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Tuesday, June 27, 2017

Is the Hoover petition legally valid?

This week the board received a legal opinion from the district’s lawyer about the petition to put the demolition of Hoover Elementary on the ballot. This purpose of this post is to discuss the issue, summarize the opinion we received from the district’s lawyer, and explain why I think the issue needs more consideration.

Too-long-didn’t-read version: A close look at the legislative history of the relevant statutes shows that voters can validly petition to put the demolition of a school building onto the ballot. Moreover, the contrary interpretation would apply not just to voter petitions but also to school board decisions, leading to the (absurd) conclusion that no one—not even a school board—has the power to demolish a school building. So I think the district should take a second look at the statutes in light of their legislative history. Now here’s the long version:

The statutes


There are two key Iowa statutes that enable school districts to dispose of school property. For ease of reference, I’ll call them the “Petition Statute” and the “Board Statute.” The Petition Statute gives the voters the power to “direct the sale, lease, or other disposition of any schoolhouse” or other district property, via a petition process to put such an issue on the ballot. The Board Statute gives school boards the power to “sell, lease, or otherwise dispose of a schoolhouse” or other district property, and provides a procedure for doing so. The Hoover petition raises the issue of whether “disposing of” property under these statutes can include demolition.

To interpret the language of these statutes, it’s useful to know their history. Originally, the Petition Statute was the exclusive way for school districts to sell, lease, or dispose of property. (See this case at page 581 and this case at page 260.) This proved cumbersome, so the legislature passed the Board Statute, enabling school boards to dispose of school property without an election. An accompanying statute provided that the board’s power was “independent of” and “additional to” the voters’ power under the Petition Statute.

The co-existence of these two statutes inevitably raised questions. In 1979, the Iowa Attorney General’s Office stated in a formal opinion that the Petition Statute grants “a much broader and more flexible power which resides in the electors of the school district than that held by the board of directors. The policy behind the distinction is the fundamental democratic principle that the electors are entitled to hold more power,” and that the board’s power under the Board Statute was “much more restricted.” As a result, the opinion concluded that when the district sold a schoolhouse under the Board Statute, it faced restrictions on the use of the proceeds that it would not face under the Petition Statute.

The Decorah case


In 2007, another issue arose about the relationship between the two statutes. What if a school board voted to demolish a building, and then the voters filed a petition to lease that same building? The court in that case held that the voter petition was valid and that the election had to go forward, even though the school board had already voted to demolish the building.

It’s important to understand the basis for that court’s decision, which turned on a close examination of the language in the Petition Statute. At that time, the Petition Statute contained a clause stating that “nothing herein shall be construed to prevent the sale, lease, exchange, gift, or grant and acceptance” of any property under the Board Statute. The court read that clause to mean that if the school board voted, for example, to sell a school building, the voters could not then petition for some contrary use of that building. But the court noted that the statute applied that rule only to “sale, lease, exchange, gift, or grant and acceptance” of property, and not to other types of “disposition,” such as demolition. As a result, the court concluded, even after the school board had voted to demolish a schoolhouse, the voters could petition for a contrary use of the building.

On the way to reaching that conclusion, the court explicitly held that the word “dispose” in both statutes included “demolition.” (See page 7 of the decision.) That interpretation was consistent with a much earlier opinion by the Iowa Attorney General interpreting that same language to include demolition.

The 2008 amendments


In 2008, apparently in reaction to the Decorah case, a legislator from Decorah filed a bill to amend the two statutes. The legislative history shows that the intent was to give school boards more power to take independent action to dispose of school property, and to define and limit the power of the voters to challenge those decisions after the fact.

The 2008 amendments made three major changes:
First, the then-existing Petition Statute said that it was not intended to prevent the “sale, lease, exchange, gift, or grant and acceptance” of any property under the Board Statute. The amendment added the words “or dispose of” to that list. This addressed the anomaly that the Decorah court identified—but in a way that was more favorable to school boards.

Second, the amendments defined “dispose of” in both statutes to include “exchange, transfer, demolition, or destruction” of property.

Third, the amendments provided that once a school board had formally acted to “dispose” of a property, the voters could petition for a contrary use, but would have to do so within a limited time (one year). (The initial version of the bill had been even more restrictive of voters’ rights to challenge board dispositions of property, but those provisions were toned down by the time of passage.)
The thrust of the 2008 amendments was to rein in the Decorah court’s interpretation and to expand the power of school boards to act independently to dispose of school property.

The 2009 amendments


The following year, a newly elected legislature amended the two statutes again. The changes show an intent to shift power from school boards back to the voters. The initial bill contained this explanation:
Currently, [the Petition Statute] specifies that the board of directors of a school district may take independent action to dispose of any interest in real or other property of the school district. Currently, “dispose” or “disposition” includes the exchange, transfer, demolition, or destruction of any real or personal property of the school district. The bill strikes this language.
It also stated:
The bill returns the Code language to how it read prior to the [2008 amendments], except for technical changes, to allow voters to direct the disposition of school property and the application of the proceeds.
(Emphasis added.)

The 2009 amendments made three changes:
They restored the Petition Statute to the way it read before the 2008 amendments. The relevant clause now reads “nothing in this section shall be construed to prevent the sale, lease, exchange, gift, or grant and acceptance of any interest in real or other property of the corporation to the extent authorized by [the Board Statute],” with the words “or otherwise dispose” stricken.

They deleted from both the Board Statute and the Petition Statute the sentence defining “dispose of” to include “exchange, transfer, demolition, or destruction.”

