Cedar Rapids schools deliver on sales tax promises

The Cedar Rapids school district made a lot of promises to voters in February 2007 - $125.4 million worth.

The promises concerned how it would spend a school infrastructure local-option sales tax over 10 years if voters approved it. At the time, only Linn and Johnson counties did not have the tax.

Voters did approve the SILO tax, and the promises made, district officials say, will be kept - in addition to constructing a $35 million administrative office building on Ellis Road NW to replace school buildings damaged in last year's flood.

“The district remains in the planning and the implementation stage for all of those projects,” Superintendent Dave Benson said. “I take very seriously the charge of my predecessors and the commitments that they made. We will carry those out.”

The district can complete both the original SILO projects and its new building because of a change in state law.

After Linn and Johnson voters approved a SILO tax in 2007, state lawmakers in 2008 made SILO a statewide sales tax through Dec. 31, 2029. That additional 12-year cushion will provide the money for the new Cedar Rapids school office

building - with one twist.

The district had planned to complete its SILO projects without incurring debt. Then the flood hit.

“The scope of the damages was so great, we had to take a look at the paradigm and decide if whether or not it was appropriate under the circumstance,” said Steve Graham, district executive director of business services.

The district will borrow

$35 million for the new office building at 2933 Ellis Rd. NW, with completion scheduled in January 2012.

The debt will cost $31.7 million in interest, with the loan to be retired in 2029.

The Federal Emergency Management Agency is providing $12.5 million toward flood reconstruction. It also is paying for the temporary office modules the district is using at Kingston Stadium.

After the flood, Graham said the district - with other SILO-funded projects already in progress - couldn't wait until it had enough SILO money in the bank to replace its flood-damaged buildings. Also, if the district couldn't complete restoration of flood-damaged facilities by May 27, 2012, it

ran the risk of forfeiting

FEMA and state recovery assistance.

Because of this, district officials and the school board decided to borrow money.

“Looking at all of the issues, the best direction was to tap into the future revenues and to maintain the promise to the voters, to proceed with projects without delay but to also provide flood recovery,” Graham said.

The district receives about $23 million a year in sales tax revenue, which will drop to about $15 million a year in the 2012-13 school year.

Linn and Johnson schools, in a special deal with the state, were allowed to keep all the sales tax proceeds for the first five years of the tax. They begin sharing the sales tax income with less retail-rich Iowa counties in 2012.

The district anticipates having an uncommitted $133 million in sales tax revenue for additional infrastructure projects through the life of the tax. The tax funds can be spent only on infrastructure and cannot be used for salaries or school operations.