Revenue Stream Studied For GRPS

December 17, 2004
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GRAND RAPIDS — Two city commissioners have come up with a plan to breathe new life into the Grand Rapids Public Schools system by generating a “new” revenue source that wouldn’t require expenditure of current city tax dollars.

Commissioner Robert Dean presented a resolution to city commissioners Tuesday, dubbed “The Build Schools & City Resolution,” calling for the city to assist cash-strapped public schools by applying the economic development tool of brownfield legislation to the school district.

On its face, the plan would give GRPS the same tax breaks businesses enjoy with brownfield designation, and possibly an opportunity to gain long-term value from its real estate.

As Dean stated in a letter to commissioners last week, GRPS is losing students and recently had to settle for a bond issue that represented less than half the funds the district actually needed.

“Additionally, the city’s image and economy is directly impacted by the public’s perception of the quality of our public schools,” Dean wrote, underscoring the fact that the city has a vested interest in making sure its public schools are of the highest quality.

However, Dean noted, the city is operating under a projected deficit of $30 million — which could grow to a deficit of $80 million over the next five years if resources aren’t managed prudently — so it’s not in a position to provide the district with the financial assistance it needs to ensure city schools are adequately meeting the needs of students and parents.

“The Build Schools & City Resolution has the potential to provide the public schools with a method by which they eliminate their functionally obsolete properties and generate a revenue stream that will enable them to build new facilities, operate programs and improve their cash position,” Dean stated.

According to Dean, brownfield status would allow schools to recapture 100 percent of taxes generated from redevelopment of functionally obsolete school properties and through relocation of the properties.

“These properties are currently not generating any taxes and the tools would only allow the recapture of taxes generated from the properties after they have been put back on the tax rolls,” he wrote.

He acknowledged that GRPS would have to request the use of brownfield tools for that purpose, but pushed for commissioners to immediately authorize their use “so that we can act quickly on their expected request.”

Mayor George Heartwell responded that he hadn’t had a chance “to come to a clear level of understanding” of the proposal, though he referred to it as a “very good” proposal.

“It’s the message I’ve been sending and that we’ve all been making around this table in support of preserving and strengthening our public education system. Process wise, though, you haven’t convinced me yet that the vision is benign.”

He recommended the commission take time to consider the concept and get feedback from city staff and legal counsel on the legality of changing the Brownfield Act, as well as hear what GRPS’s administrative staff has to say about the plan.

Commissioner James White said he and Dean had spent the better part of a year researching and talking with attorneys and experts in municipal finance on the viability and merits of the proposal. He said Public Act 381 already gives the city the legislative strength and right to act on the proposal, and he encouraged other commissioners to read it.

The schools don’t understand the whole brownfield legislation process because it’s not something that they do, but it’s something the city does every day, White said. He said he had discussed the possibility with city staff, talked to “all kinds of people,” including some of the “strongest people” in town.

“This has been an ongoing pro bono effort and we can drag it out as long as we want, but we need to exercise leadership,” White said. “The schools need our help now. There is nothing legally wrong with this. If we wait until everybody fully comprehends all the legal research instead of going forward with this, we will be dragging our feet.

“We have to, in this time of fiscal scarcity, become robust in everything that we do. We have to be proactive. We will not save ourselves if we continue to wait for something to happen or for something to clarify itself. We have to step forward and say to the schools, ‘We’re ready to work with you on this.’”

White said he has run out of patience. He said a mini-baby boom is on the way and when it hits, GRPS will see 29 percent to 31 percent of children caught in a situation where there will not be enough school facilities to accommodate them.

Heartwell recommended that the proposal be farmed out for further research and analysis of its viability, and commissioners subsequently declined to vote on the resolution Tuesday. White asked that at least the commission set a date to bring back the resolution for a formal vote.

Heartwell suggested that, rather, the commission start by presenting the proposal to the city’s Brownfield Authority, tentatively at its January meeting, or in a special meeting in February. No specific date for the presentation was actually set.    

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