KELLY CONSIDERS LEASE-PURCHASE SCHOOL FINANCING

BENTON, Mo. -- Kelly school officials will consider an alternative financing method to ease school overcrowding that would require a simple majority for passage.

The district's Builders for Tomorrow committee, which promoted three failed bond measures last year to raise funding for construction of a new high school, will sponsor an open meeting at 6:30 p.m. Monday in the high school band room.

Mark Grimm of the Gilmore and Bell bond counseling firm in St. Louis will present information on the lease-purchase method of financing new construction.

"Right now, they're doing the background work and will come back to the board with a proposal," said district superintendent Don Abner. "The other approach hasn't worked, so we're just investigating some different options."

Voters have rejected five bond proposals in the past four years -- two each in 1997 and 1999 and again in November elections -- that would have allowed for new facilities and equipment to contain the district's swelling enrollment. Either a four-sevenths or two-thirds majority vote is required for approval of bond issues, depending upon the year.

Abner said voter approval of a tax increase to finance a lease-purchase construction project would be easier to obtain than a project financed with bonds because only a simple majority is needed. The district's most recent bond election received 49 percent voter approval. The district earned 49 and 52 percent voter approval for bond measures in 1999.

The facilities committee will make a recommendation to the Kelly Board of Education later this year regarding how the district should finance construction of a new high school. The earliest the school board would seek a tax increase from voters is April 2002.

"The simple majority is probably the primary reason for us looking at this," Abner said. "We've been really close in the past, with 49 and 52 percent approvals, so we're looking at this as a possibility."

Bond and lease-purchase financing are similar in that both are permissible under Missouri law and would be repaid over a maximum of 20 years. However, they differ in how money is collected to repay debts and a district's repayment obligations.

Tax increases for general obligation bonds are made to the debt service tax levy and include a public issue of the bonds the district is required to repay. The district owns the facilities or other property during the repayment period.

Tax increases to support lease-purchase financing are made in the operating or capital projects levies. Not-for-profit corporations such as school foundations or other organizations issue bonds or obtain other financing on behalf of school districts and retain ownership of property until the debt is repaid.

"Legally, they could choose to not renew the lease and walk away from the building, but realistically it's not going to happen," said Grimm. "It's a different legal structure, but the bottom line is you're still proceeding through a bond-issue-like process to finance a project. From the investor's standpoint, there's not much difference."