They shortened the time limit for filing a petition to change a board decision about property to ten days.
The thrust of the 2009 amendments was to make it clear that the power to “dispose” of school property remains ultimately with the voters, even if the school board has made a contrary decision.

The legal issue


The Hoover petition asks to put the demolition of Hoover onto the ballot. If the demolition counts as “disposing” of a schoolhouse under the Petition Statute, and if the group submits enough signatures, the board is required to put the issue on the ballot. But if demolition does not count as “disposition,” then the board lacks the power to put the issue on the ballot.

The district’s lawyer provided a brief opinion that focused on the 2008 and 2009 amendments. Here is a summary of his reasoning: In 2008, the statute was amended to define “dispose” to include “exchange, transfer, demolition, or destruction” of a property. In 2009, the legislature deleted that definitional language. Therefore, “dispose” does not include demolition.

In light of the history of the statute, I think that conclusion is problematic, for several reasons.

  • The argument identified by the district’s lawyer would lead to the conclusion that the school board itself lacks the power to demolish a school property. The board gets its power to dispose of school property from the Board Statute. Like the Petition Statute, the Board Statute was amended in 2008 to define “dispose” to include “exchange, transfer, demolition, or destruction.” And, like the Petition Statute, the Board Statute was amended in 2009 to delete that definitional language. If that means “dispose” no longer includes demolition, then the school board would have no power to demolish school buildings. It seems very improbable that the legislature intended to prevent school districts from ever demolishing any school buildings.

    Notice that the legislature was careful to amend the two statutes together in both 2008 and 2009, implying that words “sale, lease, or dispose of” would be interpreted the same under each statute. It would be hard to argue that the words have a different meaning in one statute than they do in the other.

  • It is important to interpret the statutory amendments in historical context. The 2007 Decorah court decision held that “dispose” included demolition and that the voters had the power to petition to change a school board’s decision to demolish a building. The 2008 amendments were a reaction to that decision, and they broadened the list of actions (including demolition) that school boards could take independently of the voters. The 2009 amendments, by contrast, shifted power back to the voters, “to allow voters to direct the disposition of school property.”

    Viewed in that context, it is very hard to conclude that the 2009 amendments were intended to take the power to demolish buildings away from the voters.

  • Prior to 2008, both the Decorah court and the state Attorney General’s office had interpreted the word “dispose” to include demolition of a building. If the 2009 legislature had wanted to omit demolition from the definition of “dispose,” it could have done so explicitly. Instead, it chose to delete the definition entirely and return the statute to its pre-2008 language—thus returning to the language that had already been interpreted to include demolition.

  • If the term “dispose of” in the statute does not include exchange, transfer, demolition, or destruction, it’s not clear what meaning the term could have. Yet the statutes repeatedly use the term as separate from other terms such as “sale” and “lease.” To read all meaning out of the term would be inconsistent with the clear legislative intent “to allow voters to direct the disposition of school property.”

  • The entire focus of the Decorah case, and of the legislative reactions to it, was on situations where a school board had already formally resolved to dispose of a building and voters had then petitioned for a contrary use. There is no indication that the legislature intended to change the power of the voters to initiate a sale, lease or disposition before the school board had acted. (In the Hoover situation, the board has not yet formally resolved to demolish the building under the statute.)

  • There is a more plausible reason why the legislature would have deleted the definitional language from the statutes. The board’s power to “sell, lease, or dispose of” school property comes from section (1) of the Board Statute. But another part of the Board Statute—section (2)—provides that the board can “sell, lease, exchange, give, or grant, and accept” property to another governmental unit in some circumstances. If “dispose” in section (1) were defined to include “exchange, transfer, demolition, or destruction,” section (2) of the statute would become superfluous; the board would already have the power to transfer property to a governmental unit—or to anyone—under section (1).

    It seems likely that the legislature did not want the board’s power to “dispose” of property to include the power to give away district property to entities other than the governmental units identified in section (2). Because that could have been the unintended consequence of the 2008 definitional language, it made sense for the 2009 legislature to delete that language. This would explain why legislators stated that the bill would “clean up” the 2008 changes.

    (In my view, it may make sense to interpret the Petition Statute as referring exclusively to section (2) of the Board Statute when it says it can’t be used to prevent the board’s “sale, lease, exchange, gift, or grant and acceptance” of property. That language closely tracks the language of section (2). So when a board transfers property to another governmental unit, the voters can’t challenge that decision; but they can challenge sales and leases under section (1). The 2008 amendment inserting “or dispose of” into that language threw off that parallelism. By deleting those words in 2009, the legislature was returning to the language that tracked section (2). This is another way that the 2009 amendments would “clean up” the 2008 changes.

    This would also explain why the 2009 legislature shortened the petition period to ten days. If it intended to allow voters to challenge not only demolitions but also sales and leases under section (1) of the Board Statute, the timeline for petitions would have to be shortened for practical reasons.)

Conclusion


If we get a petition from enough people—over 2,189—to put the Hoover demolition on the ballot, we need to be careful to respect the legal rights of those people. A close look at the history of the governing statutes shows that the 2009 amendments were meant to give the voters more power over the disposition of property, not less. Nothing in the legislative history indicates any intent to deprive the voters of the power to put the demolition of a schoolhouse onto the ballot, which both the state Attorney General and the Decorah court had previously recognized. And any such interpretation would imply that school boards, too, lack the power to demolish school buildings. For those reasons, I’d like the district to take a second look at the statutes in light of their legislative history.

