Dallas school officials want to issue bonds for new or improved buildings – with a twist. They’re not interested in asking voters for a bond package. Instead, they want to create a corporation that would issue the bonds. The school board discussed this Thursday night and KERA’s Bill Zeeble reports the idea has some pluses and minuses.
A PFC is a public facility corporation. Housing authorities typically use it to issue construction bonds for low income housing and properties. But about 15 years ago, the Texas legislature allowed school districts to use them, too -- and 17 have.
Mick McKamie knows PFCs. The San Antonio attorney has worked with cities and their housing authorities for decades. He says PFCs have distinct advantages.
“You don’t have to wait for elections, you don’t have the cost of the election and you don’t run the risk of the public voting against the entire issue," McKamie said.
A bond vote carries the cost of a months-long campaign and the election. Then, approved projects wait years before construction even starts. But a PFC has its drawbacks. They cost more than voter-approved bonds and aren’t guaranteed by the Texas Permanent School Fund. They’re paid for by the district’s operating funds. Dallas ISD chief finance officer James Terry is not concerned, saying it won’t stress the budget.
“I want to make sure this district does well in the future and so I don’t think that this is something we have to be worried about,” Terry told trustees. “I think that we can handle it.”
Superintendent Mike Miles says Public Facility Corporation bonds offer a timely strategy for a district with so many needs. If the board creates the corporation, bonds would raise $172.5 million.
“This is what the administration says we need short time, in the next year or so, in order to keep our main facilities going and to jump start our strategic long-term goals of early childhood and school choice,” Miles said.
A PFC has champions on the school board, including trustee Mike Morath. He says acting now would lock in low interest rates and construction costs that would rise if the district waits for a voter approved bond package. He joined the meeting by phone from out of state.
“And if this thing is actually cheaper than the alternative and it helps kids today then I don’t see any reason why we wouldn’t jump for joy and execute this thing immediately,” Morath said.
Trustee Dan Micciche is more cautious. While he praised the district’s finance staff for coming up with a route to fast cash, he wasn’t convinced.
“So much of this stuff doesn’t need to be done on the run,” Micciche said. “That’s the feeling I’m getting with this complicated financial project.”
Board member Joyce Foreman doesn’t like the PFC either. She helped promote the past two DISD bond packages worth more than a billion dollars each, so she isn’t opposed to big dollar bonds for schools.
“I can tell you we’ll always have needs, whether we do this or not," Foreman said. "What I do know is we have to be prudent in the way we talk about spending the tax payers’ money.”
For now, Foreman would do nothing and wait. The idea will be discussed again in a few weeks.