City to borrow to make good on school $ pledge

Posted: June 06, 2014

AFTER A YEAR of squabbling, Mayor Nutter and City Council President Darrell Clarke must show how they will make good on their $61 million pledge to the School District of Philadelphia today, the deadline for introducing new bills in Council this fiscal year.

The two sides negotiated yesterday over how much of the $35 million they still owe should come from borrowing. Nutter said he will transmit a bill to Council this morning.

The issue dates back to last year, when Gov. Corbett orchestrated a last-minute rescue package for the district. One provision authorized the city to borrow $50 million on behalf of the district in 2014.

Clarke opposed that plan and came up with a new way to get the $50 million: The city would buy empty school buildings from the district and resell them.

The administration was doubtful, and Nutter and Clarke sparred until days before school began in September. They finally reached an agreement in which the district would sell as many properties as it could during the year, and the city would cough up the rest of the cash at the end.

After seven building sales and additional expenses, the bill to the city is about $35 million.

Sources said Nutter initially proposed borrowing that amount, but Clarke wanted a smaller borrowing in the hopes of securing money from the pending sale of the William Penn High School building.

Late yesterday, the two sides were discussing borrowing $20 million but hadn't reached a deal.

In a hearing yesterday, Clarke pressed Superintendent William Hite on why the district didn't sell more properties this year.

"This whole school building sale has been one of the most frustrating processes. . . . It just seems like, 'We'll get to it when we can,' " Clarke said. "But every time we turn around, people are asking Council, 'When are you going to take action? When are you going to give money to the district?' "

Hite said the district acted with "urgency" to complete the sales.

"We have agreements of sale on seven properties, which will be closed by the end of this fiscal year," he said. "It's not like we've been sitting around trying to delay the process."

The borrowing costs will be paid for by making permanent the "temporary" 2009 city sales-tax increase from 7 percent to 8 percent, a measure that passed out of committee yesterday. That measure, shepherded by Clarke, was the source of all the disagreement. It calls on Harrisburg to amend last year's school-rescue package so that a greater share of the sales-tax revenue goes to the city's pension fund.

After relentless pressure from local-schools advocates, Clarke added a fallback provision that will allow the tax to become law even if Harrisburg doesn't act. In that case, $120 million will go to the district, and a smaller slice that will grow over time to pensions.

Also yesterday, the Committee of the Whole approved next year's $4 billion city operating budget, concluding two months of departmental hearings on the mayor's spending proposals.

Unless it adds another session, Council's last meeting before the July 1 budget deadline is June 19. To receive the requisite two public readings, all bills for this year must be introduced today.

- Staff writer Jenny DeHuff

contributed to this report.

On Twitter: @SeanWalshDN


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