06/01/14 — School financing on county agenda

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School financing on county agenda

By Steve Herring
Published in News on June 1, 2014 1:50 AM

Financing up to $41.5 million for construction of two new schools will be the topic of a Wayne County commissioners' hearing.

State law does not require a public vote on the financing, but the public hearing, which will be held at 9 a.m. Tuesday in the commissioners' meeting room at the county courthouse annex, must be held before the process can proceed.

The financing is similar to a bond, but is not backed by the county's taxing power. Instead, it is more like a mortgage on the property -- in this case new middle schools in the Grantham and Spring Creek communities.

As part of the project, the Wayne County Board of Education will convey the properties to the county.

The county in turn will lease the properties back to the school board.

That action is also on Tuesday's agenda.

Commissioners and the Board of Education are working to have all of the necessary work done prior to a July meeting with the state's Local Government Commission, which has to approve the plan as well.

The $41.5 million cost is about $5 million higher than the $37 million commissioners have previously used as a baseline when discussing the two projects.

Interim County Manager George Wood told commissioners earlier last month that the higher number was recommended by the county's bond attorney and Davenport, the county's financial advisers.

The reason is to ensure that the county has enough money in hand to do the project and not come up short, he said.

The county will only use the amount necessary up to the $41.5 million.

The school board will use $2.2 million annually from lottery and sales tax revenues to repay the financing. The county has agreed to cover any amount above that.

The operating expenses for the two new schools will come out of the school board's existing budget.

The final amount will be determined after the school board opens construction bids.

Metcon/T.A. Loving are overseeing the projects, including the bidding.

School Board Chairman John Grantham said the bid opening is tentatively scheduled for June 12.

Commissioners earlier approved a resolution designating the school board as their agent so that the board could bid out and construct the two schools.

It also makes the county eligible for an estimated $1.2 million sales tax refund.

Unlike county government, the school system is not eligible to be reimbursed for the sales tax associated with the projects.

The boards will get around that limitation by having the school board deed the two school properties to the county. It is a tactic the two boards have often used.

After the new schools are constructed and occupied by the school board for the warranty period, the county will convey them back to the school board at a cost of $1, unless that would endanger the financing.

However, the school board will exercise control of the two new school buildings while the debt is being repaid.