05/06/14 — Deal is reached on new schools

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Deal is reached on new schools

By Steve Herring
Published in News on May 6, 2014 1:46 PM

The Wayne County Board of Education and Wayne County Board of Commissioners have reached a compromise over how to finance and construct two new middle schools.

The deal ends a months-long, and sometimes terse, war of words between the two boards over the $38 million project.

In exchange for yielding to commissioners' insistence on using the design/bid/build method of construction, the school board will be able to retain the architect who designed the energy-efficient middle schools for the Grantham and Spring Creek communities.

The school board Monday night unanimously adopted a resolution to use design/bid/build with the use of a construction manager at risk to oversee the projects.

In the resolution, the school board also agreed to convey titles to the two sites to the county. That will allow the county to receive any sales tax refunds associated with the projects, since the school system is not eligible for the refunds.

It is a ploy the two boards have used in past for school projects. Once the projects are completed, the county will lease the properties to the school board until they can be deeded back to the school board.

Also as part of the agreement, the school board would commit to using $2.2 million annually from lottery and sales tax revenues to repay the financing. Commissioners would agree to pay for any amount over the $2.2 million.

The school board also would pay the operating expenses for the two new schools out of its existing budget.

Initially, school architect Robbie Ferris, president and CEO of SfL+a, 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.

That plan was scrapped when the state Local Government Commission, which has to sign off on the project's financing, said that was not a viable option and what was actually being proposed was a capital lease.

An operating lease is considered renting, in which payments are considered operational expenses and the property being leased is not on the balance sheet. A capital lease is more like a loan, and as such the property is treated as being owned by the lessee, so it stays on the balance sheet.

Commissioners last month said they would not sign the lease -- a condition required by law, effectively vetoing the school board's lease plan.

Instead they approved a resolution calling for the use of design/bid/build and issuing certificates of participation, basically a mortgage on the property, "or a similar debt issuance" to pay the debt service.

School board Chairman John Grantham was asked after Monday's meeting if the school board's resolution to get the school projects under way had been driven by commissioners' refusal to sign a lease.

"Pretty much the definition of a compromise is where nobody gets exactly what they wanted," he said. "We are getting the schools, and we are able to keep the architect that we had on board.

"We are well relieved about that because that was one of our biggest concerns -- having to start over with a new architect at this point."

Grantham said he does not expect it will take long to interview and hire a construction manager to oversee the projects.

"I would probably think that by the end of next week we would have one chosen," he said.

The county should have the total package together in time to meet with the Local Government Commission in July, Grantham said.

"Hopefully it will just be a formality to get the Local Government Commission to approve it since we are all onboard together," he said. "Assuming the Local Government Commission approves it the first part of July we should be able to start construction in July."