CSD Looking To Use Elementary Schools as Collateral to Secure Loans to Expand Renfroe and DHS
Decatur Metro | | 9:02 amAmong the items on tomorrow night’s Decatur City Commission meeting, giving up the city’s interest in the city’s elementary schools so CSD can use the schools as collateral to secure loans through the Georgia Municipal Association to expand Decatur High and Renfroe Middle School.
Decaturish has the details and background…
Under the proposed financing agreement, CSD would transfer title for Clairemont, Glennwood and Oakhurst Elementary Schools to the Georgia Municipal Association. GMA would then sign a lease with the city school system. This lease agreement will be the basis for borrowing $17.5 million to pay CSD’s expansion. Once the school system repays the loans, ownership reverts back to the school system. If CSD defaults on its debt, it could lose ownership of the schools.
Related Posts:
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June 5, 2013 Op-Ed: The CSD Expansion Conversation (162)
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November 3, 2014 Meeting Monday: City Talks Annexation, CSD Reviews Decatur High Expansion Options Tonight (8)
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September 17, 2014 CSD Postpones Late September Decatur High & Renfroe Design Concept Presentation Meetings (0)
Whoof.
Is this an unusual arrangement? Can’t say I’ve ever heard of it.
Lease-back financings are pretty common; sometimes the loan is financed via a bond in this scenario, sometimes not. I imagine once the City sat on CSD’s request for bond authorization last year, CSD had to explore all its finnacing options.
This is where I need smart lawyers and financial types with experience with city and school system financing and debt to weigh in on the implications, especially those for the future. What is the downside to this? Could this allow CSD to borrow more than is wise? If, in the style of DeKalb and Clayton Counties, a few bad eggs were elected to the Board and a weak or corrupt Superintendent was installed, could the system lose its school properties so quickly that it would be hard for anyone to correct the situation? Could CSD end up in such a bind that it had to join DeKalb County Schools? Or are doomsday scenarios such a long shot that they are not worth considering? I tend to think of the City as a more stable and financially secure institution compared to CSD, not because CSD is problematic but just because it is a smaller entity, run by a smaller group of people who wear a multitude of hats and are not necessarily experienced in complicated governmental financing. But I can see why CSD would want the flexibility of owning its own schools. But there’s all these bad examples around us of what Metro area school systems have done with such autonomy…..
“smart lawyers and financial types with experience with city and school system financing”
That would be the people we just elected to the school board, as well as our current superintendent and our current city manager. We have every right to ask questions, but it’s also worth noting that we have elected capable neighbors to be the experts and make these types of decisions on our behalf. It’s fine to verify, I just hope we have a little trust to go along with it.
I have a lot of trust in the school board, but isn’t CSD also accountable to Decatur residents? If memory serves, CoD delayed the bond referendum due to the requests/demands of a large majority of citizens as they wanted more time to digest the proposal (of course nothing has happened since the referendum was delayed, but that is another conversation). Why should CSD be able to cram this down given the public backlash to their last attempt?
aside from any questions related to the fiscal soundness of this approach to financing, what’s interesting to me is CSD’s maneuvering: if the city commissioners and voters can’t get their act together to approve a necessary and time sensitive project like expansion, we’ll (CSD) find an alternate route that obviates the need for a referendum. to me, this underlines the critical nature of the expansion project, and i’m glad to see them pursuing avenues that get it rolling sooner than later.
Rick, well said. I was at that joint city commission/school board meeting back in August, and I was surprised by the fact that the city commissioners seemed really clueless about the overcrowding in the schools. Baskett and Garrett actually seemed like they were learning about the problem for the first time (where have they been the last 6 years or so…?). It blew my mind that city commissioners were that out of touch with what was happening in the schools. I do think it is wise for CSD to at least explore alternatives, bc that joint meeting didn’t inspire much confidence.
agreed, CH.
i also remember feeling the commissioners’ postponement wasn’t substantively supported. essentially, they felt they, themselves, and the public hadn’t had sufficient time to adequately familiarize themselves with the specifics of the referendum, as well as its direct and collateral implications.
in fact, as i remember Dr. Edwards pointing out, the school board’s process was transparent, had been ongoing for over a year (or two), and included a number of publicized sessions where citizens could ask questions and provide feedback. that people didn’t avail themselves of this opportunity is not the fault of the Board, and the resulting postponement has only resulted in us kicking the can down the road; most likely incurring us even greater expense and delay in meeting a critical need.
Agreed. The commissioners have stuck thier collective heads in the sand regarding the obvious need for school expansion since the bond referendum was delayed. Hopefully they will stop distracting themselves with non-issues (trees) and focus on actual, immediate problems.
How are the loans repaid?
Taxes
I’m assuming that if this is approved, CSD will have an open, public discussion on the issues that got everyone’s attention last year, ie. enrollment numbers, proposed building footprint, design, traffic issues, etc. As a parent, I’m in the schools quite often and can vouch that there is a pressing need for space. However, I’m a little suspicious that without a public referendum, CSD won’t feel the need to keep stakeholders involved in the early stages.
After all of the public meetings and discussion last time, I don’t recall seeing a revised set of drawings that incorporated any changes. My suggestion to CSD is to schedule an “open house” type of public meeting, similar to what GDOT does before a large project. Lay out the plans on the table, let people suggest changes, have staff standing there to answer questions, have forms to make suggestions, etc. In the end the architects may not incorporate anything into the final design, but it will give the community a feeling that their voice is being heard.
You need to email or mail this request to Board members so that they will respond. You can’t count on blog comments to get through.
So csd can incur debt & obligate tax payers to pay it back?
Well, yes, Beth, that is exactly the type of thing we elect the school board to do.
Excuse my ignorance but in my 30 yrs in decatur this is news to me
Title Pawn.
That’s funny