One thing was clear by the end of the three-hour Cleveland Heights-University Heights School Board work session Monday night — timing is everything.
Superintendent Doug Heuer has mentioned several times the importance of getting a bond issue or levy on the November ballot for the district’s proposed facilities master plan — more voters are at the polls during presidential elections.
But at Monday night’s CH-UH work session in the cafeteria, consultants gave the district more reasons to act fast.
In order to pay for , a $193.7 million project (the cost estimate has gone up since the last meeting) the board was presented with a variety of options, including sending a bond issue to voters.
Currently the district has more than $8.4 million in outstanding debt, said John Larson, a partner with Squire Sanders who is serving as bond counsel on the project along with Kathy Petrey. CH-UH, based on its current assessed valuation of about $1.1 billion, can ask for just over $93.6 million.
But the district can become a special needs district, Larson said, and issue a much higher bond. If it can acquire a special needs district designation, CH-UH can issue bonds for more than $158 million.
One way the district can qualify is if it demonstrates that the facilities are not adequately serving students, and $90 million won’t be enough to improve the buildings.
The other requirement to qualify as a special needs district could be troublesome for CH-UH. If the district valuation falls by more than 5.3 percent in 2013, it could lose its status.
“In a sense, you’ll probably have a chance, one chance, to take advantage of the special needs authority,” Larson said.
But there are other risks even if the district gets the bond on the 2012 ballot. If the district issues its bond amounts at different times, which is typical strategy for big projects like the facilities master plan, and its valuation drops by 15 percent during the time voters approve the bond and when CH-UH issues them, it could lose its status. And, if the district’s valuation does not increase by at least 14.8 percent between 2012 and 2015, again, the district could lose its status.
If the district sticks to its current $90 million limit and put that to voters, that would mean 3.92 mils with an estimated interest rate of 4.75 percent and an estimated 38-year term on the bond issue. For residents, that would mean an additional $10 per month for every $100,000 in home valuation.
Whatever the district decides, it must submit a resolution that it should be considered special needs district and also take the first steps in submitting a voted bond issue by July 9, Larson said. Another resolution must be sent to the state declaring the necessity of a bond issue by July 31, and the actual resolution for the bond issue must be sent to the Board of Elections by August 8.
There are other options for CH-UH to get more help — if it participates in the State of Ohio Classroom Facilities Assistance Program. But that could take seven to 10 years to get into the program and financial aid. Though the CFAP is considering moving up that process, there’s no guarantee.
The district can also borrow against its current or future permanent improvement levies or lease certificates of participation. We'll have more details on that soon.
The next CH-UH Board meeting to discuss the facilities master plan was set for May 15, though they may meet earlier.
And look for more highlights from the meeting today.