04/24/14 — County sets meeting to eye school funding

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County sets meeting to eye school funding

By Steve Herring
Published in News on April 24, 2014 1:46 PM

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Wayne County School Board Vice Chairman Chris West, left, and Chairman John Grantham discuss school construction. County commissioners will do the same on Friday.

Wayne County commissioners have called a special session for 10 a.m. Friday "to discuss and act upon" the construction and financing method for new Grantham and Spring Creek middle schools.

School board Chairman John Grantham said this morning his board was aware of, but had not received any official notification of the meeting that will be held in the commissioners' meeting room on the fourth floor of the county courthouse annex.

"We will kind of feel it out today and make plans," he said. "We will find out what we can today."

Commission Chairman Wayne Aycock could not be reached for comment prior to press time this morning.

Both commissioners and the Wayne County Board of Education already have made separate, and different decisions, on that very question.

Commissioners by unanimous vote on April 15 decided that the county should use the design/bid/build method to construct the two new energy-efficient middle schools.

Two days later on April 17, the school board acknowledged that decision, but unanimously decided to stay the course on its plans to use the capital lease method.

"For me, I can't speak for the rest of the board, but I know everyone on the board feels like it (lease) is the best way to go," Grantham said this morning. "We feel it is important to open (the new schools) in the fall and not mid-year or the next year because inflation would kill us."

As it now stands, bids would be publicly opened on April 30, Grantham said.

Switching to the design/bid/build method would require the county to interview and hire a construction manager and rebid the projects, a process that could require at least three months, Grantham said.

The delay could cost the county a half million dollars or more because of inflation, he said.

Also proceeding with the capital lease would allow the county to "lock in" an interest rate, he said.

According to state law, "The building of all new school buildings and the repairing of all old school buildings shall be under the control and direction of, and by contract with, the board of education for which the building and repairing is done."

However, the lease -- a process that County Manager George Wood said is more costly and the "worst option" to use -- would require commissioners' approval before the school board could proceed.

Wood said the capital lease method would cost $3.4 million more than the traditional design/bid/ build method to construct the exact same schools, he said.

School board members have said that is not the case and questioned how Wood arrived at his figures.

Initially, developer Robbie Ferris, president and CEO of SfL+a the firm hired by the school board to build the schools, wanted the county to use an operating lease agreement in which he would build the schools, then lease them back to the county. After five years, the county would be able to buy the schools.

The North Carolina Local Government Commission said that was not a viable option.

The school board's second preference is a capital lease, which is similar to a loan.

Wood also has said Ferris' proposed contract would allow the developer to make $10.1 million, or up to 26 percent, of the estimated cost of $38.7 million to build the two schools.

Those figures are disputed by the school board as not being accurate, either.

The two boards also disagree over the possible fate of sales tax revenues.

Wood contends there is no guarantee the state would allow the county to be reimbursed for up to $1.2 million in sales tax associated with the project if the capital ease method is used.

The method is untried, and has been repealed effective July 1, 2015, he said.

School board members said Ferris has been assured by state officials there will be no problem.

Ferris is so confident that he has agreed to place an amount equivalent to the anticipated sales tax into a trust fund, Grantham said at last week's school board meeting. If the sales tax is refunded, the trust fund would revert to Ferris. If it isn't, it would go to the county, he said.

Also at that meeting, Grantham said he didn't understand Wood's comments that other financing and construction options would have had been available had the school board told commissioners up front that it was ready to seriously look at school design.

"For one thing, we have had this building plan out for 12 years," he said. "If that is not enough upfront notice you would be hard pressed to find out what would be."

Also, the lease option has been discussed by the school board for months.