Standard disclaimer: This post is not intended as legal advice. Moreover, I’m just trying to get my current thoughts in written form in time for our meeting tonight; I’m sure there is more to discuss that I haven’t covered. Please feel free to chime in with your own thoughts in the comments.

57 comments:

Anonymous said...

Thank you for this explanation. I read the district's response and it left me scratching my head in confusion. It made no sense to me. Now that I better understand the history and context, the district lawyer is obviously way off base on this one.

More importantly, I am fascinated to watch this play out. Either the district quietly allows the Hoover to be on the ballot (and why not, it is non-binding anyway. District officials can continue to Selectively Ignore community opinions like they have a zillion other times) or this can go to court, which means waaayyyy more press coverage, which could easily include the Seclusion Box issue that the Iowa ACLU just took up, the district practice of intimidating parents who speak out, AKA the Nathalie Cruden Incident, and concerns over the school bond. The press likes to tell the full story, with all the gory details.

The real question is: Do the people who stand to profit handsomely from the almost $200 million dollar bond, want to risk their payday being lost to bad press over the Hoover vote? Last I checked, citizens do not like being told they can't vote on issues, especially if over 2,200 members of the community have signed a petition for it. That is a heck of a lot of people who all have friends, family and neighbors who they will talk to about this.
Geez...this bond could fail in record numbers if Hoover does go to court.
I wonder who would get fired if that happens.
This is the best soap opera in Iowa, that's for sure.

amy said...

Certainly will miss having you on the Board, Chris.

(sticks hands in pockets, wanders off whistling the theme to the Andy Griffith Show)

Anonymous said...

"...the Petition Statute grants “a much broader and more flexible power which resides in the electors of the school district than that held by the board of directors. The policy behind the distinction is the fundamental democratic principle that the electors are entitled to hold more power,” and that the board’s power under the Board Statute was “much more restricted.”"

Sadly, ICCSD has sunk to a level where fundamental democratic principles mean little to Murley and his disciples on the board majority. Please folks, VOTE NO...do NOT give them a gigantic blank check. They traffic in abuse, bullying, retaliation, and intimidation. They've shown time and time again that they do NOT have the community's interests at heart. There is Zero trust.

mariaconz said...

It is clear to me, having read your legal analysis of the disposal question, that your analysis is correct and the district attorney's is incorrect. It would follow, given the district superintendent's and the board's rubber-stamp majority's relentless repression of free speech, that they would try to keep lawful petitioners from having a voice on the ballot. I would take the issue to court if the ICCSD once again that's the will of the voters.

mariaconz said...

* THWARTS the will of the voters. Stupid spell-checker!

Anonymous said...

Keep Hoover and do what?

Demo Hoover and do what?

And how do you pay for any of it?

Chris said...

The district's lawyer, Joe Holland, talks out his point of view here.

Anonymous said...

Chris,
It's a pretty big concern when those that want Hoover gone and those that want it saved can't say what would happen in either case.
Care to shed some light on that?

Anonymous said...

Anonymous 2:19 pm
Oh...I dunno.
How's about we do something completely out-of-the box and keep Hoover as the perfectly good neighborhood elementary school it has been for over 60 years?
I know, I know - completely cray-cray, right?

Anonymous said...

You have convinced me it is a legal petition and able to be put on the ballot.

What a shame if the district chooses to suppress such an important, and legal, vote.

Anonymous said...

Okay Anon 2:19...

Save Hoover and keep using it as a neighborhood elementary. Who is spelling this out? Honest question, it might be a well established mission statement.

Get rid of Hoover and do what? Baseball stadium? Parking lot? Who proposes shutting down a neighborhood elementary school without clearly outlining what happens in its place?




Anonymous said...

stop dancing around and sue them already!

Anonymous said...

I'd like to hear why an elementary school was shut down without a clear and transparent agenda moving forward. Is Chris Christie involved in the ICCSD?

Anonymous said...

Sorry if these questions have already been answered. So when exactly is old Hoover currently scheduled to close as a school and be demolished? Is this part of the FMP or is it separate?Do we know how much the demolition will cost and how will it be paid for? Where will current old Hoover students be moved to? If old Hoover were somehow able to remain open how would it effect the current FMP? Thanks.

Chris said...

Anonymous (9:18 am) — “Old” Hoover is currently scheduled to close after the 2018-19 school year. I can’t find any document with a demolition date in it, but there is no planned use for the building after 2019, and any new use of the site would probably occur in conjunction with phase II of the City High project in 2019-21. (The district won’t say what will go on the site.) The board redrew the attendance zones to split up the current Hoover area between the Lemme, Longfellow, and Mann zones.

The demolition is part of the facilities master plan (FMP), but it is not funded by the bond proposal. It will be paid for with the remaining PPEL money left over from the installation of air conditioning and other upgrades into Hoover in 2014. In other words, passage of the bond does not commit the district to go through with the demolition or the closure. It’s not clear what the demolition cost will be, but there appears to be about half a million dollars left over from what was budgeted for that project.

If the school were kept open, the board would have to draw an attendance zone for it and adjust other attendance zones accordingly. (The board will redraw some attendance zones next year in any event, because of its decision to change the location of the new North Corridor elementary school.) If Hoover (with its 300+ seats) were kept open, it’s possible the board would decide to reduce the amount of new capacity being built elsewhere on the east side; for example, though it makes sense to give Lemme needed renovations, it’s not clear why it needs additional seats. The current plan, however, already results in almost 1400 more elementary seats than our enrollment projections show that we’ll need even ten years from now, so it’s no longer clear how the district is deciding how many seats is too many.

