Skip to comments.Memphis: Schools to get loan, no builder authority (air conditioning scam)
Posted on 12/04/2002 10:08:32 AM PST by GailA
Schools to get loan, no builder authority
By Aimee Edmondson firstname.lastname@example.org December 4, 2002
The Memphis City Schools air-conditioning controversy has prompted City Council chairman-elect Brent Taylor to call for revamping the way taxpayer money is spent to build and maintain schools and other city buildings.
He'd like to see Mayor Willie Herenton revive an old suggestion of creating a public building authority to handle school construction.
"Not to cast aspersions on the city school board," Taylor said, "but we can obviously see much of the attention is focused on construction and facility maintenance and not on education.
"The focus needs to be on the failing schools," Taylor said, referring to the 46 schools on state probation in the 175-school district.
Yet through his spokesman, Gale Jones Carson, Herenton said he isn't interested in trying to get a public building authority cranked up because of all the red tape involved.
"He's leaving that alone completely," Carson said Tuesday.
In 2000, after learning about seemingly unnecessary sky-high prices for building nine new city schools, a disgusted Herenton called for the construction duties to be removed from school board powers and placed under a public building authority.
Both city and county school boards didn't like the idea, and it eventually fizzled because their approval was necessary for the change.
Now the city is actually enabling the school board to move forward on its controversial air-conditioning job that estimates show is millions overpriced.
Like a homeowner with an equity line of credit from the bank, the school district can tap into as much as $50 million in loans from city government.
And like that homeowner, school officials don't need the banker's blessing for specific home improvements such as a new air-conditioning system or a new roof.
That's how the school district plans to pay for air-conditioning replacements at Longview Middle and Whitney Elementary, as well as several other projects in the works.
Both internal and external estimates show the school system is paying millions more than it should to replace heating and cooling systems at Longview and Whitney.
School officials had put the work on hold because they didn't have the money, but the school board directed them to move forward immediately - in spite of the fact that they received only one bid and internal estimates showed the price to be as much as $4.8 million too high.
The City Council approved setting up an open line of credit after the school district requested it in 2001. That's when the district went millions over budget to build the nine new schools. As is the case with the latest air-conditioning job, the school district received only one bid, which industry experts considered to be astronomical.
Contractors have long said they quit bidding city school jobs because the work always goes to favored minority-owned companies.
After a group of white contractors sued the school system, the board began using a construction manager to complete work.
Under state law, that's a professional service where government bodies can choose companies based on qualifications and proposals rather than low bid.
Now Joseph Lee, the city's director of finance and administration, is waiting for the school board to ask for the money for the air-conditioning work. School officials are scheduled to do so today.
"The city is ready, willing and able to support the schools with this loan agreement," Lee said.
The school district is currently paying back $48 million it borrowed over the past decade.
In addition to funds from Shelby County government, the city has given - rather than loaned - $175 million to the school district over the past eight years.
If school officials borrow the full $50 million, which they may do at any time, they'll have to pay $30 million in interest on the 20-year loans.
The air-conditioning jobs have garnered attention in recent weeks, even spawning a lawsuit by local contractors who say the school district illegally showed preference to minority vendors during the bid process.
But the main focus has been on the price.
School board staff estimated the job to be worth $10 million to $13.1 million, a range of $4.8 million to $1.7 million less than the single bid from Honeywell International.
Two other external estimates, one from Memphis air-conditioning and heating company W. A. Soefker & Son Inc. and another from an expert hired by The Commercial Appeal, show the job to be about half of Honeywell's $14.8 million price tag.
These two schools are two out of 26 in line to get new air-conditioning and heating systems.
- Aimee Edmondson: 529-2773
The whole school board should be forced to resign, but what good would that do? The board would only be replaced by a new committee of incompetance.