Higley district looks to lease new schools to handle growing enrollment - East Valley Tribune: East Valley Education News

Higley district looks to lease new schools to handle growing enrollment

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Posted: Tuesday, August 21, 2012 12:19 pm

The students keep arriving at Gilbert’s Higley Unified School District.

Soon, district leaders say, they’ll have to answer the question of where to put them.

More than 400 additional students are on Higley’s 10 campuses compared to this time last year.

Superintendent Denise Birdwell said that trend will continue. If projections come true, six campuses will be overcrowded by August 2013.

Voters in the Higley district approved bonds to fund construction of two new campuses in 2006. But with the decline of the economy and property values, the district lost the ability to spend those bonds.

Legislative action could have changed that last year. But lawmakers never let the plan go to a vote.

So Higley is getting creative, taking a page out of construction funding that’s used at the university and state levels in Arizona, and in the education arena across the country.

It wants to lease buildings — new schools, designed by the district for the district.

But first, Higley needs permission to lease beyond the five years now allowed in statute.

To go beyond that limit, district schools in Arizona must get voter approval. So that’s why, on the Nov. 6 ballot, Higley voters will see a lease question.

And with a plan to lease buildings, that’s also why voters will see a capital outlay override on the ballot.

The first question allows the district to sign a longer lease — which shows the district has “financial fortitude,” Birdwell said. The second question will help pay for the lease.

If everything falls into place, the district will have new middle schools by August 2013 on two pieces of land it already owns, one each on its northern and southern ends.

The land will be leased to a nonprofit company, which — using funds it secures through the sale of bonds — will build the schools. Those schools will then be leased back to the Higley district.

At the end of the 30-year lease, the nonprofit group turns the campuses and the land over to the district.

Several examples of this are already in place, including in the East Valley, said Gary Aller, president of Educational Facilities Development Services, which formed last year to help education and health-care entities fund new buildings. At Mesa’s ASU Polytechnic new student housing is currently under construction.

“The universities have done probably a billion dollars worth of student housing using this methodology,” Aller said.

One of Aller’s founding partners worked on that deal, he said.

The state has other projects, as well. The latest were the Arizona Fish and Game headquarters and the buildings and parking structures for the Arizona Department of Environmental Quality and the Arizona Department of Administration.

Aller’s company plans to work with Higley.

“I think it’s good for everybody. It doesn’t put any burden on the state. It doesn’t put any additional asset value on the district or debt on the district. So if property values come back up, they can still issue bonds. They can even use the money from a bond issue to pay off the lease and take the buildings,” he said. “I think it’s going to be a tool we’ll use into the future to solve social problems we’re having.”

Chuck Essigs, longtime school funding expert in Arizona and the government liaison for the Arizona Association of School Business Officials, said Higley’s drive to find financing for school construction is also “an indication of the funding problems in Arizona.”

Key to the issue, Essigs said, is that school districts’ bonding capacities were cut in half in 1998 when the state settled a court issue surrounding school capital financing. The courts ruled that it was unfair — and unconstitutional — that bonds were used to fund school construction because districts of lesser wealth were not on an even playing field with other districts.

The state took over school construction and maintenance with the School Facilities Board.

“The idea is you wouldn’t need the bonding capacity you had. The Constitution still allows bonding to be twice what it is, compared with the law. But the state’s idea was, ‘We’re going to build new schools and give out hundreds of millions in building renewal funds to keep buildings in good condition.’ But that source of revenue has dried up,” he said, putting the burden back on the districts.

Higley’s Birdwell believes her district’s plans for school construction could impact districts across Arizona.

“If it works as smoothly as we hope it goes, it could change the way schools are financed in the future,” she said.

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