Anonymous said...

So they spent about a million three years ago to renovate old Hoover and add air conditioning and now they are going to spend maybe another half million to demolish it. That is beyond crazy and bizarre. Especially considering they don't have an apparent plan or pressing need for the space (or they would tell us). Why would anyone would ever trust these people with 200 million? Even if they were going to close a school old Hoover doesn't seem like it would be a likely first choice as there are plenty of smaller and older schools without air conditioning that are in less densely populated areas. Do we think there is some secret strategic plan for the site that for whatever reason they can't tell us, or do we think there is a nefarious reason that they won't tell us, or could it simply be that they don't have a use for this space yet but want Hoover gone so they can build new schools? Even though bond money wouldn't be spent on the actual demolition of the building, I think voting yes for the bond supports closing Hoover.

amy said...

The very fact that we've paid a million dollars, through a bond issue, to renovate a school only to spend money to knock it down *for no reason Steve will explain* should be enough by itself to tell us that saying "sure, have another $200M with a lot of discretion" isn't such a hot idea.

I was thinking earlier about where this bond plan might've come from in the first place. I don't know Steve well, but what I do know of him does not tell me that he's a man of great originality and imagination. So the original idea for the plan is likely either a boilerplate thing that's been popular in supe circles or, more likely I think, it's something that his SUPES buddies told him would be an awesome idea.

Either way, I'm guessing we're a little late to this party, and that many other school districts have seen similar attempts, some successful and some not. It may be worth looking for other districts who've had a supe propose to them a very large FMP and see how it's gone. If SUPES buddies were involved, my guess is that the same SUPES buddies also had some ideas about how the money could be spent. And it would be interesting, if that were the case, to see how that's gone too.

amy said...

Oh, and here we go. I think plenty of this will look and sound familiar to all. All of these are recent.

http://lbschoolbonds.net/Schoolbuildingplan.cfm
https://www.rcsdk8.net/Page/6104 -- this one's nearly $400M!
http://www.steamboatschools.net/facilities-master-plan-4dc8c573/2015-steamboat-springs-school-district-facility-master-plan-bond-and-mill-levy-86b5da13 - $92M
https://www.bellevuepublicschools.org/vnews/display.v/SEC/District%7CFacilities%20Master%20Plan?template=m - $76M
http://lafsd-ca.schoolloop.com/file/1271057786406/1281197254781/1292798619374051007.docx - $70M
http://www.boiseschools.org/2017_bond_ - $172M
https://www.pasoschools.org/domain/42 - $95M

...it's hardly worth going on, there are tons of these. All of these look very large relative to the size of the districts. All of them use the same kind of language and sales pitches. It would be very interesting to see which districts running these proposals have superintendents working for SUPES and similar outfits.

The question I come to is "why is it suddenly necessary for school districts all over the country to suddenly look for very large money for massive, comprehensive but nebulous facilities plans that stretch way into the future and have a lot of play built in? Whose idea is this?" My guess is a very boring powerpoint stored somewhere online will answer that directly.

amy said...

Omg, Austin's got one coming up for nearly a billion dollars: http://www.mystatesman.com/news/local-education/aisd-trustees-eye-900-million-bond-election-recent-failures-loom/waI5aL5fBqBF3Mc3hfSMlN/

amy said...

So here we have a Wisconsin supes' conference sponsor advertising services:

Miron Construction Co, Inc.
Miron is a leader in the education market, having completed over $1 billion in K-12 educational construction. Our extensive services include: facilities master planning, referendum planning, comprehensive pre-construction services, design-build, and construction management. Our educational team has guided 24 districts to successful referenda in the last 8 years totaling over $415 million—and translating to an 86% success rate!

www.miron-construction.com

Megan Nussbaum - megan.nussbaum@miron-construction.com or (920) 969-7334
Craig Uhlenbrauck - craig.uhlenbrauck@miron-construction.com or (920) 969-7030

...but this still doesn't feel close to where the idea for these massive long-range proposals has come from.

amy said...

Oh, look: $87M for Lawrence, KS. You know, this is going to be a tremendous train wreck across the country the next time the economy falls into a hole. And just when the state universities have borrowed to the max, too! Good times for all.

http://m.ljworld.com/news/2017/apr/16/lawrence-school-districts-87-bond-issue-few-freque/

amy said...

This looks closer, though still not it: they make a very big deal about having been "authorized by Congress", but the VP of the parent organization is someone at Beacon Capital and there's a lot of construction-industry people involved here:

http://www.ncef.org/resource-lists/bond-issues-and-campaigns?sort_by=title&sort_order=ASC&page=3

There'll be a national school/supes-org group of people inbetween this and the supes, though, pushing stuff like this through. But, unsurprisingly, the beneficiaries here are the construction/architect firms and the capital management companies.

amy said...

Actually it would make sense to me if this had been cooked up by the capital-mgmt/banking types -- they're the same ones who sold garbage financial products to districts across the country in the '00s, bankrupting some of them along the way when the economy tanked. They're making a percentage on every tremendous bond, and there appear to be a zillion of these. A billion here, a billion there, pretty soon you're talking about real money. It's easy to get the construction people on board because they'll get money right away, and I imagine you can sell the supes relatively easily too. But as I thought, there's nothing imaginative or new about ICCSD's proposal.

