District faces bus garage lease increase
The Park Rapids School Board is looking into other options after receiving a proposed one-year bus garage lease almost doubled from the previous year.
The lease agreement between Shell Prairie Agriculture Association and the school district was $10,230 last year. This year, the proposed one-year lease is $19,488, from July 1, 2009 to June 30, 2010.
"There are a couple of areas that are distinctly different than the last lease, one happens to be the cost," said Superintendent Glenn Chiodo at Monday's school board meeting.
The board needs to decide where it wants to go with this, he said.
"Last year, there was lots of discussion of building our own" but we decided to go with the lease, which made sense at the time, Chiodo said.
This year's lease also includes additional stipulations involving environ- mental issues. The school district would also be responsible for maintenance on the buildings under the proposed lease.
Chiodo said the board has a little time to make a decision but the current lease expires June 30.
"The board needs to give 60-day written notice if you choose to do something other than renew the lease," Chiodo said. Sometime in April the board will need to decide.
"What are we getting in addition to what we're currently getting for a 90 percent increase?" asked board member Gary Gauldin.
"Nothing," said business manager Carol Hutchinson.
"From what I've read, Park Rapids 309 can't afford this lease," Gauldin said.
"We have some options, none of them are very good, they're all very costly," said board chairwoman Sherry Safratowich.
Board member Dennis Dodge said he recalled discussions last year and some of the options included contracting for bus services or building a bus garage on school district property. The district decided contracting for services was not a good option last year.
Hutchinson said she has begun looking into how much money the district could borrow that would equal the proposed lease payments of $1,624 per month over the course of a year.
"We could do capital facilities loans, which by statute are limited by 15 years, so they're actually bonds that are issued. It decreases our operating capital funds," Hutchinson said.
The other option is a lease-purchase.
"The interest rates are higher but the issue costs are lower than they are with the other option so it's a balancing act," she said.
Board member Stephanie Carlson said another option would be to park the buses outside.
"That is an option for our district," said board member Karol Savage. "We would need a mechanics bay for repairing the buses. But there are options."
But any option costs money.
"We're really bound by a dollar amount, just like we are personally," Safratowich said.
Chiodo reminded the board that the district will likely being going through some heavy reductions in the next month or two.
"I think it's imperative, although I agree with moving in that direction, I think it's imperative that we look at this fairly carefully and methodically," Chiodo said.
There will be lots of questions out there and Chiodo said he wants board members to be well versed on this subject before any decisions are made.
If the school district decided to move ahead with building its own bus garage, it would be capital dollars, which are different than the operating budget, he said.
The board got the impression last year that the lease would probably increase.
"I think we knew (the lease) would go up but ... this is paying for something we don't own, we don't have any control over," Dodge said.
A bus garage had been in place with Shell Prairie Agricultural Association since October 1968. The district made payments for the building until the fair board's loan was paid off. Then, the district paid for repairs, maintenance and insurance. The fair board had asked to renegotiate the lease. The district declined and the fair board sued and won.
The school board decided Monday night to appoint a committee to explore all options about the bus garage.
It will bring the issue back to a meeting in April.