Freehold Regional School Board Considering Solar Panels, Capital Upgrades

The Freehold Regional High School District is considering $57.7 million in capital improvements to address the long-range facility needs for the district, with a bond referendum among the options available to the school board as it investigates ways to pay for the improvements and upgrades.

The capital proposal, presented by board secretary and assistant superintendent Sean Boyce at the Jan. 31 meeting of the Board of Education, includes $27.3 million for projects such as roofing repairs and window replacements; $2.1 million in energy efficiency improvements; and $28.3 million to outfit the schools with solar energy panels.

“The energy efficiency improvements are not required to keep the doors open but they make sense since the cost will be recovered through energy savings,” Boyce said.

The solar energy portion of the proposal was also not as immediate an imperative as the capital projects but would provide opportunities for a return on investment, according to Boyce. Pursuing solar energy options would result in a 33 percent reduction on electric bills and allow the board to receive solar renewable energy credits through the federal government’s funding incentive program. Those credits could then be sold on the open market with the resulting revenue returned to the district.

The lowered two percent state-mandated cap on school district spending increases has made it increasingly difficult for school boards to draft spending plans that include costly line items such as capital improvements, Boyce said.

“You don’t want projects to come at the expense of programs and services,” Boyce said. “We need to look at other options for maintaining and upgrading our facilities.”

Among those options are a bond referendum and a public/private partnership to finance solar panels, rather than simple line items in the 2011-12 budget.

By putting the capital planning proposal up for a bond referendum, the board would be in a position to maximize the financial benefits of the solar energy plan and state aid, Boyce said.

Lisa A. Gorab, an attorney from Wilentz, Goldman & Spitzer who consulted on the proposal, said all projects included in the proposal would be eligible for state aid if approved through a public bond referendum. Gorab estimated state aid for the life of the bond would be 34 percent.

Board member Harold “Heshy” Moses questioned whether the district could depend on the estimated 34 percent state aid, given New Jersey's fiscal woes and monetary cuts to local school districts. 

“I don’t trust [the current administration] when it comes to public education,” Moses said.

Gorab acknowledged that state aid is crucial toward acquiring financial benefits via referendum.“The state has never underfunded for the length of issue for funded bonds. From 2000 to 2010, you got 40 percent in state aid. Last year, the district got 34 percent,” Gorab said. “We should know at the end of February where they’re going to fund aid for capital projects.”

The other financing option would have the district enter into a power purchasing agreement, Boyce said. A private energy company would pay for the solar panels and the roofing improvements associated with erecting the panels.

“The [solar] system would be owned by the private entity, and the district would purchase energy at a reduced rate,” Boyce said. The private company would also receive the financial benefit of selling the solar credits.

To pay for the remaining capital improvement needs, the district would enter into a five-year capital lease, and this portion of the project would be eligible for state aid, Boyce said. This financing option would give the board control over the spending and would not need to go to referendum, Boyce said. However, the financing option would ultimately cost the district $1.1 million per year over 25 years, while the bond referendum would result in a $200,000 net gain, he noted.

In the next month, Boyce said the district will analyze the power purchasing agreements that are being solicited; finalize the scope and time-line of the projects; meet with municipal planning boards in the towns where the high schools are located; and prepare a community education plan to explain 2012 capital planning proposal to the public.