The thing is that this is a recent idea. All of these humungous bonds are either in the works now, like ICCSD's, or they went up just in the last couple of years. So there's really been little or no time to see how this plays out, as there has been with, say, TIFs, or everyone's favorite, CDOs.

So -- a fashionable idea for mortgaging a district to the hilt, backed by financiers and sold in a wave across the country. What could go wrong?

Anonymous said...

Thank You, Amy!

You are so right, this is the 2008 housing crisis all over again. Thank you for seeing the pattern and sharing it.

amy said...

Chris, are we paying anyone to advise the board/Steve on how to get this bond passed? If not, is anyone offering advice for free?

amy said...

Of interest, maybe: https://blog.citigroup.com/2011/05/investing-in-school-infrastructure

amy said...

(sigh) Stifel, the FMP giant-bond underwriter here, is the same outfit that got caught by the SEC after they wrecked the finances of some districts in Wisconsin by selling them CDOs (the mortgage swaps that nearly brought down the world's financial systems) and telling them all kinds of baloney about how safe and surefire they were.

http://www.digitalmuni.com/system/documents/1710/original.pdf?1455659585

Who's our underwriter, again? And how many of these things are they helping districts sell to voters?

amy said...

I'm actually wondering if the school districts are some of the new garbage CDOs. (Now let's see if mystery-meat *school bond derivatives* are actually being *sold to school districts*.) If you'll recall, the CDO market tanked because it was all built on garbage mortgages dressed up as prime rib, and when the interest rates reset, people couldn't pay their mortgages anymore, they lost their homes, and the investors lost their shirts -- and a lot of the investors were pension funds, school districts, these sorts of groups.

So here we are, and can our interest rates reset? Why yes they can, in the form of higher taxes (and I bet there's another way, too, that I don't even know about). Suppose a district borrows to the hilt and builds every new damn thing it can think of till somewhere over the horizon, while promising voters that it's only the price of a latte and a smile or whatever. Once the money's borrowed, of course, it has to be paid back. And if for some reason the tax base shrinks -- say a contraction in the economy hits a municipality hard and the housing values and tax base drop, which is certainly conceivable over a span of 20 years -- why, up your taxes will go. The magic here for the banks is that the municipality has taxing authority. If that authority is statutorily limited, of course, and a district can't pay back...well, I imagine things get ugly at that point for both the district and the investors. Again.

Has anyone who knows up from down actually had a good look at this bond issue? If Chris can outlawyer the district lawyer, I'm guessing whoever's taking care of finance for us leaves some room, too.

amy said...

Chris, this thing about how if we don't borrow now, borrowing's going to get way more expensive: who is it who told Steve that?

Anonymous said...

Here is one scenario worth considering. Over the last 12 years median home prices in IC are way up while sales are trending backwards. That's not good especially with the number of new homes still in the works.
Over the last year median rental prices have taken a nosedive while the number of rentals available has grown by 400%. That is not good. How many rental units are sitting unoccupied? (https://www.trulia.com/real_estate/Iowa_City-Iowa/market-trends/)
Without the employment infrastructure to support the housing development it is only a matter of time before funds start to dry up and things slow down. And it won't help that we built expensive schools on the outskirts of town. Homes will sit empty and those in the construction business will be among the first wave to depart as our tax base shrinks. And if the U of Iowa and the Hospital slow down, say the asian student full pay situation changes, watch out.
It might be good for those who are considering this bond to wait another year for one that has the fat trimmed. A bond that puts good heating and cooling in all of the schools doesn't have to include schools built where no one lives. Or a Hoover being shut down and mothballed with no clear agenda.


amy said...

Well -- I mean yeah, UI/UIHC are likely to have some trouble. Two of the three funding legs at UI are wobbly: we're likely to see further cuts from the state, and we were already seeing research funding coming up short before Trump took office. Harreld's solution is to up tuition by a third, but I don't really see that the market's going to bear a whole lot of that, and my sense is the tipping points are pretty sensitive: you overshoot by not much and you're going to see sharp enrollment declines. And yes, if tomorrow wealthy Chinese parents decide that Iowa's not the place (or the US is not the place), then we're in a world of trouble. As for UIHC, apart from research funding, we're staring at state and federal governments that are deciding that health is for the elect, and the rest of us can, I don't know pray our way to good health. I don't know where people are going to be getting insurance, public or private, for paying the hospitals.

My sense too is that those numbers are about right when it comes to median rents; I think we've topped out for a while. The rentals-available number looks weird -- I don't know what they're comparing to what -- but yes, there are definitely units sitting open (at high advertised prices).

It's an interesting thing, and Chris, maybe you can shed some light: I don't actually know what authority ICCSD has to tax to make up for revenues coming in under projected for debt repayment. What I'm seeing is that when districts don't have adequate authority to do that, they have no choice but to cut into operating funds. But I also don't know how Iowa's rules restrict districts from doing that.

As an aside, Moody's has been quite activist when it comes to state and local charter-school and school-choice projects; they don't want district money going to charters, because that takes from revenues available to pay back investors, and it means they have to (or say they have to) downgrade districts' bond ratings, which in turn drives up the interest rates districts have to pay. To investors. So that we can build schools.

It's weird, but I have this memory of a time when people would actually save up money before buying big things.

amy said...

