Salem officials are exploring financing options for the renovation and expansion of Salem High School, a project now expected to cost less than the initial estimate of $53 million.

The school division’s goal is to place the project for bid in January 2020, with a groundbreaking in May or June, schools Superintendent Alan Seibert said.

The school — built in the late 1970s — has needs including more classroom and corridor space, and a better heating, cooling and ventilation system. But the top priorities are improving safety and security throughout the school with a focus on the front entrance, and improving the learning environment for all students, especially those with special needs, Seibert said.

Before any of that can happen, the city must finalize the design and amount of money it will borrow.

The city could need to borrow up to $35 million for the project. Some of the original conceptual plans that drove the cost estimate above $50 million were downsized a year ago. The most recent estimate based on conceptual plans is $37.5 million.

Changes from the original concept to the new proposal include leaving the second-floor classroom area mostly untouched, except for select corridor improvements, and work on the heating, ventilation and air conditioning system. Seibert said the changes will allow the school division to chip away at second-floor needs in future incremental phases.

Overall, additional construction was reduced by 17,000 square feet in the new proposal. But the bulk of the original plans for the first floor and building exterior are still in place.

The city’s financial adviser, Davenport & Co., analyzed the project’s budgetary impact. Courtney Rogers, a senior vice president with the company, presented the analysis last week during a joint meeting of the city council and the school board.

Rogers outlined funding scenarios for paying off the project’s debt if the city needed between $25 million and $35 million.

Options reviewed included the possibility of raising the city’s real estate tax and capitalizing on additional revenue streams. For instance, projections indicate that the city’s annual meals tax, which can be used for capital improvements, could generate about $520,000, and freed-up business incentive payments could be redirected to put another $235,000 or more toward the project annually.

If Salem’s real estate tax — currently $1.18 per $100 — were increased by 1 cent, it could generate $215,000 annually, according to the city. Salem Finance Director Rosie Jordan said the median home value in Salem is $172,000.

City Manager Kevin Boggess stressed that the city isn’t solely focused on taxes as a means to fund the project. “There are other ways we can adjust to generate revenue and create some of the capacity needed here,” he said.

Seibert said Salem has a “long history of collaboration between the school division and the city” on major projects, citing work completed in the past 15 years on Andrew Lewis Middle and South Salem Elementary.

Completion of the high school project’s design is expected by the end of next year.

Staff writer Alicia Petska contributed reporting.

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