The Amphitheater School Governing Board has ratified agreements with three homebuilders that combined with a previous pact will generate approximately $980,000 in voluntary school impact donations for the district by the time their developments are completed.
The agreements, ratified Nov. 12, represent promises by the Estes Co., Monterey Homes and the A.F. Sterling Co. to donate $1,200 per home at the closing of each sale to offset the impact their developments will have on district enrollments, said Todd Jaeger, Amphi assistant superintendent and the district's legal counsel.
The Governing Board had adopted a policy April 10, 2001 permitting the district to "solicit and encourage" developers to contribute voluntary "educational donations" to the district to offset the impacts of proposed developments on area schools.
The first donation made under that policy came in December 2001 when the district negotiated an agreement with Black Horse Partners in connection with the developer's proposal to build 414 homes on 180 acres east of Oracle Road between Golder Ranch and Wilds roads in Catalina. Rezoning for the project was approved by the Pima County Board of Supervisors shortly after that agreement was reached.
The developers' contributions will go into the district's gift and donation fund under an "impact donations" subaccount that can only be used for capital improvements, Jaeger said. Auditors will track the money to make sure it is spent for what it is allotted, he said.
The district's expectations of what will be raised from the program are based on the number of homes projected for construction by each builder.
The Estes Co. plans to build 170 homes west of La Canada Drive and south of Lambert Lane; Monterey Homes is planning to build 160 homes near the intersection of La Canada and Tangerine roads; and A.F. Sterling Company plans to build 70 homes in the area of La Canada and Moore roads, according to Jaeger's office.
The donations can be used "to make improvements to existing facilities or to build new facilities," Jaeger said, adding that builders have sought and received assurances that the money they contribute will be used in the areas their developments will impact.
Jaeger admitted to the board that the conditions under which the money can be used are "very, very broad." They include acquiring school sites, building on existing facilities and expanding common areas in existing facilities such as cafeterias or gyms.
"It would go against donative intent" to spend the money somewhere in the district that is not demonstrating growth, he said.
"The builder could give us permission to spend the money elsewhere," he said after the meeting, "but I don't see why we would spend it (in a part of the district) where we are not experiencing growth.
"If the district were to rescind our promise to use the money from the builders in the way the donor intended, the function of that would be that it might relieve donors of their obligation and they could demand a refund," he said.
Boardmember Nancy Young Wright said she wanted to make sure the public "did not interpret these agreements to mean that the district is cheering on higher density rezoning.
"Our role is simply to try to prepare for students - the students we have and the students we might have," Young Wright said.
There are currently only two ways the district can get the money it needs for capital improvements, and those are either through funds from the State Facilities Board or from donations, Jaeger said.
The State Facilities Board, based on restrictions imposed by Students First legislation passed in 1998, has told Amphi that the district will not need a new school for more than 10 years because it has space in its southern end.
"The State Facilities Board sees that we are not crowded in our schools in the southern part of the district and says we don't need any more space," Jaeger said. "The problem for us is that although we're growing in the north, the School Facilities Board looks at capacity on a districtwide basis," he said."They basically want us to bus kids (outside of their neighborhoods).
"We've got to find some other means of addressing the normal, logical assumption of people who are buying houses that their kids will go to school in their neighborhood and donations are the way," he said.
Boardmember Mike Prout said school funding in Arizona is "a self-help system, so we need to do all we can to help ourselves."
Since the impact donations won't be available until homes are built, Jaeger said the money "will just be trickling in."
"These developers aren't going to plop $600,000 down on the table up front," he said. "So we will just take it as we can get it."
The impact donations will have may be a Catch 22, Jaeger said, because as the district adds capacity in its northern end, the State Facilities Board might put off allocating state monies to build a school because "it will look like we have enough space even if we are still growing in the Northwest and need more room."
But Jaeger said the school district has no option because "growth is in the north."
Although the district is presenting the donation policy as a citizenship kind of thing rather than an impact fee, which the courts ruled against two years ago, some developers privately are bitterly opposed to being pressured to make the contributions.
They go along, they say, since their only other choices are to fight Amphi's policy in court or risk the likelihood that the district will be among the leaders of any protest against a proposed development.
Some say they just aren't willing to risk the outright rejection or the costly delays of continuations by the approving jurisdictions that the opposition could cause.
Prout said he hoped builders and developers don't view the donations as "blackmail."
"I hope they don't because that isn't the intent," he said. "Schools help their sales - the real estate agents list school sites on their listing sheets; that information is right up there with the number of bedrooms and bathrooms. It draws people to the area if you have good schools, so as we go down this road, I think (developers) will see it as a benefit."
Chris Sheafe, partner in Black Horse Advisers, developers of the Catalina subdivision, agrees.
"The quality of schools is a top priority of our homebuyers, so I don't think it's too much to ask that we contribute toward those schools as long as what's being asked of us is fair and it's not just the new homeowner who will be paying," Sheafe said."Contributions must be such that they don't unfairly burden the new homeowner."
Allan Lurie, president of the Southern Arizona Home Builders Association, said the voluntary contributions members make is an aspect of their business the association stays out of, figuring those decisions are being made based on what is best for those companies. "They're entirely on their own here," he said.