Also, I'm totally spitballing here, but considering how gross things were in the last debt bubble:

Suppose you're in the business of pushing debt, and you're trying to get these dopey school districts to buy a whole lot of debt on building projects. You want them to have the biggest needs possible, do you not? More needs = bigger bond = bigger, more efficient payoff. If the needs are going to look as large as possible, then you'd certainly want the forecasted enrollments to be on the generous side. Maybe the wildly generous side. Of course, there are certain consulting firms that specialize in forecasting enrollment, just as there are certain firms that specialize in bond rating, and we know that there were some issues there in the aughts. Would you not, in some way, want to encourage these consulting firms to err on the side of large future enrollments requiring many seats and larger or more buildings? Sure, there might be local yokels who squint at the weirdly ginormous numbers and ask how you got them, but, you know. Special proprietary sauce. Like how bond ratings get made.

I think it would be interesting to know what kind of relationships, if any, the consulting firms have with the underwriters. How'd we find that Ohio firm, anyway? Someone recommend them, or did they just show up and bid?

Anonymous said...

Amy:

There is only one new school on the bond and it is needed to relieve nearly 300+ extra students at Garner, and 100-200+ extra students at Penn by 2019. This school is well inside existing housing and is most definitely needed.

What is not needed? Athletics. Jumbo gymnasiums at small schools that don't need them for school wide assemblies. Art and music rooms all over the district except for some select schools like Hills, Penn (?), Van Allen (?), and Coralville Central. These are guesses... they were finished or planned before Twain which supposedly was the impetus behind adding a bunch of art/music rooms.

Also not needed are classroom additions at City, SEJH, and most elementary schools in Iowa City. This is especially true if Hoover stays open and boundaries can be adjusted to better balance FRL and student population to building capacity.

As to generous enrollment projections, that is only the case for the City High attendance area schools it seems. Undoubtedly Coralville and North Liberty schools are underestimates due to not counting construction projects that already have homes built on them and/or ready to build now.

Without a doubt in my mind... you are spot on about our taxes going way up in the future to pay for this and rising interest rates from lowered school bond ratings should this bond pass.

Anonymous said...

The Hoover space is needed to for baseball. Liberty is getting sports facilities on their property from the bond and West's facilities get upgrades. The baseball stadium on the Hoover property helps create equity of sports facilities for the three high schools.

amy said...

I feel certain that a baseball field could be found for City's use that doesn't involve throwing away a building representing millions of dollars of tax money. I did not pay taxes, or vote money to fix up that building, so it could be knocked down so a few dozen kids each year could play baseball. Kids all over the world play baseball without that kind of waste.

I think also that perhaps we are at the point of needing a districtwide conversations on what constitutes "adequate sports facilities" in a district not populated by billionaires. I ran track, as a kid, in a school of 4000 kids. While it's true that our first school track we ran on was inadequate -- 1/12 mi, carpet over concrete -- that was because it was useful mainly for getting injuries, especially since Phil Knight had only recently had a good idea about what to do with a waffle iron. The other track was cinders, and it was fine for our purposes. The track that exists now at West is not only nicer than UI's indoor-training track was in its second-last incarnation; it's nicer than the track I ran on at a university that now costs somewhere in the neighborhood of $60K a year and was full of rich kids when I was there, too.

I'm guessing that even the universities that regularly trained future Olympians didn't have tracks as nice as West's till fairly recently.

More important, 30 years on, I still run. Not as fast. But I didn't get so burnt out and injured by a program driven by parents who're so into school sports that their kids, after years of hypercompetitive training in near-Olympic facilities, graduate high school and never touch the sport again. Which is something I see routinely here.

Do I think school sports are important, yes, for many. Being part of a team can be a great thing, the physical training can be great, the sense of accomplishment and the new knowledge of one's own capabilities can be a wonderful and affirming thing. Do I think we need to be talking about sports arms races and parity for high schoolers, no, I do not. Even if we're that worried about the handful of kids who might miss out on major sports scholarships somewhere else because they didn't have an incrementally better field -- you know what? Create such a thing as intradistrict sports transfers for the super-talented, rather than throwing away a multimillion-dollar building so that the kid maybe has a chance at being abused by a university as a student-athlete. And then put a short leash on the coaches so they don't feel entitled to demand wild upgrades to the existing facilities so that they the kids can pretend they're pro. Or to throw tantrums about not getting them.

Further, I think it sends the wrong message to the kids to build sports palaces we can't actually afford. It tells them it's really important to overspend and that it's no good to live within their means if the result is they haven't got a McMansion and a gleaming car and all the rest, because darn it, someone else has it, therefore they deserve it too. That's a damaging message.

We're running schools, not Olympic sports camps, not farm teams.

Anonymous said...

Amen to all that Amy!

That would be about a $14 million dollar baseball field plus the price to replace that lost capacity elsewhere bringing it up to $25 million!

Are people really that insane to think we should spend that much money to move a high school baseball field right next to a high school instead of about a mile away?

Appears the board majority over the years really is that insane. We need to elect better people this time around.

Anonymous said...

The fact that they are trying to sneak this new baseball field by the voters is yet another example of a small groups willingness to throw ethics aside for what they want.

Using disability, new windows and HVAC as leverage for a massively expensive baseball stadium is wrong. I'm so glad I know this now. Now I see what low down sneaky snakes they are. Greedy deceitful and manipulative through and through. All their past actions make more sense in light of this. No one involved in this shameful plan should be allowed access to any business having to do with education. This GO Bond is beyond tainted, it needs to get voted down. We can't afford any of this. Not the cost of multi million dollar baseball fields or the sneaky snakes behind it.

