Saturday, March 6, 2010

Borrowing money for capital improvements

D-11 borrows $4 million for work at 17 schools

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Seventeen schools in Colorado Springs School District 11 will receive capital improvements in the coming school year, even though voters did not give the district the ability to borrow $131.7 million for school maintenance and construction.
Voters did approve a $131.7 million bond sale, but because they did not approve raising the property-tax rate to pay off the bonds, the district could not issue them.
D-11 can, however, borrow roughly $4 million through the Colorado Department of Education’s Qualified Zone Academy Bonds program, because the district has room under the existing tax-rate cap to borrow the lesser amount.
The program offers schools interest-free bonds for projects at schools where at least 35 percent of students qualify for free or reducedprice lunches and the district can find a 10 percent corporate match.
Midland International Elementary can replace sewer pipes that were part of the school’s 1956 original construction. Sixteen other D-11 schools will have exhaust fans replaced, fire alarms updated and roofs fixed.
Chief Financial Officer Glenn Gustafson said Coca-Cola provided the corporate match. Work by the district’s long-range planning committee was used to decide which projects should be done.
By using the Qualified Zone Academy Bonds, the district can accomplish about $4 million worth of projects without raising the mill levy, Gustafson said.
A mill levy is a tax rate upon the value of real estate.
If the board decides to ask voters again to raise the mill cap, the amount of the increase would allow roughly $127.7 million to be borrowed. The $4 million Qualified Zone Academy loan removes that amount from the total voters authorized in 2004.
School Board members will decide whether to ask voters to raise the mill cap; in a 6-1 vote April 27 they indicated they would put a question to raise the mill cap on the ballot in November.
Congress created the Qualified Zone Academy Bonds program, which provides the investor with a federal tax credit in lieu of an interest payment from the borrower.
Because the federal government provides the credit, the district is typically only responsible for repaying the value of the bond.

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