be obligated to repay 52.66% (up to an estimated $3,434,719) of the District’s SRRF award over a period of ten (10) years at an interest rate of zero percent (0.00%).
B. Supplemental Bond. Up to $2,391,628 of Project costs may be financed through a supplemental bond issued at local expense and at market interest rates. The supplemental bond shall pay Project costs not covered by the SRRF program.
EXPLANATION: During the pandemic response, the MSAD 15 School Board decided to use some of the federal COVID funding to update the HVAC system in one wing of the high school, spending roughly $1.2m to have the work done by Mechanical Services in the summer of 2022.
As part of their work, Mechanical Services made us aware of the Department of Education's School Revolving Renovation Fund (SRRF) and offered to test our HVAC systems to see if we might qualify for the fund's grants, which were focused on air-quality, due to the pandemic. They tested rooms in all five of our schools, found high levels of carbon-dioxide that are beyond what is recommended by ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers), and then had three independent air-quality engineers create a recommended solution plan.
School administration met with these engineers, agreed that their plan addressed the problems, and recommended to the school board that we allow Mechanical Services to help us submit an SRRF application (you can see a folder with all five schools' applications here). Their submission resulted in MSAD 15 receiving grants to address four of our schools: GNG High School, GNG Middle School, Memorial School, and Dunn School. Russell School, which has the newest HVAC equipment did not receive grant funds. (MSAD 15 inadvertently mailed a flier to each household indicating that the Maine Department of Education Air Quality Grant Award would install upgraded ventilation systems at all five MSAD 15 Schools. The grant award does not include the Russell Elementary School; it includes the High School, Middle School, Dunn School and Memorial School. We apologize for the misprint.)
The below graphic breaks down the details of the grant:
As explained in the wording of the question above, the grant money comes in two pieces: one portion ($3,087,726) is completely forgiven (meaning we don't have to pay it back); one portion ($3,434,719) is provided as an interest-free loan (meaning we have to pay it back, but don't have to pay interest).
However, that money doesn't cover the entire cost of the project because awards were capped at $2 million for any one school, and the HVAC systems at the high school and middle school are in pretty bad shape, being 50 and 35 years old, respectively.
That means, to complete the project, we will need to borrow $2,391,628 at normal borrowing rates (likely 3.25% or so, but we'd have to solicit bids once we are authorized to borrow by a "yes" vote).
The SRRF process requires a request for proposal be issued once you win the grant. We did that (you can see it here), and Mechanical Services bid for and won the bid as low bidder.
Here's Diane Boucher, who was the MSAD 15 CFO at the time, explaining the awarding of the bid:
If we pass this question, the work will largely be done in the summer of 2025. You can see a very detailed outline of the work to be done here and an extensive FAQ about the project here (these were presented at the February 2024 School Board meeting, so please understand that we hadn't yet set the date for putting it to a vote).
What Happens If We Vote No?
If we do not pass Question 1, we will lose access to the state grant money and not be able to receive the $3 million in state money or borrow the $3.4 million at zero-interest, and we will still have a large number of classrooms that don't meet air-quality standards.
Further, with 50-year-old and 35-year-old systems in our two largest schools, it's only a matter of time before we have a significant failure that could make it difficult to operate the schools (i.e., no heat in the winter). We would have to continue to hope that our maintenance plan keeps things up and running with a system that is hard to find parts for and have obsolete technology. In addition, high carbon dioxide in the indoor air is a health and safety issue that can contribute to headache, nausea, decreased concentration, and other symptoms.
It is likely the School Board would bring back a new plan to update the HVAC that does not take advantage of state money, as the SRRF is unlikely to grant us another award after we turned down the first one. This project also puts our schools in line with current guidelines on air quality and safety, which are turning up in our legislation and may be required by law in the future.
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