|Fort Thomas Independent Schools Superintendent Karen Cheser, |
School Board Chair Brad Fennell and Board Member Karen Allen. FTM file.
The VA Homes project moves forward another notch with approval of a vital piece of the funding puzzle.
At a special session held Wednesday, July 19, the Fort Thomas Independent School Board agreed not to contest the project funding agreement that would provide a pilot payment to the schools in lieu of tax revenue.
"This wasn’t just a rubber stamp decision made by the school board. We dug in and thoroughly looked at the numbers to reach the most fiscally conservative decision we could and allow the city to make their deal," said School Board Chair Brad Fennell.
RELATED: City Signs VA Homes Deed
With the help of Treasurer Andy Remlinger, the board poured over spreadsheets mapping out various funding scenarios and projections. Fennell and the rest of the board worked to find a plan commensurate with the projected tax revenue that such properties would provide.
The city and the school board went back to the table after an initial payment proposal of a set amount based on current property tax rates. After much discussion and research, the school board proposed, and the city accepted, a pilot that would give the schools an unfixed amount based on funds remaining after developers take what they need for bond repayment.
Background and details
The VA homes project is funded with an Industrial Revenue Bond, or IRB. Property taxes are not collected under IRBs but money will be collected from homeowners equivalent to a property tax bill. This money goes to the developers to cover their investment in the property.
Because most schools, including Fort Thomas, rely on property tax funding, IRBs provide for a pilot payment taken from the money collected that would be paid to the schools.
The VA Homes developers have asked for a fixed payment of $135,700 a year for the thirty-year bond. Starting in Year Three, Fort Thomas Schools will receive all funds remaining after that amount is deducted from money collected.
In Year Fourteen, the city will begin to receive 15 percent of the money as well remaining after the developer’s share is deducted, a concession made by the school board.
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Passed by the state in 1990, the Support Education Excellence in Kentucky, or SEEK, funding program is designed to provide equity in education across the state. With a complex formula, this affects the allocation of state provided funds to local school districts. With the properties not on the tax rolls, Fort Thomas schools would save about $916,000 from not being part of the SEEK formula.
Secondly, on average, property values go up at about one percent each year, according to Remlinger. These additional funds would go to the schools as properties are developed and sold.
Over the 30 years, estimated taxes on the properties would be about $4.6 million after the SEEK portion is removed, according to Remlinger’s figures. With the pilot, the schools would essentially break even.
Fennell said being able to ensure schools would not lose potential funding while helping the city on a project everyone agrees is a win for the community made all the hard work by Remlinger, the school board members and city officials worth the effort.
"We have a fiduciary duty to look out for our students. They entrust us to do that. But I want to reiterate, the city has been a tremendous working partner for us…And that relationship will just continue to help all our citizens," he said.