BEVERLY — Mayor Bill Scanlon announced a plan to sell McKay School and six to eight unspecified vacant pieces of land to help pay for the new high school.
Scanlon said the money will be used to afford initial high interest rates that will eventually taper off as the city pays its $32.9 million share of the $81.5 million project.
The state has agreed to reimburse 56 percent, and an extra 2 percent if the school meets green building standards, for a total of $47 million.
But when the city first takes out loans, the payments and balance for about the first 10 years will be higher than the $2.2 million per year Scanlon said the city can afford. That's where the additional money from the sale of McKay School — which has been closed since 2001 — and the land parcels comes in.
"Our intent is to create a stabilization fund of at least $3.4 million to smooth out the interest payments ..." he said in a letter to the City Council last night.
He said he expects half of the $3.4 million will come from the McKay sale — despite a weak housing market, recent banking crisis and a previous high bid in March of $1 million for McKay — which the city turned down.
"With the uncertainty in the credit markets now, should there be cause for concern?" asked Ward 6 Councilor Judith Cronin.
"I feel very good about it," Scanlon said. "There's considerable interest from multiple parties, and they're aware we turned down the other offer, so we're in good shape."
He said there's also "time involved in the process before we need the money," and the sale of McKay may take a year or two. Scanlon would not elaborate on when the parcels would be sold, or where they are, but said they may be identified in the next couple of months.
The city will fund the majority of the project, which is an annual $2.2 million, through:
$1 million that will become available as debts for previous projects, like the senior center and expanding the library, are paid off.
$500,000 from the increase in annual taxes being paid by the Cummings Center since its tax break expired in 2006. The money has been in the school budget on a temporary basis for the last two years. Scanlon said the school budget will still increase next year, but not by as much due to the loss of the $500,000.
$450,000 from annual payments to the city as reimbursement for the state's share of the $53 million elementary school renovation project that was completed in 2003.
$125,000 from new taxes imposed by the state last year on companies that use poles and wires.
$50,000 from building and maintenance savings that will come with having better heating and cooling, and energy-saving elements in the new high school.
$75,000 in other departmental budget transfers.
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