By Nathaniel Smith • The Times-Independent
A group of Moab residents is challenging the method with which the Grand County School District is financing construction of the planned new middle school. The Grand County Board of Education’s decision to use a Local Building Authority (LBA) rather than a General Obligation (GO) bond to fund the construction project has drawn criticism, and now a petition is circulating that calls for the matter to be put to a vote.
The root of the complaints can be traced to the fact that a GO bond must be approved by a vote, whereas the LBA method does not require a ballot measure. GO bond financing is the more traditional route and comes with an interest rate of about three percent. In comparison, an LBA bond has an interest rate of three and a half percent. According to the school board, taking the higher interest rate would be offset by money saved with the more expeditious process of the LBA. Furthermore, the board asserts that 32 other school districts in Utah have used the LBA method in the last ten years, so it is not out of the ordinary to do so.
Tom Lacy, a certified public accountant for Canyonlands Care Center, is worried Grand County taxpayers will have to bear the extra costs, without having been given the opportunity to vote on the decision. In a letter Lacy wrote to The Times-Independent, he argued the half percentage point disparity in the interest rates will result in more than a million-dollar difference that the taxpayers will have to bankroll.
Lacy is unconvinced by the board’s argument that it is better to lock in the bond now before interest rates and construction costs increase. “Nobody knows the future, nobody knows what the building costs are going to be… The one thing for sure is that taxpayers are getting soaked for an extra million,” Lacy said in an interview with The Times-Independent.
Melissa Byrd, chair of the Grand County Board of Education, said the possibility of the GO bond interest rate increasing is not something the board wanted to gamble on. “The board didn’t want to wait; by the time we go to an election we wouldn’t know where the GO bond would be. With an LBA we know right now…with a GO bond we wouldn’t be able to lock in a rate until next November,” Byrd said.
When asked why the matter couldn’t have been put on the 2018 ballot to be voted on this year, Byrd responded that tax numbers did not come in until August. Those numbers included the reassessment of business properties that allowed the school district to capture more revenue. The unexpected bump in revenue brought the district’s future building fund to a high enough level to cover the down payment on an LBA bond. “We weren’t really in that position before the tax revenue came in… we were going to stretch thin if we were going to do an LBA,” Byrd said.
When the additional tax revenue pushed the future building fund to a point where making the $2.1 million down payment was feasible, it was too late to get the issue on the ballot. Rather than delay the project and wait another year to let people vote on the issue, the board decided enough factors had aligned to make the timing right and not to pass up the opportunity, explained Byrd. The board wanted to break ground on the construction project in the spring of 2019, something that would not have been possible had they decided to wait for the next election.
For Lacy and others opposing the decision, the board’s reasoning does not make up for the fact the issue was not put before the public for a vote. Creation of an LBA is a less direct method of financing than using a GO bond because it requires that the title of the building be transferred to the building authority, which then leases it to the school and uses that money to pay back the bond, Lacy noted. He said, “it’s a lot of extra cost, a lot of layers of legal documents, just a much more cumbersome way of doing it than what it would be with the public vote.”
Lacy added that an LBA is typically used in three instances: for borrowing a small amount of money that makes the cost of holding a vote not worthwhile, when a public vote has been attempted and failed multiple times, or if there is a deal that must be made in a timely manner. Lacy argued that the middle school situation does not fit any of those three instances. Members of the school board contend the possibility of rising construction costs and increased interest rates makes this a time-sensitive issue.
In a message addressed to the community and posted on social media, school district Superintendent JT Stroder wrote a response to some common arguments against the board’s decision. Stroder’s message addressed the cost of the two types of bonds, claiming that a GO bond could be more expensive than the LBA route. “If the Federal Reserve meets and raises rates like they are expected to over the next year, at least three times, then this Local Building Authority Bond will actually be less than a GO Bond would be in the next 1-3 years,” reads the post. Stroder added that typically, construction costs don’t go down. “Projected costs on building three years down the road increases the costs to around $3 million.”
Along with Lacy, local resident Dwight Johnston has placed himself at the forefront of the group pushing the petition. “Major building projects have always gone in front of the voter, and they should be now,” he said. “It’s critical we all have a right to vote on it.” Johnston argued putting the matter to a vote would force more careful and frugal planning from the board and district staff. He gave the example of financing the current high school, the bond for which initially failed to pass a vote. But when it came back a few years later with a lower cost, it passed. Johnston worries that in their goal to improve education, the board is prone to thinking that no amount of money is too much. Johnston questioned the narrative that the board didn’t have enough time to put the issue on the ballot. “They could’ve gotten it on the ballot; it was a conscious decision not to because they were nervous about it passing,” he claimed.
Stroder responded to worries over a lack of representation by arguing that because the decision was made by board members who are elected officials, the voters are represented even if it is not through direct input on the issue.
Another concern raised by Johnston and Lacy is whether the middle school should be remodeled or rebuilt. Johnston argued, “We never have had an honest comparison of [remodel] costs versus building a new one.” Byrd contested that idea by describing the assessment process. She said the board got a consulting team employed by the Alpine School District to do the assessment pro bono. The board was confident in the assessment’s accuracy because the team was highly experienced and had “no skin in the game.” That assessment found a remodel would cost 75 percent of a new building and only extend the building’s lifespan by 15-25 years. Lacy claimed the assessment included highly expensive earthquake safety measures that are not required in the Moab area. He said it was his understanding that the inclusion of reinforcements for seismic activity led to a much higher price tag than what was realistic.
Johnston also claimed that the district has for years diverted maintenance funds into savings for a new building. He partially blamed the building’s dilapidated state on that decision and said it was unfair to the voters to not make that clear. “They did zero maintenance for six years and they’ve also upped our taxes every year,” said Johnston.
If Grand County residents would like to sign the petition, it can be found at over 30 businesses around town including Dave’s Corner Market, Moab Frozen Yogurt and the Grand Rental Center. The petition must be done by Nov. 24. Those with questions can contact the district office at 435-259-5317.