SHELBY – The Shelby City Schools District is attempting one last Hail Mary to build a new Pre-K through eighth grade building in the district.
After failing three times in 12 months to pass a bond issue in the district to fund a new facility, Shelby City Schools has one last option to build a new building without needing any additional taxpayer money.
The Ohio Facilities Construction Commission (OFCC) is still considering funding half of a new building in Shelby if the district can come up with their half - which could be possible thanks to the Rover Pipeline.
According to Superintendent Tim Tarvin, due to the fact the Rover Pipeline revenue was confirmed by the proper taxation authorities in January, the OFCC has put Shelby on the short list to receive state funding when it becomes available.
"Now, because we have received the first year's tax settlement from Rover Pipeline money, the OFCC sees that, and that's what may qualify us to receive our 50/50 funding share," Tarvin said.
Through a financial package from the district plus Rover Pipeline revenue, Shelby City Schools is able to contribute $16.8 million towards the total $33.6 million needed to build a new Pre-K through eighth grade facility. However, nothing is guaranteed yet - the plan is contingent upon the OFCC receiving more funding from the state, and whether or not the OFCC will prioritize the Shelby building project.
The fate of a new building within the Shelby City Schools district will be determined in the coming months.
HOW WE GOT HERE: On Nov. 6, 2018, voters in Shelby failed for the third time to pass a bond issue that would've built a new pre-kindergarten through eighth grade building in the district. Unofficial final results from the Richland County Board of Elections showed the bond issue earned 54.48 percent of votes against the issue, and 45.52 percent of votes for the issue.
Shelby voters rejected the district's first attempt at passing a levy to build a new school and a new football stadium on the Nov. 7, 2017 general election. The issue was presented again with the football stadium at the May 8, 2018 primary election, and rejected again.
The issue on the ballot Nov. 6 was a 2.8 mill, 37-year bond issue that would have cost Shelby voters $10.2 million. If passed, the bond issue would have funded a 132,000 square-foot building for Pre-K through eighth grade students that would be designed to keep the primary, intermediate and middle school grades located in separate wings.
A new pre-kindergarten through eighth grade building would combine the student populations of Dowds Elementary, Auburn Elementary and Shelby Middle School. Auburn Elementary was built in 1948, Dowds Elementary was built in 1956, and Shelby Middle School was built in 1965.
Traditionally, there are two ways to finance a school construction project via bond issues: one is to pass a bond issue where the entire cost becomes the responsibility of the citizens who live within that school district; the other is to pass a bond issue that enters into a partnership with the OFCC and shares the cost with the state of Ohio.
The Shelby Board of Education confirmed at their Oct. 22, 2018 meeting that any revenue collected from the Rover Pipeline would be used towards the retirement of the bond issue, if it had passed. Because of the fact that the Rover Pipeline project occurred through the Shelby City Schools district, the board expected the district to receive additional public utility property tax revenue from the project beginning in 2019. The exact dollar amount that will be collected by the district was unknown at the time.
After the bond issue was defeated for the third time in November 2018, the Shelby City Schools district received its first payment of $1 million in tax revenue from the Rover Pipeline. According to Treasurer Elizabeth Anatra, the full valuation of tax revenue from the pipeline won't be realized until next year. But for now, it was enough to prove to the OFCC that the district would be able to fund its half of the building project without asking the voters for any additional money.
"It is important to understand this solution was not available prior to November 2018," Tarvin explained.
The cost to build a new pre-k through eighth grade building would be $33.6 million total, with the state paying $16.8 million. The bond issue proposed the Shelby City Schools district contributing $6.6 million towards the project and voters would pay the remaining $10.2 million. Now, the district is still committed to contributing $6.6 million, but the $10.2 million would come from Rover Pipeline revenue generated over the next 30 years.
The cost breakdown would be as follows:
• $2 million from the district's general fund
• $1.6 million in local funded initiatives (LFI) money left over from the high school construction project
• $3 million of bonds borrowed against a continuous permanent improvement (PI) levy
• $10.2 million in Rover Pipeline money generated by the district using certificates of participation (COPS)
The district would borrow the initial money using a lease agreement, where the lease company would be a nationally recognized bank, which would act as a trustee. The district would then make payments towards the lease agreement over 30 years.
WHAT NEEDS TO HAPPEN: Currently the Shelby City School District is on a short list with seven other districts to receive funding from the state for a new building. The OFCC has indicated they are open to funding Shelby's project without the district passing a bond issue.
However, the OFCC first needs to find the funding to hold up their end of the bargain.
"The issue is, the OFCC budget is pretty much depleted," Tarvin explained. "There have been so many communities that have passed bond issues in the last few years, there's not enough money in the OFCC budget to fund all those schools."
One domino that needs to fall is the passing of Senate Bill 4 in the Ohio legislature. The bill, which determines capital appropriations for school facilities assistance, passed the Senate on March 13. If passed in the House, the bill would give the OFCC $100 million to fund school facility projects.
"The hope of the other districts and the OFCC is the governor will also include money for the OFCC in his biannual budget," Tarvin said.
If the funding for the OFCC is approved, it's still not a guarantee that Shelby's project will make the cut. The OFCC will then determine out of the eight schools on its short list, which districts will be prioritized to receive funding. Of the eight schools on the list, Shelby is the only district that did not pass a bond issue.
"And there could be districts on the ballot in May that pass a bond issue and leapfrog all eight of the schools on that list," Tarvin said. "We don't know where we'll end up on that list with regards to OFCC priority."
Through conversations with the OFCC, Shelby expects them to make a decision in May as to which districts will receive funding. After that, the decision will go to the OFCC's larger commission in July.
WHAT HAPPENS NEXT: Assuming the OFCC receives enough funding to complete its projects, and assuming Shelby City Schools is chosen to receive OFCC funding to supplement money from the district and Rover Pipeline income, the district could finally move forward in building a new facility at no additional cost to Shelby taxpayers.
But the question surrounding three failed bond attempts lingers: Just because the district can build a new building, does that mean they should?
"That's probably the most difficult thing when we're considering what we're going to do," said board member Lorie White, who just finished a term as board president. "You try to analyze each time through this why people are saying no."
White noted the proposed building plan has been altered numerous times in the last two years: for example, the community voted against the plan because of the location of a stadium rebuild; then, the community decided they didn't want a stadium to be part of the proposed plan at all. As a result, the current iteration of the plan only involves building a new Pre-K through eighth grade building.
Now, White has to determine whether the community voted against the bond issue a third time because of costs, or because of the entire concept of a new building.
"This time we may have the opportunity to follow through with the concept, and not cost the taxpayers additional money," she said. "We're blessed to be in a financial situation where we could even consider it."
Despite possible ramifications from the public, the board of education and the administration feels an obligation to explore this last funding option partly because of the pure uniqueness of the situation. Tarvin noted the district was surprised that the OFCC had kept Shelby on the short list to receive funding from the state even after failing to pass a bond issue.
"This is uncharted territory," Tarvin said. "This is a unique opportunity being presented to the Shelby City School District and the community to build a new school with no additional new taxes because we're fortunate enough to be receiving Rover Pipeline revenue. Does that outweigh the fact that we didn't pass a bond issue?"
No official decisions will be made by the Shelby Board of Education until word on funding from the OFCC is received in May. In the meantime, the weight of the decision hangs heavy on the board.
"This is my 12th year on the board, and without question this is the biggest decision I've had to make since I've been on here," White said. "What we're going to do is going to affect the district for three decades at least, whether we say yes or no.
"At the end of the day, the final answer is, I feel like I'm trying to make the decision that's best for the district, and best for the kids."