School District Debt is Focus of Presentation to City Council

A team representing Vernonia School District 47J, including representative from the state,  county, the Governor’s office and the School District,  made a presentation to the Vernonia City Council at the July 7, 2014 City Council Meeting.

The presentation focused on the current financial situation of the School District.  According to members of the team, the District has over $5 million in long term capital construction debt, with annual payments of over $500,000.  The presentation included a request that the City of Vernonia forgive over $100,000 in debt the School District owes the City.

Aaron Miller introduced himself to the Council as the new Superintendent of the District as of July 1.  Miller told the Council he would like to work together and move forward.  “I think the relationship between the District and the City is a critical piece as we continue to move forward and revitalize our community after our natural disaster,” said Miller, referring to the 2007 flood which damaged all three schools and large parts of the rest of the community.  “I think we still have a lot of work left to do, but its good work and I think we are headed in the right direction.”

The total long term debt includes two loans the District still owes on the old middle school building totaling $887,577.  The District is scheduled to make an annual payment of $25,565  through 2022 and a second annual payment of $78,950 through 2024 on those two loans.  There are three  outstanding loans on the new school construction: An initial QSCB Construction Loan with a balance of over $2.8 million that includes annual payments of $206,538 through 2027; an Energy Construction Loan through the Cool Schools program with a balance of $970,035 and annual payments of $84,324 which also runs through 2027; and a second Cool Schools Loan with a balance of $1.237 million with annual payments of $106,152 through 2029.  In addition the School District owes the City of Vernonia for System Development Charges (SDCs).  That debt has a balance of $106,290 with an agreement for the District to pay $37,036 annually through 2016.

It was pointed out later that the Cool School Loans helped pay for installation of energy efficient technology in the new school, including the pellet stove heating system, solar panels and radiant heat flooring.  Although these technologies initially added expense to the overall construction project, those costs will be recovered through energy savings over time.  The district also received $1.1 million in grants from the state which helped pay for the installation of some of those technologies.  Because of the installation of those technologies the District has applied for both LEEDS Platinum and Green Globe certification.  Both certifications allow the district to approach corporations and philanthropic foundations for grant funding; the Green Globe certification is especially important to timber companies.

John Donovan, a Senior Vice President at Metropolitan Group and the chief fundraiser for the capital campaign for the new school construction project, addressed the Council next. Donovan informed the Council that even though the new school has been open and operational for two years, there is still approximately $5 million in construction debt that needs to be retired.  Donovan told Council that the District is looking at several federal and state grant funding opportunities and continues to pursue private philanthropic and corporate funding as well, including a ‘Timber Campaign’ that includes conversations with Wauna, Stimpson, Hampton and others.  Donovan also mentioned the continuing partnership with the community and noted a recent success as Hands On Art was a awarded a grant from the Miller Foundation to purchase sound equipment that will be used at the school campus as well as be available for use by the community for local events.

Senator Johnson addressed the Council next.  Johnson reminded the Council that the job that was started in 2007 is not finished.  “All of us feel an ethical, moral and financial commitment to finish this job,” said Johnson,  “and not just finish it by having the doors open, but finish it by tidying up the financial issues.”  Johnson explained to the Council that the current annual payments being made by the District to discharge the un-retired debt is hampering fundraising efforts.  “Getting donations to fund debt is very, very difficult,” said  Johnson.  Johnson explained that the team working on this issue and is looking at all possible ways to “pick away”  at the debt amount.

Johnson explained that she recently had a conversation with the State Treasurer about the possibility of restructuring some of the loans and gave the Council a handout with information about that conversation.  Johnson also told the Council she had personally paid for a study to look into the feasibility of developing a larger wetland on the old mill site which could be used as a wetland mitigation bank and become a revenue source for the City.  Johnson provided the Council with an executive summary of that study.  “The reason I bring this to you is I want you to know that all of us on this team consider this one of our highest obligations and we have to get this concluded.”

In the spirit of working together, Johnson made a request that the Council forego the $106,290 balance on the SDCs the District owes the City.  “This would be a tangible demonstration to foundations that this partnership is real and vital and would give us a chance to begin to pay this down in a way that foundations would look at favorably,” said Johnson.

SDCs are one-time fees assessed on new development that help fund specific types of public infrastructure and offset the cost to the City to facilitate new development.  The Vernonia School District incurred SDCs for Water, Sewer, and Storm Water.  The City and District reached an agreement in 2012 on a total  SDC amount of $261,144 with credits given by the City of $121,985,  which included eliminating SDCs for Parks and Streets because of work the School District was to complete, leaving a balance of $139,159.  The District agreed to make annual payments of $36,000 which included an annual interest rate of 2.25%.  The District made a single payment on June 1, 2013.  The payment due on June 1, 2014 is past due.

Johnson concluded her remarks by stating, “Not a day goes by that our partners are not thinking about ways to close the books on this capital campaign and then turn our attention to funding the other promised amenities at the school, which include ball fields, enhanced curriculum, and additional technology.  Those are all still promises.  But we also still have the Senior Center and the Health Center which call out for additional financial support.  We will do anything we can to help fulfill our promise to the citizens of Vernonia.”

Mark Ellsworth followed Johnson in addressing the Council.  Ellsworth works for the Office of the Governor as a Regional Solutions Coordinator for the North Coast region.  Ellsworth has acted as the Governor’s representative to Vernonia since 2007 and has been instrumental in the Oregon Solutions process that helped find funding for the school construction project.  Ellsworth reminded the Council that the decision to rebuild the community was a choice and that the commitment is still there to work with the city and provide resources.  Ellsworth noted that Vernonia has been a model for how recovering communities interact with local schools, and with state and federal governments.  “We brought talent,” said Ellsworth.   “We brought an Oregon Solutions Process and expertise from state agencies.  The Governor wrote an Executive Order directing work for Vernonia.”

Governor Ted Kulongoski signed Executive Order 10-07 “Rebuilding Vernonia’s Schools and the Surrounding Community in the Wake of the December 2007 Storm” in August of 2010.  The order instructs state agencies to work collaboratively with Vernonia and take actions to facilitate the reconstruction of the schools and public infrastructure.

Ellsworth told the Council he has never seen a response like he witnessed in Vernonia.  “That commitment is still here,” said Ellsworth in closing his remarks to Council.  “It doesn’t waver.  We don’t have many meetings that Vernonia is not at the top of the agenda. This partnership [between the school district and the city] is important – how we work together and solve these problems.  We still have a hill to climb.”

Columbia County Commissioner Tony Hyde was the final speaker to address the Council and reminded them that Governor Kulongoski gave the Executive Order and that Governor Kitzhaber extended the order.  Hyde told Council that he has been making presentations around the country about community resiliency and disaster recovery.  “This project is second to none,” said Hyde.  Hyde told Council that Vernonia has set the tone and created a model for the rest of the country.  “We should all be celebrating where we are headed,” said Hyde.

Later during the meeting, Council discussed the presentation and the request to waive the SDCs.  Council agreed to review the request and discuss it again at their next Council meeting on July 21.