Special account yields funds for new Chesapeake school

CHESAPEAKE

With about $29 million, the school division has enough money in its capital projects account to start work on a new high school.

That amount, and projected future deposits, gives the division the ability to borrow and pay back a $95 million, 20-year loan, while also paying existing debts and maintaining current schools, according to a report from Vicki Lucente, the division's assistant superintendent for budget and finance.

The School Board got the update on the account, which it calls a "lock box," during its annual retreat recently. The account pays for school construction, renovations or additions.

School officials want to start work on a new high school to relieve crowding at Hickory, Indian River and Oscar Smith high schools in 2008-09. Enrollment is expected to climb at those schools. They'll need room for 960 more students by 2013, based on school projections.

The project is awaiting City Council approval.

Chesapeake schools pay about $32 million in debt each year. Usually, less than a third of that comes out of the capital projects account. The school division owes money for things such as Grassfield High School, the new Oscar Smith Middle School and the Western Branch High School addition.

If the division takes out a $95 million loan, Chesapeake will have to withdraw about $18 million from the account each year to pay off the loan.

The city opened the special account about four years ago to help the school system pay for new school construction, renovations or additions.

The money comes from several sources including hotel occupancy fees, a portion of the city's real estate tax revenue and an annual city allocation. The account opened with $2.2 million and now has a projected annual income of $12.2 million.

The account guarantees the school system can repay loans, but it forces the board "to prioritize some severe needs," Lucente said.

The priciest of those needs are new schools; officials predict the city will need up to six more by 2018.

Amy Couteé, (757) 222-5216, amy.coutee@pilotonline.com