Superintendent pursues QZAB funds

Published 9:55 am Friday, October 24, 2014

Despite a very tight deadline approaching, Superintendent Willie Bell has decided to pursue $1.8 million made available by the Virginia Department of Education in Qualified Zone Academy Bonds, which the superintendent said could help in upgrading buildings and catching up to the technology curve.

Bell was made aware the money was on the table at a recent VDOE meeting in Norfolk in early October, he announced at Monday’s Franklin City Council and School Board joint meeting. The original notification of this option being on the table would have come in November 2013, Bell said, which was prior to his appointment.

“It was just lucky that I stumbled upon it,” Bell said. “They were close to giving the opportunity to the fourth district in line to get the funds.”

With the deadline approaching by the middle of November, Bell added, “We’re going to have to hit the ground running even faster.”

QZAB is a federal program which encourages tax breaks to loaning agencies that help cover interest. It can be used by schools based on certain criteria, including a high percent of free and reduced lunch student population and the district being located in an economically depressed area. Franklin is one of three systems in Virginia that are able to receive the funds this round, including Richmond and Petersburg.

City Manager Randy Martin said he was made aware of the QZAB funds late last spring through the city and school district’s mutual financial advising firm, Davenport & Co. At the time, Martin said he was told the district was not pursuing the funds.

“I was under the impression that the door was closed on it,” he said.

“I surely did not want to leave the funds on the table,” Bell said. “They gave us an opportunity to move forward with it.”

Ward 6 representative Frank Rabil turned to School Board Chair Edna King, and he asked her if it was a decision that the school board made to not pursue the funds.

“It was not presented to us as a board,” King said. “This was the first time we were made aware of it, during Mr. Bell’s administration.”

Bell said he would like to be able to put a laptop in the hands of each student. And when that happens, it’s going to expose the schools’ wifi limitations.

“Right now, they are positioned in strategic locations where you can pick up the signal,” he said. “You add that many devices, you will need to add points.”

The bandwidth would also have to be ramped up for the district’s approximately 800 students. Bell said that as they add the laptops, for the first year or two, they would look at keeping them on school grounds, and having a laptop available in each classroom.

A QZAB wish list has been put together, but has yet to be prioritized down to the $1.8 million figure. A company also had to agree to a 10 percent match, and that company will be ABM, which recently completed a process of upgrading HVAC, lighting and other energy-efficiency measures in each school.

Some items on the technology wish list including student laptops, teacher laptops, wireless access points, Smartboards, security cameras and surface tablets.

Moving over to items deemed maintenance — but perhaps a better word for them would be capital — includes replacing some old HVAC units, auditorium lights, walk-in refrigeration systems and replacing the roof of the Charles Street Gym.

The grand total on the wish list right now is more than $2.5 million, but Bell said they would refine that and prioritize items.

Ward 2 representative Benny Burgess, along with Rabil, also asked that they consider coming up with a 3- to 5-year Capital Improvement Plan.

“I would prefer that you tell us a need,” Burgess said. “If we can’t fund it, then we can’t fund it. But we definitely can’t fund it if we don’t know about it.”

King said the school board did consider capital needs during the budget process, but did not go into as much detail as they could have after hearing about the financial “dire straights” city council was faced with.

Bell said they would have to come up with a capital improvement plan as part of this process, and it was something his advisory council would be working on.

Kyle Laux of Davenport & Company gave a presentation on how it could work, explaining that the debt incurred could be worked into the city’s existing debt service without heavy increases. At most, using conservative estimates, the potential tax impact over the next few years could be up to 5 cents per $100.

Two of those pennies are due to already existing debt. The lowest would be 3.5 cents, 2 of that existing debt, over the life of the debt repayments.

Martin said that depending on how much of a “supplemental coupon” financial agencies require, this could be hard to pass up. A supplemental coupon acts as an interest rate, as some companies may not be willing to loan the money on tax credits alone.

The next step will be a public hearing, likely on Monday, Nov. 10. Martin said a public hearing does not mean the city will accept the funds.

“If it is at a zero percent rate, or even 1 percent or half a percent, then it can make sense as a pure financial decision,” Martin said. But he added that it would still be incurring debt that may have to be balanced by a tax increase.

“The school board will still have to convince council of the need,” Martin said. “Council is going to have to be fully convinced before taking action that the need is justified.

“We need to know if this is a deal that is too good to pass up, or if there are other options. We always prefer pay as you go, unless it is zero interest money.”