Credit crisis delays Wake school plans

Wake manager David Cooke asked county commissioners and school board members Wednesday whether they wanted the good news or the bad news about how the nation's worsening economic outlook will affect new school construction.

After those in a joint meeting of the county's two elected boards asked for the good news, Cooke pointed out that the Federal Reserve had lowered interest rates a half point.

"Everything else I've got is bad," Cooke said. "The market is changing every day. Though we continue to have a long-range perspective, we're not thinking in months or years right now. We're having to think in days and weeks."

No one is buying the bonds the county had planned to sell this fall to cover construction projects through January 2010, he said. That means the commissioners and school board will have to work together to slow, delay or even cancel some planned construction projects.

Members of the school board said they recognize the economic outlook is dire, but none was ready to talk specifics about which school and renovation projects might be delayed or canceled.

What was clear is that the prospects of putting any new school bonds before voters on a 2009 ballot, as had been proposed, are increasingly dim. Even with its AAA credit rating, the county is having trouble selling a $370 million in bonds that voters approved in 2006.

"There's no market for long-term debt, at least not under terms we're willing to pay," Cooke said.

Even with a proposed one-year bridge loan to keep current construction projects going, he said, it would be prudent to delay indefinitely at least $113.5 million in planned schools.

The county is already planning to delay construction of a jail expansion, a new downtown courthouse, the new Wakefield branch library and new buildings at Wake Tech, Cooke said.

Schools are "not like a library, where it can be delayed six months and it doesn't matter," said Lori Millberg, a school board member.

If there was a silver lining to be found, at least from a student-capacity perspective, it is that the county's once red-hot homebuilding market has slowed.

Less than half the number of new building permits for single-family homes were issued in the first six months of 2008 than over the corresponding period last year -- the lowest number of permits issued in Wake County since 1995.

That translates to fewer new students entering the school system, a trend that has already begun, with growth in enrollment at the beginning of the current school year lower than expected.

The population of the county and the school system is still growing, however.

"But we are not growing like we were," Cooke said. "The growth in the tax base is slowing down."

Fewer new houses and less consumer spending will mean property tax revenue will be lower than had been projected and sales tax receipts will be less, he said.

School board chairwoman Rosa Gill said that which schools can potentially be delayed will be the top subject of discussion at a meeting of a facilities committee scheduled for Tuesday.

"Maybe the market will boomerang, and we'll have smiles on our faces," Gill said.