CHICAGO -- The Detroit Board of Education next week will consider placing a referendum on the November ballot seeking authorization to issue $1 billion of general obligation bonds to finance school renovation projects.
The proposed bond authorization would probably be the largest in the state's history, said Nick Khouri, Michigan's chief deputy treasurer.
Detroit Public School DiStrict superintendent David Snead earlier this month proposed that the school district issue between $1 billion and $1.5 billion of GO bonds over a 10to 15-year period to modernize the school system's aging facilities, according to Michele Edwards, manager of public information for the school system.
The school district has asked state Treasurer Doug Roberrs to qualify the bonds for participation in the state's School Bond Loan Fund, which is a credit enhancement program for school bonds.
The district must receive preliminary qualification from Roberts before the school board can vote on placing the bond authorization before voters, Khouri said. Edwards said the board is expected to vote on the referendum measure on Tuesday.
If Roberts issues a preliminary qualification and the bond anthorization is approved by the board and voters, Roberts would be required to issue a final qualification shortly before the bonds are sold, Khouri said.
State treasury officials have met with Detroit school officials to discuss the bond amhorization, Khouri said. He added that the treasurer will review the financial structure of the proposed bond issuance and the purpose Of the debt before issuing a preliminary qualification for the bonds.
Under state law, the district is required to show that the planned improvements are necessary and that the cost is reasonable.
The School Bond Loan Fund is a constitutional and statutory program establish~ by the state that:provides security for the timely payments of debt service for qualified school districts.
If a school district in the program cannot pay its debt service, the state will lend money from the School Bond Loan Fund to the district. The school district then repays the loan to the state as pan of its annual debt service.
The qualified bonds would carry the state's GO bond rating. The state's GO debt is rated AA with a stable outlook by Standard & Poor's Corp.,-- A1 by Moody's Investors Service, and AA with a stable trend by Fitch Investors Service.
Edwards said the average age of schools in the district is over 65 years. The district has not begun any new construction in the last 12 years, she said.
"These facilities were built for educational Uses that have completely changed," Edwards said.
The proposed renovation plan includes the construction of new schools, modernization of electric wiring to accommodate computer facilities, and the repair of existing buildings, Edwards said.
The improvements will help the district keep pace with a projected 12% increase in school district enrollment to 190,000 students by 2000, she said.