A recent op-ed on Decaturish by Former Atlanta COO and Decatur resident Hans Utz recently got some appreciation in FFAF regarding its explanation of the city’s debt cap.  As such, it seemed a good article to highlight and discuss here, since we so enjoy discussions that involve such thrilling topics as debt and enrollment figures.

In short, it helps spell out…

• Why city debt is necessary – to spread the cost of projects out over time so future residents also get to pay in
• The different forms of Decatur’s debt
  • The city’s revenue bonds – taken out against non-property tax forms of revenue
  • CSD’s certificates of participation – “like a homeowner taking out a second mortgage”
  • “GO bonds” – which are borrowed against property taxes
• Which forms of debt apply to the “Constitutional Debt Cap” of $137 million – only the Go Bonds
• Where Decatur would stand if it were to borrow the full $82 million in Go Bonds to build new/larger schools
  • Watch these mathrobatics – The city currently has borrowed $31 million and CSD has borrowed $5 million in Go Bonds, so add the requested $82+ the current $36 = $118 million.  And what was that limit again?  $137 million?  So $137 – $118 = $19 million!

Is that $19 million gap risky?  Mr. Utz’s states…

Incidentally, the constitutional debt limit is itself a conservative ceiling meant to prevent fiscally weak or irresponsible municipalities from overextending themselves.  Decatur is neither.

Ultimately, Mr. Utz’s argues that Decatur shouldn’t be all that worried about its debt cap with this bond proposal and that the major concern should be the very real increase to taxes as a result of the bond – he calculates it as a 7% increase on Decatur property taxes.

He concludes…

So are we in a bad place with debt?  No, not at all.  Not even a little bit.  Not even if the schools do get an additional $82 million in capital.  We should stay vigilant, of course, but we are operating well within our capacity.

The question is whether we think the schools need the capital sufficiently enough for us to willingly to increase our overall property tax by 7 percent.  That is a big conversation that we must have as a community.

Oh how nice it would be if we still had the old Ponce de Leon School on West Ponce.  (Hence the random-ish Ponce de Leon School photo courtesy of Ponce de Leon Elementary Facebook page  )

It’s looking less and less likely that the City Schools of Decatur can build its way out of its enrollment-growth problem.

Anyone who has an opinion, voiced or unvoiced, regarding the City Schools enrollment issue needs to read this just-released Decaturish report from last night’s School Board meeting regarding how Decatur is rapidly reaching its debt limit.

A few snippets to whet your appetite.  It shouldn’t take much…

As the School Board sat in the new municipal center on Feb. 10, they saw the city approaching [the debt] limit. The School Board needs to issue even more debt to expand its current facilities. Decatur’s constitutional debt limit is 10 percent of the assessed value of its current tax digest, according to Dianne McNabb with Public Financial Management, an advisor for CSD.

At the end of the School Board meeting, board members unanimously decided they’d ask the Decatur City Commission to put an $82 million bond referendum on the ballot this year. But that would only allow the school system to build out its facilities to accommodate about 90 percent of its enrollment projections.

And that money ain’t free either.  Decatur homeowners, please read on…

A bond issue would have to be approved by the voters. Taxpayers would have willingly increase their own millage rate by 4.84 mills if the city borrows $82 million for its schools. For a $300,000 home, that’s $726.51 in additional taxes per year, starting in 2017. For a $700,000 home, that’s an additional $1,695 in taxes.

There are other options to building that have been mentioned here before and are starting to get mentioned by Superintendent Edwards .  Year-round schooling or split-shifts would split kids up into terms/groups that go to school in different cycles (be it weeks or times of day) allowing for greater utilization of existing buildings.  This hasn’t been a popular option in the past, but all of the “better” options are beginning to look quite concerning in the light of day.

It seems like its time to put ALL options out on the table and work this thing out.  Congenially, of course.

Among 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.