The School for Arts-Infused Learning, an Evans charter school, sought $13 million in bonds, not to avoid bankruptcy, but to reduce the amount of loan interest it was paying.
“It’s very difficult to jumpstart a charter school,” said Gene Dunn, executive director of SAIL. “The board at the time did not have a lot of finance options, and so the only loan that they were able to secure was basically an interest-only loan.”
An interest-only loan is a loan that allows the borrower to pay only the interest for some or all of the term of the loan. Dunn estimates the interest for the school’s current loan is at about 12%.
On Dec. 21, the Columbia County Board of Commissioners voted unanimously to approve the issuance of a $13 million refunding revenue bond for SAIL. Interest for the revenue bond is not to exceed 5.50% non-taxable and 6.50% taxable.
The bonds will be issued by the Development Authority of Columbia County.
“People have the impression that we were bankrupt, that we’re going bankrupt. That’s not at all the case,” said Dunn. “In fact, we’re probably one of the most financially viable and solid charter schools in the state of Georgia right now. Our board has done a tremendous job to ensure that, but obviously an interest-only loan is not a good model. So our board is trying to take steps to refinance, which will drop our interest rates.”
The bond approval was met with cheerful response from several parents and school board members who attended the meeting.
“I just want to thank you very much,” said Pam Lightsey, a member of the SAIL School’s Governing Board, before the commissioners, emphasizing the continued opportunity for school choice in the county. “With the last couple of weeks of communication back and forth in trying to answer any questions on behalf of SAIL.”
The Development Authority is authorized to issue revenue bonds and to loan the proceeds of those bonds for various projects. The purpose of this bond is to refinance the outstanding principal amount of a Oct. 31, 2017 loan that was used to purchase the school’s campus and facilities.
While charter schools are public schools, they differ in that they have special agreements with the state, or “charters,” that allow them flexibility in how the schools operate and go about meeting state education standards.
Because of this, Dunn notes, while charter schools like SAIL receive full-time equivalent funding from the state based on how many students they have, they do not receive local tax dollars that traditional schools receive.
“Together, they have at least that influx of the local tax dollars and SPLOST money, things that we can’t take advantage of that,” said Dunn. “We only get a state tax dollars. So as you can imagine we have to be more thrifty with our money.”
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Section 147(f) of the Internal Revenue Code of 1986 requires that bonds such as this be approved by the “applicable elected representative” (in this case, the Board of Commissioners) of a “governmental unit” (Columbia County) after a public hearing after reasonable public notice. Per this federal protocol, a civil action was filed by the State of Georgia against the Development Authority and SAIL.
Columbia County District Attorney Bobby Christine, who signed off on the civil action, stresses, that this does not mean that he is suing the school or the Development Authority.
“The D.A. has an obligation to make the court aware to set aside a time for anyone with formal objection,” said Christine, explaining that the lawsuit is to ensure, according to federal law, that the Superior Court holds a public hearing regarding bond refenderums in case there are any objections. This hearing was Dec. 21 in Columbia County Superior Court. Christine says he is not aware of any objections raised in the hearing.
The Board of Commissioners first considered the bond issue on Dec. 7. Commissioner Connie Melear voted to deny the bond. Commissioner Dewey Galeas joined her in voting against it, while Chairman Doug Duncan and Vice Chairman Gary Richardson voted in favor. Commissioner Don Skinner was absent at the time, and so a lack of majority vote killed the motion.
When the issue returned to the agenda, however, members, Melear and Skinner included, voted unanimously. Melear says that her change of mind on the issue came after reviewing the matter and a revision of the resolution.
“This was an issue that came to us in the 11th hour and was something we had not seen before,” said Melear. “Some of the wording of the resolution put in front of us was not clear enough for me to be comfortable that there truly is no liability. The wording was changed to help clarify the terms, and that got all the commissioners on the same page.”
The resolution brought before the board on Dec. 21 differs from the version presented on Dec. 7 in that it adds the condition that the board’s approval is contingent on there being no indebtedness or liability on the part of the Authority, the county or the taxpayers.
Dunn said that the approval of the resolution, and the bond from the Development Authority, means putting money back into the classroom. This includes improvement of campus facilities, the addition of 8,000 square feet of modular classroom space and hope toward replacing them with more permanent facilities.
“We want to pay off our campus, and we want to be able to improve our campus, but you can’t do that with interest-only,” said Dunn. “So this is going to make it a lot better in the long term for our school.”
Skyler Q. Andrews is a staff reporter covering Columbia County with The Augusta Press. Reach him at skyler@theaugustapress.com.
