Detroiters Await Repairs From '94 Bond Vote
The long-delayed, massive repair program for the Detroit public schools is lurching forward at last.
District officials say they expect 30 projects to be under way this week, almost 3« years after Motor City voters approved what was then a record $1.5 billion bond sale for school construction.
Except for some preparation work last fall, the problem-ridden program has so far brought no improvements to Detroit's 184,000 students, who occupy some of the nation's most decrepit school buildings. (" Building Plan In Detroit Still Only a Dream," June 11, 1997.)
The projects on the district's to-do list this spring include roof and window replacements, upgrades for health and safety, and an addition to the system's African-history museum that will allow an alternative high school based there to expand, according to Arthur Carter, the deputy superintendent in charge of community relations.
"People are on the [construction] sites now," school board President Irma Clark said in an interview last week. "Overall, I am satisfied we finally have a handle on this bond issue."
Case for Caution
But the Michigan official who approves state backing for local bonds, Treasurer Douglas B. Roberts, sounded a strong note of caution.
The district wants him to approve the sale of another $200 million in bonds so the securities can be offered at the lower interest rate that state backing makes possible.
In 1996, Mr. Roberts approved the sale of $89 million in bonds, the first chunk of the $1.5 billion voters approved in 1994.
But the treasurer said last week that he had not been asked to approve the next chunk or shown what he needs to see before he can do so.
"In my opinion there's nothing in front of me to say yes or no to," Mr. Roberts said, though he acknowledged that papers had recently arrived that he had not yet had a chance to review. "All they have to do is show me they have in place a tracking system so you can show where the money goes."
Mr. Roberts said he was concerned, too, that so little of the money from the first bond sale had been spent.
He said the district had earned $8.3 million in interest on the money from the sale, ending with a total of about $91 million in the bank.
Deputy Superintendent Carter could not provide exact figures for what had been spent, but Mr. Roberts said the district reported spending about $5 million for management and architectural fees and another $118,000 on construction costs.
The earnings on the proceeds from the first bond sale and the length of time the money has been held could signal tax-law violations, Mr. Roberts said.
If the Internal Revenue Service were to decide that, by not spending the money in a timely way, the district compromised the tax-exempt status of the bonds, it could ask the district to pay the tax liability or face losing the status that helped make the bonds attractive in the first place.
The IRS does not say whether it is auditing a particular bond seller, and a spokesman for the agency in Washington declined to discuss a specific case.
"My experience with the IRS is they would not be happy," Mr. Roberts said. "Is it appropriate for me to allow [the district] to borrow $200 million more when there's more than $89 million sitting in the bank?"
Mr. Carter suggested that the question would soon be moot. "We expect to start spending money in a rapid manner, so we don't anticipate any problems" with the IRS, he said. As of last week, he added, the project for the first time has a chief who reports directly to the superintendent.
But word of progress hasn't gotten out, and, even if it had, some seem to be waiting for proof positive.
"This is obviously an in-house kind of secret," said John Elliott, the president of the Detroit Federation of Teachers, which opposed the bond issue in 1994. "The whole business has become a kind of Keystone Kops project when we should be calling it a tragedy."