School Board To Consider Whether To Move Forward With Plan C As Is Or Make Changes

Kal Zucker said he doesn’t max out his credit card, and he doesn’t want to max out the district’s, either.

The Cleveland Heights-University Heights School Board member expressed his concerns about the latest financing proposal for the district’s master plan at a meeting May 15.

After more than four hours, board members couldn’t come to a consensus, and called a special meeting at 6:30 p.m. Thursday at the Board of Education building to decide whether they will move forward with the master plan as is or ask for changes before the regular meeting June 5. The meeting is open to the public.

The newest version of Plan C is projected to cost more than $206 million if . The original plan C, which is estimated to cost about $193 million, was changed after the and board members asked for a plan with ’s construction first.

The first segment of the revised plan will pay for renovating Heights High, , and middle schools and creating swing space, and will cost more than $158 million. That’s as much as the district is .

“I want to tell you that my initial reaction to this is that the price tag is too high,” Zucker said. “…Honestly I don’t like the idea of tapping debt at the very ceiling of debt.”

Alan Baucco, senior vice president of Stifel Nicolaus, said the district “only has one shot” to qualify as a special needs district, which would allow it to incur that much bonded debt instead of its current limit of about $90 million.

“It’s kind of a now or never situation,” Baucco said, explaining that 2013 is the last year the district would likely qualify.

If approved, the bond would have a 38-year term at 6.6 mills. Homeowners would pay $201 annually on $100,000 home, said Scott Gainer, chief financial officer for the district.

That would only pay for Segment 1. In Segment 2, would be rebuilt, and , and elementary schools would be renovated with a price tag of nearly $48 million.

If the district moves forward with a $158 million bond, it will have to seek other financing alternatives for the second phase. The would also be restricted in how it can get money for renovations and other projects.

"There is a maximum amount of debt the district can issue. We are the fiscal agent for the library — the only way they can issue debt is through us," Gainer said by e-mail. "So the concern is that if we use up the whole debt capacity it would preclude the library from issuing debt (bonds) if they need to, although they would still be able to have operating or capital levies." 

School board member Nancy Peppler asked if the district could have two bond issues instead. Baucco explained that the district would likely lose its special needs designation and not be able to ask for that much if it went to voters with two bond issues instead of one.

“When I see 6.6 mills, I am less confident we’ll be able to pass a bond issue,” she said. “…That’s a bit of a game-changer for me tonight.”

Steve Shergalis, director of business services, emphasized the urgency of moving forward with the plan. Each year the district delays the project, the escalation costs, or the projected inflation of supplies, materials and labor, go up by 1.5 percent.

He and Zucker had a back-and-forth debate about the cost. Zucker said there has to be a way to reduce the cost of the plan.

Shergalis explained that the only way to reduce costs would be “to not do something.” He said the reason the district hired a is to get the most efficient, effective plan possible.

“We’ve been kicking this around for half a year,” Shergalis said. “...I’m very confident about what this team has put together.”

School Board President Karen Jones, a University Heights resident, asked about what it would take to add , the only elementary school in University Heights, to the plans .

Shergalis said the plans represent “hundreds of hours of planning time,” and if architects had to go back and revise, they’d have to reconfigure everything — including the cost and phasing.

School Board member Ron Register said the district should make a decision soon.

"We need to get on with it," Register said. "I think we hired the best people to help us out here."

Superintendent Douglas Heuer said the board must approve two resolutions before July 9 and a third before July 31 to be designated a special needs district and to get the bond issue before voters this November. 

Register said the board cannot "half-heartedly" approve the plan, and agreed the board should meet one more time before the regular meeting in June to make sure they're on board and "understand what it's going to take to do this."

Look for highlights from Thursday's meeting soon.