Following a presentation by Ardmore City Schools superintendent Sonny Bates and attorneys hired by the school district, the Carter County Public Facilities Authority approved a motion Monday morning, incurring the school's indebtedness.
Confusing as it may sound, the principle behind the decision is simple. Rather than incur the debt itself and face restrictive construction timelines because of availability of funds, the school district looked to the authority to incur the indebtedness. Going through the county will not put any financial stress on the county. The property tax, passed in May, will only affect property owners within the school district. Bates said going through the county authority will allow the district to receive its funding through bonds by November, according to its financial advisors.
"Our limit for indebtedness is 10 percent, which means we can only get a small portion of the money," Bates said. "Going through the county, this will speed [the projects] up by about four years. Our longest project is Jefferson Elementary, which will last 18 months."
Bates said an additional benefit to going through the authority is the money will be kept separate from school funds to better ensure transparency to the public.
The Carter County Public Facilities Authority is comprised of the county commissioners, and the meeting was held prior to Monday's commission meeting. Commissioners Dale Ott and Joe David McReynolds approved the motion, and Kevin Robinson voted against it. Robinson was concerned by a couple of issues regarding the language on the agenda item, most notably regarding a reserve fund. J.C. Leonard, McDonald & Associates said the reserve fund was in place to make sure there was a contingency plan should the school need to weather a financial downfall in service payments through the tax.
Robinson was also concerned the reserve fund could be open-ended, and did not have language to the contrary. He also said he would like to see a bonding document prior to voting for the issue. The reserve fund would hold $2.1 million, and Leonard said the Internal Revenue Service does not allow a reserve in excess of $10 million.
Leonard made assurances to the trustees the wording will be to their satisfaction, and District Attorney Craig Ladd also wants to see a copy of the document.
"All the terms will be defined," Leonard said.
During the commission meeting, a resolution approving the trust action passed on a 2-1 vote as well. As part of the commission's yearly routine, the position of chairman changed hands, with Ott assuming the position for the new fiscal year.