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| North Lakes Academy building plan for 2009 on hold |
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| Tuesday, 24 November 2009 | |
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Cliff Buchan News Editor Plans to construct a new North Lakes Academy school in Wyoming may be on hold, school officials confirmed this week. For months the school has been progressing with plans to build a new school in Wyoming that would serve students through high school. A fall 2009 construction start was envisioned at one point, but school officials now say that goal will not be met. Jackie Saunders, NLA director, said the school is weighing options that could result in the new high school being constructed in stages and not at one time. Work could still begin in the coming months in an effort to open a partial school in Wyoming next fall as originally planned. Saunders said a series of factors have contributed to the decision. Saunders also confirmed this week that the Minnesota Department of Education, the school’s original charter sponsor (now called authorizer), did not look favorably on the building and bonding plan at this time. “I respectfully disagree with some of their comments,” Saunders said of the report sent to NLA on Nov. 13 by Chas Anderson, MDE deputy commissioner. In general, Anderson’s letter said the MDE believes “it is not in the best financial interest of NLA or taxpayers to proceed” with a bond offering and “cannot support NLA’s efforts in this regard.” Saunders, in response to the Anderson letter, said she felt the MDE was premature in its criticism of the NLA plan. Many of the MDE concerns are now in the process of being addressed and the MDE was to be updated soon, she said. Saunders said a NLA facilities team will address building options early this week. The options include a plan to construct a building to house students in grades 9-12 by the fall of 2010. Saunders said the school expects enrollment of 175 to 200 students in the top four grades next year. “We know we definitely want to go forward with building next year,” Saunders said. Construction of a middle school could follow later, she said. Wyoming role The building plan to date has been in concert with the city of Wyoming. The city has reviewed plans for the 37,000 square foot school to be built on land south of the Fairview Lakes Medical Center hospital campus. The site is in the new development area west of US-61 and near the new location for Xccent, Inc., now under construction. The city council earlier voted to serve as the conduit for the issuance of $7.8 million in Series 2009A bonds and $375,000 in Series 2009B bonds. The bonds would be for the purpose of acquiring, constructing, installing and equipping the new school. The bonds are to be backed by state charter school lease aid provided under state law. With the report from the MDE in hand, Mayor Sheldon Anderson said the city council may take a second look at the project. He said the council awaits a report from City Attorney Mark Vierling. “I’m deeply disappointed,” Anderson said of the possibility that the school construction plan may be delayed. “I thought it was going to be good for the community.” Saunders said the school is in no way backing away from its plan to move from Forest Lake to Wyoming, but is reacting to circumstances. “The bond market was such that we couldn’t start this fall,” Saunders said. “Investors want to make sure they are making a good investment.” MDE comments The MDE comments, sent to the city of Wyoming via its legal counsel last week and were obtained by the newspaper. In the letter to Saunders, Anderson said the MDE was not given adequate time to comment on the building plan and that the department should have been notified earlier of the school’s intent to proceed. The MDE identified a series of concerns with the NLA plan. They are as follows: •The NLA has a general fund reserve balance of only 2.79%; best financial practices indicate a charter school or school district should hold at least a 10 percent general fund reserve balance. In addition, given the recent delay of state aid payments by the state, NLA should be working toward a plan to establish a general fund reserve balance that is 10 percent or greater. The lack of a general fund reserve balance may jeopardize the affiliated building corporation’s ability to pay the bonds. •The interest rates in the proposed bond schedule are extremely high (9% and 12% respectively) and represent a significant cost to the school. At those rates, the affiliated building corporations will pay over $16 million in interest payments over 30 years, on principal of just under $8 million. In addition, the proposed bonds are high speculative (one is a junk bond) and thus involve a high degree of risk. •It is unclear if the school can sustain and expand its enrollment in order to meet the obligations under this proposed agreement. The assumptions in the preliminary official statement include a 2% increase in general education aid to NLA beginning in fiscal year 2012 and projects additional increases in federal education aid. This projection is not prudent given the state and federal budget deficits. Also, the proposed enrollment projection appears to be overly optimistic given that the school does not currently have a student waiting list. •The preliminary official statement misrepresents the department’s sponsorship role. The department reserves the right to terminate any contract with a charter school for just cause if necessary. The language in the document may mislead readers and potential bondholders into believing that the department will never terminate the contract before June 30, 2011. •The department will forward the language addressing the issue of property taxation of facilities leased by charter schools to the Minnesota Department of Revenue for further comment and review. NLA history Now in its 11th year, Saunders said there should be no doubt that the school will continue to grow. The public charter school today is educating 290 students in Forest Lake — 170 students in grades 5-8 at its main facility at 255 NW 7th Ave. and 120 students in grades 9-11 at its newly leased facility in the McCullough office building, 308 SW 15th St. At its new campus in Wyoming, Saunders said she expects NLA will grow to total enrollment of 450 students in grades 5-12. Saunders said the school will ask to delay its bond closing scheduled for the second half of November. She remains confident, however, that the school project will move forward, once building options are refined. The project is affordable and doable, she said. “The bond people said we could (afford it),” Saunders said. Social Bookmarking ...       |
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