I wanted to share some thoughts about the Alpine School
District creating a Local Building Authority last night. I will be totally upfront and admit that I
did not make it through the 28 pages of bylaws and articles of incorporation
before the board meeting. But I read
enough that I raised some questions and concerns.
Let me tell you what I understand. The original consolidation plan for Orem went
through a lot of tweaks to get to the plan that was actually voted on. A rebuild of Scera Park was necessary. But there wasn’t money from the bond to pay
for it. The plan was to sell Hillcrest
and use that money as well as some money from capitol funds to pay for the
rebuild. But then some folks from Orem
kind of freaked out. There was a vocal
group that made sure that the district was painted in a poor light and “Orem is
getting the shaft!” became a kind of rallying cry. If there is one thing the district does not
like, it is bad publicity. So regardless
of if these individuals were posting and using alternative facts, the district
got a bit skittish. Orem residents were
given meeting after meeting and the vote was repeatedly delayed and the
consolidation plan was reworked. The
sale of Hillcrest was taken off the table, but then there were no funds to pay
for the Scera Park rebuild.
So, how does the school district pay for a school without
bond money? There are a couple of
options. The district has a rainy day
fund and the district could have just paid for the rebuild out of those
funds. But having a certain percentage
of money in that rainy day fund also means that we have high ratings from
financial gurus like Fitch and Moody’s.
If we use up that rainy day fund, it can impact our ratings and that
would translate into us paying more in interest in our bonds, etc. Instead the school board created a non-profit
corporation called a Local Building Authority or LBA. The LBA essentially takes out a construction
loan to build Scera Park and pays it off over roughly 17 years (similar to our
bond repayment schedule). The LBA leases
the school to the district and uses the savings from not having to operate
Hillcrest (about $780-800k a year) to pay the lease which in turn the LBA uses
to pay off that loan. It is a way for
the school board to be flexible, build schools quickly, etc. There are definitely some benefits. But it also presents some questions. It was brought up in the meeting that the LBA
could also fund things like Clear Creek and even rebuilding the district
offices. A school board member stated
that Clear Creek was taken off the last 2 bonds because voters did not want to
fund those items. Another board member
stated that it did not mean that voters did not want to fund those projects
funded, they just had “higher priorities.”
The school board can take on additional debt without going through Truth
in Taxation or going through having stakeholders cast their vote on a
bond. There is a lack of transparency as
well as accountability. State law states
that the only notice the board had to give was 24 hours public notice. That was it.
No public hearing or comments. No
meetings or feedback. An LBA was created
and the board can choose to acquire additional debt without voter input. They can add millions of dollars in debt to
refurbish Clear Creek or renovate district offices without voter input.
While I do not think any of our board members or district
personnel are going on a spending spree, it does raise concerns about giving
the power of going millions of dollars into debt to 7 people instead of tens of
thousands of voters. If the LBA decides to add Clear Creek or other projects,
we could be paying millions of dollars over decades for projects that our
children will not access and we never voted on.
Basically, we were in a pickle. We needed the funds to rebuild Scera Park
without worrying about losing our AAA rating.
I understand that. I just wonder
if we opened Pandora’s box.
