BROOKINGS — At its Monday night meeting, the Brookings School Board unanimously approved taking out a $4.5 million private placement loan from First Bank & Trust. The money will pay for the replacement of Brookings High School’s boiler, air handlers and electrical switchboard for heating controls.

“This is a kind of a different way in which we are financing our facility improvements,” board member Wes Tschetter said. “We are authorizing our business manager director to then — when the board approves, for instance a progress payment on the boiler project, as an example of several hundred thousand dollars at a board meeting — then they contact, in this case First Bank & Trust, and say this amount that we have authorized to borrow against this $4.5 million. We need this amount that the board approved, and then they would allocate it to the district.”

He said private placement loans have several benefits compared to municipal bonds.

“This increases the maximum flexibility for the board and for the school district,” Tschetter said. “The benefit is then we pay money — the interest — on the money which we had advanced. And then as time goes along and we are in the payment phase of it, we’ll get pre-pay without penalty or extend it based upon the board’s action. So it has a lot of flexibility that it just will work nicely in this, as opposed to when we build a school or whatever. So I think this is a good process.”

Board member Keli Books said private placement loans like this give the district greater cashflow flexibility.

“We could spend that on other components not related to the boiler project,” Books said. “It just is right now our intent to pay for the boiler project with these funds, but the funds could be utilized to our discretion.”

Director of Business Affairs Stacey VanBeek said in this case the boiler replacement will require all of these funds.

“We’ll need all of the $4.5 million to pay for the boiler project,” VanBeek said. “So in my mind, it’s freeing up maybe some other money that we would have for other projects.”

She said the district will save money on interest payments by taking money as needed rather than all at once. She said there is no penalty for the district paying off the 9-year loan early, and they do have an option to re-evaluate terms with the bank after 3 years. According to the school’s December business services report, a 50% down payment on the project is due later this month. The board voted Monday night to authorize a down payment of $2,279,146.99 to Johnson Controls as part of the district’s monthly bills.

In October, the board hired Johnson Controls to replace the high school’s two low-pressure steam boilers with three natural gas boilers and an array of pumps and ancillary equipment. Johnson Controls estimated that installation work would begin May 1, 2025, with substantial installation complete by Oct. 15, 2025. The current boiler is the original heating system installed in the high school in 1965.

In other business, the board briefly discussed — and then tabled — a proposed covenant to the sale of the Fifth Street Gym. The covenant would have placed certain restrictions on property use by future owners.

“It’s mainly things we put in that keeps that neighborhood — that it’s a fitting use for the neighborhood,” Board President Teresa Binkley said.

Books pointed out the covenant contradicts the property’s current zoning, which allows residential use.

“It’s zoned R2 right now, so it can be single family,” Books said. “Right now its zoning, if I remember correctly, could be like two duplexes — two duplexes for a total (of four single family residences). So I don’t see a need to remove that as a 20 year option.”

As written, the covenant had forbidden any structure on the property, “including, without limitation, a group home, homeless shelter, detention center, treatment facility, or other residential use, temporary or permanent.”

“So, ‘no structure may be used for residential purposes,’ is that just those purposes listed or any rezoning residential purposes? Because I don’t feel comfortable saying for 20 years, no residential use,” Books said. “I agree with the detention center, treatment facility, those types of things. But ‘no residential’ is even different from its current zoning … I just don’t feel prepared that we’re actually ready to vote on this.”

Other provisions in the proposed covenant would have prohibited the property from being used as a warehouse, for storing or incinerating trash, for raising livestock or for “noxious or offensive activities.”

“There were four or five areas that we had requested be put on the covenant,” Superintendent Summer Schultz said. “I’m not 100% sure on the wording, so I would ask you to just wait or at a minimum know what you want in order to include in the motion.”

The board tabled the proposed covenant and asked Schultz take it back to the district’s attorney for re-wording. The school board could reconsider the topic at a future meeting.

In November, the board voted to list the gym for sale through Ryan Krogman of Century 21 Krogman and Company. The asking price is $500,000. The board will start looking at offers at their Jan. 13, 2025 meeting.

Contact Jay Roe at jroe@brookingsregister.com.