Failure to pay financing plan could cost Marlington local ownership of schools
LEXINGTON TWP. Three elementary buildings in Marlington Local would become collateral for the Huntington National Bank as part of a proposed plan to fund capital upgrades.
Jill Murphy, head of municipal loans at Huntington National Bank, briefed school system officials at a meeting of the Board of Education on Thursday of the terms of a possible financial package.
The loan, or hire-purchase agreement, in its current form would be $ 4.7 million. It would apply to improvements to elementary school buildings in Washington, Lexington and Marlboro.
The Huntington National Bank’s financial package would last seven years on paper. However, in reality it would last eight years due to closing costs.
“For the amount we borrow, that seems like a lot of collateral,” Board of Education chairperson Carolyn Gabric said. “Do you have to take all three buildings?”
In response, Murphy said she understands state law requires the three buildings to be considered collateral if Marlington Local does not meet the payment schedule. This is because the proposed capital project involves every school.
If local Marlington officials do otherwise, “I guess it’s going to be a legal problem,” Murphy said.
There was talk of finding a way to take the planned improvements to Marlboro Elementary School out of this funding. This is because there is relatively little leveling work to be done at Marlboro Elementary. In this school, the plan is to install new doors and windows.
“I think if we wanted to the district could separate the Marlboro part,” said Superintendent Michael Shreffler.
If the Huntington National Bank found itself exercising its guarantee right, the financial institution would not make elementary schools available to it.
Rather, “Huntington rents these school buildings to the school district for use.” Murphy said.
Local officials in Marlington are expected to hear a similar funding proposal from Consumers National Bank at a subsequent Board of Education meeting.
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