The school district is considering borrowing between $15 and $20
million to avoid scaling back the new high school and provide
capital for future construction.
Gilroy – The school district is considering borrowing between $15 and $20 million to avoid scaling back the new high school and provide capital for future construction.
In a study session tonight, Gilroy Unified School District staff will present the board of trustees with several financing options to overcome a $15 million facilities budget deficit. The leading option includes borrowing more than $15 million from private investors through a funding mechanism known as certificates of participation. The district would use the money to fund Christopher High School, infrastructure improvements at Rucker Elementary School and a new elementary school, among other construction projects.
“We’re trying to think big picture here and not react,” said Superintendent Deborah Flores.
In addition to needing $14 million to build the remainder of the first phase of the new high school, the district will likely need an elementary school in the next five to six years, she said. Rucker is also in “desperate need of major renovations” if it is to continue functioning, she added. These projects will require additional funding mechanisms.
District staff will recommend tonight that trustees borrow about half of the more than $40 million these construction projects could cost through certificates. The district could then pay back the money, plus about $1 million in interest, during a 25-30 year period from the general fund. The district would garner this money from fees land developers pay for each square foot of housing they build.
In March, the district asked developers to raise their fees from $2.63 to $6.61 per square foot – or to about $16,500 per new home. The parties have debated the raise for six months without resolution. However, to be conservative, district staff calculated the certificate repayment plan using a $3 per square foot fee – which the district will likely impose in 2008.
Other financing options include floating a bond, cutting back plans for the new high school and drawing from Measure J funds – a 1976 flat tax that expires in 2012. Trustees will also consider a combination of financing options.
Six contacted trustees agreed voters would not likely pass a bond floated in the next few years. Voters passed the $69 million Measure I in 2002 under promises that the district would build two new elementary schools and the first phase of the high school. Trustees indicated they would not float another bond until about 2012, when the district will have fulfilled Measure I promises and begins work on the new high school’s second phase.
Certificates offer an advantage because they do not have to be approved by voters, trustees said. The concern therefore is not about getting votes, but making certain the district can pay back the loan, trustee Francisco Dominguez said.
“You’d have to set aside a dollar amount each year,” he said. “If we do that, then … we’d have to make reductions in other places.”
