Before the dotted line is signed, the school wants feedback from islanders.

During its regular board meeting on May 27, the school board is holding a public hearing about its plan to acquire $1 million in non-voted debt.

In February, the Orcas School District was offered $900,000 in federal grant monies to make repairs to the elementary school. To secure the grant, they must come up with $800,000 in matching funds to complete the entire project, which includes a new HVAC system, motion control heat and lighting, and replacing the galvanized plumbing with copper pipes. The improvements are estimated to save the school $13,000 a year in energy bills.

The deadline to complete the repairs is June 2012, so the work must be done this summer. The board’s plan is to put a small capital levy before the voters to pay back the debt. The district wants to have $1 million as a cushion, in case the building has more problems than expected.

School administration has been negotiating with two banks to sell $1 million in bonds. A Capital One offer allows the school to pay off the entire amount after only 10 years, while a Cashmere Valley Bank offer allows pay-off at any time. The Capital One interest rate is 2.5 percent while Cashmere’s is 3.85 percent for the first five years and 5 percent for the final five.

During its April meeting, the board debated which offer was more fiscally responsible.

“A lower yearly payment is attractive, but if a bond or levy is passed in a few years – then what?” said board member Tony Ghazel. “The Cashmere proposal has higher payments for a few years but you can pay it off after a few years … the risk is that the public doesn’t pass a bond or levy.”

Chris Sutton was optimistic about putting a measure on the November ballot.

“We can pass it, then pay it off,” he said. “We have enough in the general fund to pay Cashmere for a few years.”

According to business manager Keith Whitaker, with $40,000 in the capital project fund, $52,000 in energy rebates from OPALCO, and energy savings, the school would have enough money to make payments through December 2013.

The board passed a resolution, 4 to 1, to go with the Cashmere Bank offer. Board member Jim Sullivan voted no.

Community members are invited to the public hearing during the board meeting on Thursday, May 26 at 5:30 p.m. in the school library.