West Valley plans to help charter school

WEST VALLEY CITY — The West Valley City Council is planning to help Monticello Academy, a new charter school, secure a facility.

After declaring some conflict of interest Tuesday, council members adopted a proposal that would have the city act as a conduit for the school in securing a $10.5 million bond for a building — the city will lend its name to the school, and the school will receive a lower interest rate on the bond.

Monticello Academy opened its doors this week but is temporarily housed in Granite School District's former Hillview Elementary building. But, through what is called "conduit financing," the school will be able to secure a bond to build its own facility.

Gary Belliston, financial specialist in the State Charter Office, said Utah law allows governing bodies that can issue tax-free municipal bonds to enter into partnerships with nonprofit corporations and assist them in obtaining a bond.

West Valley City officials said the bonds would not be taken out by the city. Essentially, the city would only act as a reference for the school, giving its board the authority to go on the bond market and solicit loans.

Even if the school "defaults, goes belly-up," the city has no risk and no responsibility, said Councilman Joel Coleman.

The city's approval amounts to no more than the city saying, "We think this is a very safe and worthy cause for our community," he said.

"There is absolutely no liability to the city in the issuance of these bonds, it will not effect (the city's) debt...and it's a way to enhance educational opportunities for children without any liability or cost to the city," said Paul Isaac, West Valley City manager.

Unlike school districts, which collect revenue from property taxes for school buildings, charter schools are not a taxing entity and cannot create revenue for facilities. They must rely on state and federal start-up funding to get a school up and running.

Many new charter schools hire charter development companies that help finance facilities and start-up costs. But Monticello officials opted not to go with a development company, saying they wanted to keep the control and decision-making in the school.

Timpanogos Academy and Ranches Academy, two charter schools in Utah County, also received conduit financing through the Utah County Commission a few years ago.

Coleman and City Councilman Mike Winder are members of the charter school's board of trustees. That raised some eyebrows among West Valley City residents at the meeting.

But Coleman said the city's involvement does not represent a conflict of interest.

"Anyone else could (get this help) from the city," he said. "The natural assumption is to think, 'Oh, since the two council members are on the board, there may be some preference.' But the reason we're council members is the same reason we're starting the charter school: We're parents, we care about our students and want a better school for them — we want to make our city better."

Jim Welch, the city's finance director, said the proposal will go into a 30-day "contestability" period when its legality can be challenged before its final acceptance.

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