Anonymous said...

The baseball stadium could be built with donations. In any case, City needs the Hoover property to "remain viable for the next 50 years."

Chris said...

Anon (6:49) -- The primary cost of closing Hoover (whether it be for the sake of a parking lot or a baseball field) is the loss of 300+ elementary school seats. I assume that loss, when the district has to make it up, will not be covered by donations.

In any event, if it's for a baseball field, why won't the district say that and defend the idea publicly as it asks the voters for $191 million?

Saying that it needs the land "to remain viable" is saying nothing. In what way will the school not be "viable" without those extra five acres?

Chris said...

Anon (6:49) -- Sorry, my last paragraph was more snappish than it should have been. I just mean that your statement that City needs the Hoover land to remain viable is an unsupported assertion. Please support it!

I do get impatient with that kind of argument, because real educational equity is a serious issue, and those arguments just trivialize it. The City High swim team has to travel only a mile to get to Mercer Park--they can even walk!--while the West and Liberty teams will have to travel much farther. Does "equity of sports facilities" require us to build pools a mile away from West and Liberty? In fact, the distance to pools or baseball has nothing at all to do with the relative quality of the educational experience at City, West, and Liberty.

Supporters of the Mann renovation have repeatedly argued that Mann is in a relatively urban area and so we can't have the same site expectations for it that we would have at many other schools. I agree! But why does the same logic not apply to City High? To give it acreage "equity" with West and Liberty, we'd have to take the entire Morningside neighborhood and everything between City High and Court Street. But what has that got to do with whether the educational experience is equitable?

amy said...

One example of how a giant school bond issue can go very, very wrong:

http://www.ocregister.com/2015/01/07/the-bank-the-school-and-the-38-year-loan/

There's some good reporting here, too, about how the underwriter's gone drumming up bond business among school districts.

Do we have any idea how the underwriters will structure these bond sales? What the total cost is expected to be and how that figure's arrived at? What we're paying the underwriters? Again, this is info that should be plainly accessible, without digging, on the district's website.

amy said...

Ugh. No time to pull all the links together now, but there's dozens of stories out there about pay-to-play deals where underwriters contribute to yes-bond campaigns in exchange for business, contractor-donors magically getting lots of bond-money business, etc. Here's California's recent attempt to deal with the first problem.

http://www.treasurer.ca.gov/news/releases/2016/20160727.asp

Are the underwriters among the donors to the Yes campaign?

Anonymous said...

This is something worth digging, although I seriously doubt anyone from Press Citizen has the ability to do an investigative report on this. Maybe Gazette, but definitely not Press Citizen.

Anonymous said...

The $200 million bond is the largest and will have lasting impact for generations. An investigative report of something like this makes careers for the journalists.

amy said...

Well, the real story would be the national one. This is just part of something nationally stupid. And the schools aren't, I imagine, the only ones being caught up; they're just a subset of municipal bonds, so I'm guessing there's similar stupidity for other munis. When you look at what happened when the mortgage markets cratered, and the scale of the business that was lost, I expect the banks went scrambling pretty fast to find nonconsumer loan markets to exploit, and if I were a predatory horrorshow I imagine I'd be quite happy to go out hunting gullible school districts.

One of the serious problems plaguing districts that didn't go in with eyes open is a little "something for nothing" trick that wound up costing them gigantically: essentially, after the referenda were passed, the underwriters not only attached high interest rates to the bonds, but they structured the bonds so that the districts couldd shift a lot of the payments into the future on the idea that the local property values would go up, over time, and therefore allow bond payoffs at lower tax rates. Problem: although the consultants assured the boards that the future property value estimates were totally kosher, they were in fact not. And if you're looking at a timescale of 30 years, once your trajectory's off at the beginning, good luck catching up. So these districts are now in serious financial trouble, cutting programs, basically having to admit that yes, in 25 years or so they'll still be paying through the nose for old buildings and have no way of paying for new.

And it's always the same story: palatial sports fields, arts centers, all kinds of shiny thing that would make sense for a district of princes.

This is why it's important for us to know the details of how this is all to be structured and what exactly we're paying for and who's giving the estimates.

Anonymous said...

"This is why it's important for us to know the details of how this is all to be structured and what exactly we're paying for and who's giving the estimates..."

When I bought my house I asked those questions and the bank was required to disclose all that, such as how much exactly the total payment would be after 30 years. And it was a modest house worth less than $200,000.

Now we are borrowing $191 million. Where is the full disclosure of this ginormous loan? The voters approve it, and the banks get rich. Steve moves on to another job, adding these large capital projects as accomplishments to his resume, and the board is replaced with new members. We the residents are left holding their pants. Sweet, just sweet.

Like they say, there is a sucker born every second.

Anonymous said...

What Amy is describing in comment after comment, is exactly what happened to the Chicago School District (you know, the one where the superintendent is in prison for all kinds of financial shenanigans, and the home of SUPES, the educational corporation our current school district superintendent was employed by until those owners went to prison too, but not to worry, Mr. Murley just rolled into his same position with a new company doing exactly the same thing under new management. But, I digress. Forgive me.)

