Goodrich district takes aim at school bond for renovations
August 11, 2010 - By David Fleet
The school board will consider a $15.4 million bond issue for renovations to several district buildings at the Aug. 23 meeting. If approved, district voters would decide the issue on Feb. 22, 2011.
Five years ago, board members considered a bond of $32 million for renovations to several buildings, but the proposal was tabled. Since then, a sagging economy has pushed the SEV (State Equalization Value) of area homes down, reducing the maximum bond amount the district can obtain to $15.4 million.
Over the last 15 years the district has secured two millages for construction— Oaktree Elementary School in 1995 and the middle school, which opened in 2001.
John Fazer, district superintendent said if the board waits until May 2011 to vote the area SEV will dip by a projected 8.6 percent dropping the maximum amount to $1.1 million.
"By using the School Bond Loan Fund (SBLF) we can keep our current millage rate of 7.75 mills," said Fazer. "The SBLF supports smaller districts like Goodrich when the SEV is low. Otherwise districts would have to raise taxes to fund building projects. The key is we can extend the mills out without raising taxes."
At 4:30 p.m., Aug. 16 the district building and site committee will meet at the central office to discuss considerations regarding possible projects. At 6 p.m., Aug. 23 the board will consider a resolution to move forward with the school bond. School officials have until Oct. 8 to decide what projects will be targeted if the bond is approved by voters.
According to the Michigan Department of Treasury the SBLF program offers a state credit enhancement and loan mechanism for school district bond issues. The bonds must be qualified by the state treasurer and the bond proceeds must be used for capital expenditure purposes such as building, renovation or upgrades.
It lets schools like Goodrich borrow from the state the difference between what their debt levy produces and the amount actually needed to make their annual bond payments. The idea, say state officials, was to allow growing schools to bond for more construction than their existing tax base could reasonably support.
In the case of Goodrich, if $15.4 million is needed but the SEV and millage rate produces less, the state would loan the difference to the district. The millage rate would stay at 7.75 until the total loan is paid off.
The assumption underlying SBLF loans, according to the Department of Treasury, is that the borrowing district's tax base will grow over time, and that eventually the loans can be paid off, on top of the district's bonds. A district's bond proposal must also be "prequalified" by the Michigan Department of Treasury to be eligible. Qualified bonds are backed by the state's full faith and credit, which results in lower interest rates. However, construction financed by qualified bonds is subject to Michigan's Prevailing Wage law, which requires (for all practical purposes) that union-scale wages be paid for construction labor, according to the Michigan Department of Treasury.
"It's a good time to build," said Fazer. "Construction costs are less now than even five years ago—we are going to build from what was considered in 2005. The committee will accept recommendations from the public over the next few weeks—we need to look at the basic needs."
Key will be work at the high school and Reid Elementary, the two oldest facilities in the district, added Fazer. For example, the boilers to heat the high school were installed in 1972 and are currently working at 60 percent efficiency.