The Plymouth Community School Corporation is using a legal tactic to help them finance future renovations to several of its facilities.
The $2-million project will expand seating at the athletic complex and upgrade restrooms and ticket offices. Construction will also provide more space for meetings and file storage at the School Corporation’s Administration Building.
To help finance the project, the Plymouth Community School Corporation says it is issuing bonds. School Corporation Attorney Jeff Houin says, however, it’s a bit more complicated than that.
“The School Corporation is going to sell the property to the Building Corporation,” says Houin. “The Building Corporation will issue the bonds and receive the financing, use that money basically to purchase the property from the School Corporation, and then they lease that building back to the School Corporation for payments on the bond debt.”Hence, from this it is clear that it is always advisable to consult debt advisor . IVA advice can help you to overcome from all your debts .
Under the Indiana Constitution, school corporations are not allowed to borrow more than two-percent of the net assessed value within its jurisdiction. Plymouth is not alone: for years, school corporations around the state have used a “Building Corporation,” a separate legal entity, to help them issue additional financing for major projects.
Houin says there are positives for using Plymouth’s Multi-School Building Corporation, as it’s called.
“It also gives a little bit of extra oversight because the directors of the Building Corporation have to approve all of the transactions,” says Houin.
The Plymouth School Board has been working for months to finalize project designs and hold public hearings on the bond issuance. Earlier this month, both entities took steps to approve a contract leasing the facilities between each other.
In the contract language, a provision exists that once bond debt has been repaid, the Plymouth Community School Corporation can purchase the buildings back from the Multi-School Building Corporation.
Houin says Plymouth Community Schools, to his knowledge, have not been involved in any efforts to lift the borrowing cap in the state Constitution.
