Iowa City School Board Wants to Borrow Money for Building Projects

By Gregg Hennigan, Reporter

IOWA CITY, Iowa - Borrowing money is the best way for the Iowa City school district to get the cash it needs to tackle a long wish list of building projects, Superintendent Stephen Murley said Thursday night.

At a school board work session, Murley recommended the board use bonds to fund capital projects, which could include new elementary schools, a new high school and building renovations.

That would break from the district's traditional approach of paying with tax money it already has collected, but Murley and Craig Hansel, the district's chief financial officer, said that does not provide enough dollars soon enough for the district to deal with its growing enrollment.

"We're feeling that crunch in our classrooms and we really need to address those needs sooner than later," Hansel said.

The four board members at the meeting agreed with Murley's recommendation – and an absent member had a statement in support read – giving the unofficial majority backing needed to move forward.

The Iowa City school district has seen division in the community and on the school board over how money should be spent on building projects. Many parents in North Liberty and Coralville want a new high school on the north side of the district. Many parents on the east side of Iowa City say that is not as pressing a need as one or two new elementary schools in their neighborhoods.

Murley Thursday night specifically recommended the board use what are called tax anticipation revenue bonds. These borrow against future sales tax revenue and therefore do not increase the property tax rate.

The district would pay interest on the bonds, but Hansel said interest rates are currently lower than construction inflation.

About $100 million would be available through the bonds, although the district would not seek all of that money at once, Murley said. Also, if new schools were built, the district would still need to pay to operate them.

Murley and board members stressed the no-tax-increase point, knowing it will be important in selling the idea to the public. While the school board can approve the bonds itself, a simple majority of voters in the school district would have to approve a new revenue purpose statement to replace the one currently in effect as part of the school infrastructure local-option sales tax passed in 2007.

The board's next decision will be deciding when to go to voters for a new revenue purpose statement. The next two available election dates are Dec. 4 and Feb. 5, and Murley and board members said they prefer one of those so that money would be available for the summer construction period.

Board members were divided on which date to pick, however. Board President Marla Swesey and Karla Cook said December may be too soon. In particular, they were worried about a December election being so close to the Nov. 6 vote on a new justice center.

Voters are being asked to approve a $46.8 million bond issue to build a justice center. Although the tax anticipation revenue bonds would not increase property taxes like the justice center bonds would, Cook was concerned about that message getting through in a short turnaround.

"When you start splitting people's focus, that becomes an issue," she said.

Board members also said they've already heard from community members who said they want to see a plan for how the district would spend the money.

Board member Tuyet Dorau, on the other hand, advocated for the Dec. 4 date.

The deadline to file for the Dec. 4 election is Oct. 19, so the board will have to decide fast. It is expected to resume the discussion at its Oct. 16 meeting.
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