REFINANCING BONDS SAVES DISTRICT MONEY
by Rene Schafer Horton
The Amphitheater Public Schools Governing Board at its Nov. 12 meeting unanimously approved refinancing bonds worth up to $72 million if the district financing team can demonstrate at least a 2 percent savings to taxpayers. In addition, the board said, those savings must represent at least $260,000 in today's dollars after refinancing costs have been paid.
The board's financial advisers estimated that Amphi will realize a savings of more than $1.2 million from refinancing the bonds.
Amphi is currently servicing nine bond issues, four of which can be refinanced now to take advantage of low interest rates, according to Bryan E. Lundberg of the investment banking firm Peacock, Hislop, Staley and Given, Inc..
The firm is part of Amphi's financial team for the refinancing of bonds from the school bond project voters approved in 1994.
The refinancing will cost the district less than 1 percent of the principal amount of the bonds qualifying for reissuance, or approximately $720,000, according to Lundberg.
That money will cover professional fees and the 1 percent redemption premium paid to current bond holders for paying off their bonds early.
However, there will be no up front costs to the district, Lundberg said, because the costs get paid out of the sale of the new bonds. The lower interest rate on the new bonds "will be sufficiently low enough to overcome the cost of the bond issue, the professional fees and still show a return of at least 2 percent savings," he said.
Jim Geil, Amphi's bond counsel, said the benefit to taxpayers "will be the savings we can demonstrate on interest on future taxes that won't have to be levied because we have swapped expensive debt for lower-cost debt."
Because the money the district owes to the current bond holders is guaranteed, if it borrowed the same amount - $72 million - at today's lower interest rates, the district would end up short on what is owed to current bond holders.
Therefore, the district will have to borrow up to $83 million, Lundberg said, to make up for the shortfall. That money will be used to buy new bonds at lower interest rates and pay off the principal and interest on the recalled bonds, helping the district realize significant savings.
After a detailed presentation by Lundberg and colleague James L. Stricklin, Boardmember Nancy Young Wright asked what other school districts were doing concerning bond reissuance.
"The 30 year-historic lows (in interest rates) have caused a lot of (school districts) to go out and refinance and then try to refinance again," Stricklin said. "The only interesting trend that I'd like to point out is that in the 80's you might have seen a 5 percent savings schedule, in the 90's, a 3 percent savings schedule, and now in 2000, you're seeing a 2 percent savings schedule… (therefore) the (savings) differential between the old rate and the new rate is not quite as much as it used to be."
Other restrictions put on the district's financing team, in addition to the 2 percent savings parameters, included not increasing the district's secondary tax rate and making sure the district's ability to issue Class B bonds in the future is protected.
Class B bonds allow the district to borrow money but greatly restrict the way that money can be used. They came into existence after the Students First legislation was passed in 1998 in an attempt to eliminate inequities between school districts in Arizona.
Boardmember Mary Schuh wanted assurances that the secondary tax rate would "either stay the same or go down in order to meet the refunding and refinancing of these bonds."
Stricklin said the assumption is that the district, through the bond refinancing, will be able to maintain or lower the tax rate and pay back the debt quicker "as opposed to maintaining or lowering the tax rate and paying it off later."
It is possible to lower the tax rate simply by increasing the duration of the bonds.
Stricklin clarified questions on what the money saved could be used for by explaining that the refinancing "keeps us from spending the taxpayers' money unnecessarily. It doesn't create a pot of money for us to spend."
Bond counsel Geil of Lewis and Roca said "it is likely" the bonds may be reissued within two weeks "if the interest rates hold and parameters can be met."
In other action, the board approved without discussion a number of consent items, including authorizing Amphi Superintendent Vicki Balentine and Amphi legal counsel Todd Jaeger to take actions deemed necessary by them to defend a lawsuit brought against the school district by Peter A. Chen Sept. 6.
Chen was an Amphi special education teacher at La Cima Middle School in 2000. According to court records filed with Pima County Superior Court, Chen claims that his career ladder mentor "exhibited extreme and unwarranted hostility against" Chen and that this behavior was racially motivated.
Chen also claims that during his employment at La Cima he discovered that the school district was not in compliance with federal and state guidelines concerning special education.
Amphitheater declined to renew his contract in 2001 and Chen claims in his lawsuit that decision was both racially motivated and a result of his being a "whistle-blower, that is, that he made public complaints and complaints to appropriate agencies of the school district's non-compliance, for which the school district retaliated."
Chen is suing for wrongful termination and violation of his civil rights.
The school district, in its response to the court, denies all allegations by Chen.
Additionally, the board:
Voted to ratify Balentine's execution of agreements with home developers concerning voluntary school impact donations (see related story).
Approved 4 to 1 renaming Amphithe-ater Middle School's football field Cirelli Field after John Cirelli, a teacher and coach at Amphitheater Middle School for the past 31 years.
Schuh voted against the proposal, saying after the meeting, "I want to take personalities out of district facilities. I don't think tax-paying entities are there for the glorification of personalities (and) how can we pick one person over another when there are many teachers who've been here 30 years?"
Approved the reapplication of the Career Ladder program. Career Ladder is a pay-for-performance incentive plan for teachers designed to keep them in the classroom rather than leaving teaching for higher paying administrative jobs.