Questions Raised About Leasing Schools
Posted January 1, 2008
Raleigh, N.C. — Two years after state lawmakers approved the concept of using public-private partnerships to build public schools, the first such projects are beginning to take shape.
Private developers build schools in the partnerships and lease them to school districts. Advocates say the arrangement gets schools built more quickly and cheaply than traditional methods of issuing bonds to pay for construction. But some people have questioned whether the savings truly exist.
"I believe these are the way of the future. It's a tool to reduce the total cost of ownership of buildings," said Robbie Ferris, chief executive of FirstFloor K-12 Solutions LLC, a Raleigh company that has designed an elementary school over the past two years.
Cumberland County Schools administrators could decide in the coming weeks whether to proceed with the FirstFloor K-12 Solutions design for a new school.
Ferris said leasing schools over time doesn't add to the building costs, and the energy-efficient model he is designing will cut utility bills over several decades.
"There's absolutely no doubt in my mind this will save millions of dollars," he said. "Thirty school systems across the state have expressed interest."
Charlotte-Mecklenburg County Schools are moving ahead with plans for a lease agreement on several renovation projects. School officials said the $65 million project may cost $150,000 more a year than using school bond money, but they said they might save money on inflation by having a private company get the schools built this year.
The Wake County school system is taking bids for a test public-private school that would open in 2010.
"Everywhere we have inquired about this, we've gotten more negative comments than positive comments. That really came as a surprise to me," school board member Horace Tart said.
Leasing schools is thought to be an option if bond money isn't available for school construction. But there is concern that private companies can't take advantage of lower interest rates available to schools and government.
Developers also have complained that the open process of submitting proposals to school administrators is slow and costly for them.
Tim Minton, executive vice president of the Home Builders Association of Raleigh-Wake County, said he believes the public-private partnerships have potential.
"I think the challenge is, when you're looking at private business and government, they tend to run differently," Minton said.