Group hones in on middle school options
by Laura Haley
contributing writer
Mar 07, 2013 | 1442 views | 0 0 comments | 8 8 recommendations | email to a friend | print
A committee that is exploring solutions for remodeling or building a new Grand County Middle School has developed several possible scenarios but no final recommendation at this point. Grand County School District Superintendent Scott Crane had set a goal of late February for the committee to issue its recommendation, but the group is still examining all possible options, according to discussions during a March 4 meeting.

Approximately 30 people attended the meeting at the Grand County School District Office for a lengthy discussion about possible financing options for the work that needs to be done at the middle school. The Grand County Board of Education formed the facilities committee in December and it has been meeting regularly since that time.

According to Grand County School District Business Administrator Robert Farnsworth, it would cost approximately $8 million to renovate the school or $12 million to build a new one. Farnsworth also said that regardless of which choice the committee recommends, the options to fund the work would be the same.

Farnsworth said that there are four funding mechanisms available to the school district: a general obligation bond, which was the funding source for the construction on Helen M. Knight Elementary School; use of the district’s capital funds; the creation of a local building authority (LBA); and money received through private donations and grants.

“The possibilities are limitless, but everything costs money,” he said.

Farnsworth said that, despite the outstanding bond for the work on HMK, the district still has the ability to bond an additional $32 million, if voters agree.

“This requires a vote of the people,” Farnsworth said. “It is backed by the taxpayers.”

Farnsworth said that the San Juan School District decided several years ago that it would not use bonds for building. Instead, the San Juan Board of Education allocated an increased percentage of property tax revenue to the district’s capital fund, allowing more money each year to be earmarked for new buildings and renovations.

The state limits the capital local levy to .003 percent of assessed value, Farnsworth said. The current rate in Grand County is .000362 percent.

“It’s only about 12 percent of the maximum amount,” Farnsworth said. An increase in the capital levy would not require voter approval, he said. Instead, the school district would be required to hold a Truth in Taxation meeting, and at least three members of the school board would have to approve the change.

In order for the school district to raise an additional $1 million per year in tax revenue, the property taxes on a primary residence worth $200,000 would increase approximately $91.52, according to Farnsworth. However, he said that a levy would not automatically disappear once the needed funds were collected. “It’s up to the board, when a tax rate is set, to lower it once it’s no longer needed,” he said.

Brandon Johnson, a bond attorney from Chapman and Cutler, a firm that the school district has worked with in the past, presented information about establishing a local building authority (LBA). According to Johnson, if the school district were to choose that route, the LBA, which would be run by the members of the school board, would have authority to issue bonds for construction or renovations needed without taxpayer approval. The LBA would then lease the facility to the school district, using the monthly payments to pay off the bond.

“Once the bond is paid, ownership transfers automatically with no further payments,” Johnson said. “Close to half the school districts in the state have done this.”

Johnson cited Granite School District, Sevier School District and Uintah School District as examples of schools that have used the LBA method.

Johnson said that one benefit of establishing an LBA is that it is not secured by property taxes, while a general obligation bond is.

“If something strange happened and property values decreased to 25 percent of what they were, the tax levy would have to increase significantly” on a general obligation bond, he said.

If the district were to opt to establish an LBA, an $8 million bond to remodel GCMS would result in an increase of $62.37 per year on a $200,000 primary residence. That amount would go up to $93.28 per year to finance the $12 million that is estimated as the cost of building a new school.

Moab realtor Dave Bierschied pointed out that the impact would be larger for business owners and people who own second homes or investment properties in the area, because those are taxed at their full value. “We have a lot of people here who are second home and investors that pay the full amount,” he said. According to Farnsworth, primary residences are only taxed at 55 percent of their value.

Moab resident Dwight Johnson said that if taxes are raised too much, people would be less willing to build second homes in the area. “We have to be careful or we really will kill the goose that lays the golden egg,” he said. “We live in a county that doesn’t push industry ... What we have going for us is hotels and second homes,” he said. “Those guys that build second homes really do have other choices.”

Bierschied said that most of his clients have been astounded by the low property tax rates currently in effect.

The committee is scheduled to meet again on March 18. Part of that meeting will cover the possibility of doing the renovation on GCMS in phases so that not as much money is required up front.

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