Anyway, back to Chicago. If you aren't aware, they are in a massive rush to lay off teachers and close schools all over because they are in massive debt and can't afford to keep schools open.
Why?
Because several years ago they took on huge school bonds with major interest rate hikes build into the loans, and as the loans have matured, the only way to pay them back is to cut costs. The district administration has been unwilling to renegotiate the debt with the banks (because the banks deserve the inflated interest rates they cooked up, and no one wants to cut out their golfing buddies) They way they have cut costs in closing schools on the poor side of town, forcing all those kids to travel long distances to far away schools. No more neighborhoods schools for the middle class and poor kids, and the rich parents aren't too happy their pretty buildings are being invaded by thousands of minority kids, which has created all kinds of racial tension and put cops in schools to keep the peace.

It is a perfect example of what can easily happen in ICCSD if this bond is passed and we are unable to pay back the loan debt. Schools close, and you can bet it won't be on the rich side of town.

Anonymous said...

In social media I am now seeing various supporters of the GO Bond stating that a vote against the bond is a vote to close down schools.

But that won't happen of course, because we have a superintendent who comes from a highly ethical background, opposes bullying tactics, sets a good example for people throughout the district, and publicly discourages any culture of retaliation. Surely that's why "we" just gave him that huge raise. /sarcasm

Anonymous said...

Social media also telling us a vote for the bond is a vote for Scott Kibby.

amy said...

So if you want to see something amusing, google "transforming the learning environment" and "bond".

My guess is that some analysis of the various One District materials will give a pretty good idea of where the packet for all this is coming from, because my guess is the whole thing got sold in a crate to Steve, Lynch, Brian, and McGinness. I would not be surprised if the handout templates are part of them right down to graphic design. The question is who's peddling the crate.

That National Center for Beacon Capital & Pals Educational Grifting has something along those lines but it's quite old, and I'm guessing there's a ca.-2009 iteration floating around that we've been using.

amy said...

These might also look familiar, and come from searching for "learning environment" + "bond" or "highly functional learning environment" + "bond"

https://www.facebook.com/YESforexcellentschoolsEL/

http://docslide.net/documents/our-kids-our-community-our-future-farmington-public-schools-bond-proposal-august-6-2013.html ($220M bond)

https://webcache.googleusercontent.com/search?q=cache:QVmTDH7nx1QJ:https://www.lwsd.org/SiteCollectionDocuments/About-Us/Study-Sessions/2016.01.25/Proposed-Bond-to-Reduce-Overcrowding-Enhance-Student-Learning-Environments-PPT.pdf+&cd=4&hl=en&ct=clnk&gl=us ($400M bond)

https://www.highlineschools.org/Page/5939 ($300M bond)

https://www.shorelineschools.org/cms/lib/WA02217114/Centricity/Domain/1122/SPS%20Bond%20Brochure%202017.pdf ($250M bond)

http://www.springfieldchamber.com/index.php?src=blog&srctype=detail&blogid=302 ($189M bond)

http://www.wvsd208.org/district/bond_information_2017 ($82M bond)

https://www.baschools.org/pages/uploaded_files/2015BondBrochure.pdf ($370M bond)

This is pretty interesting, actually. I'm not close to exhausting the links.



amy said...

This article, an architect explaining how to run a district's bond campaign, is also interesting. I'd really like to know who's advising ICCSD on ours. Note the tactic suggested for talking to No voters.

http://hsaarchitects.com/DonHutchisonSLATEArticleOct2012.pdf

amy said...

This architecture firm will actually provide your campaign kit. (Meaning the taxpayers will pay for that, too.) Here's how one firm's managing some recent and upcoming campaigns:

http://www.banwellarchitects.com/public-school-bond-vote-preparation/

amy said...

Ah! Here we go. Is Shive-Hattery running our campaign, designing our Yes materials, anything related like that? And are they contributors to the Yes campaign?

http://www.shive-hattery.com/publications/ideas/AnamosaBondReferendum/files/assets/common/downloads/publication.pdf

amy said...

Boise, $171M this year: http://boiseguardian.com/2017/02/21/school-bond-would-add-3400-debt-to-median-value-home/

Winston-Salem, $350M in 2016: https://www.wsfcs.k12.nc.us/2016bond

Sherman ISD in TX, $308M in 2017: http://www.heralddemocrat.com/news/20170422/sherman-bond-pac-files-financial-report

Gresham, OR: $291M in 2016: http://www.gresham.k12.or.us/modules/cms/pages.phtml?pageid=333187

....there really seems to be no end to these. Nearly of them talk about the wonderful upgrades to every building along with new school building into forever. All your dreams come true. The thing is, if even a quarter of these districts run into trouble in ten or fifteen years, they're going to be doing it at the same time that the states are mired in state-pension-fund troubles that they can no longer pretend don't exist. There won't be money for bailing out the schools, because there won't even be money for paying the pension obligations.

But apparently it's very important that we build a lot of new sports fields and so on right now. I expect there's someone around who's got a fairly clear view of how this is likely to pan out, and ain't nobody listening, because somebody can make money today.

amy said...

It's granite-countertop syndrome. Remember in the early aughts, when all of a sudden if you weren't "upgrading" to a McMansion, you were expected at least to be giving your kitchen a lot of side-eye and thinking about how inadequate your perfectly serviceable melamine countertop was, and how you really needed a big slab of polished granite in there? No cash? No problem! Get a home-equity line of credit and while you're at it upgrade those old appliances and add a backsplash and some new lighting and several other things you'd never thought of needing before. It was a good thing! You could upgrade your curb appeal in case you might decide to sell and upgrade to that McMansion after all!

You could also use a HELOC for all kinds of other things, while you were at it. That trip you always wanted to take. The college education the state's shedding responsibility for while cutting taxes. I mean - college, that's important, right? A need, not a want?

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