Economy delays rebuilding plan for Cleveland city school district
CLEVELAND (AP) — The city schools’ extensive rebuilding plan may face further delays as the district has trouble borrowing money to start construction.
District officials canceled a plan to borrow $70 million by selling bonds after advisers warned of high interest rates or the possibility some investors might not bid.
The Ohio School Facilities Commission, which is helping pay for the construction, requires local dollars to be in place before it provides state money.
“We’re not going to panic,” said James Fortlage, the district’s chief financial officer. “We’re monitoring the markets. We’ll go forward when the timing is right.”
Attracting bidders is not impossible but will require precise timing, said Mike Sharb, a public-finance lawyer with Squire Sanders & Dempsey in Cleveland. The market’s mood swings daily, he said.
“Things are getting done,” Sharb said. “But people are picking their spots a lot more carefully.”
Cleveland school officials are weighing alternatives, including negotiating a no-bid deal with investors.
The district has planned a $1.5 billion construction project to wrap up in 2015. The state is expected to pay for two-thirds of the massive building and renovation plan.
Because of the credit crunch, state and local governments across the country are having trouble raising capital, the Government Finance Officers Association said in its October newsletter.
In North Carolina, Wake County manager David Cooke says the county has enough money to wait to borrow but long-term problems could delay construction of schools or libraries.
Ohio educators accustomed to the difficulty of passing school funding issues are already bracing for a long day Nov. 4. They say economic turmoil during this election is making levies and bond issues an even tougher sell than usual.