Spokane County lends $8.5 million to Central Valley School District for new middle school

Spokane County will loan the Central Valley School District $8.5 million to ensure a new planned middle school may open its doors next fall.

A dispute in the state Legislature over a state Supreme Court decision affecting water rights stopped the flow of money to the district, which is in the midst of building a new $27.5 million facility to replace North Pines Middle School at the intersection of Pines Road and Broadway Avenue in Spokane Valley. The short-term loan provided by the county Treasurer’s Office will allow construction to continue uninterrupted, said Marla Nunberg, director of communications for the district.

“We really have made a promise to the community, and we didn’t want to have that stop partway through the construction of the building,” Nunberg said.

Most of the new building’s gym has already been built, Nunberg said. Garco Construction, Inc., of Spokane is the lead contractor on the project, which will replace the existing middle school first built in 1949 and most recently remodeled in 2002. As of October of this year, 516 students attended classes at North Pines, according to the state.

The money for the loan comes from the Spokane County investment pool, the combined capital of many taxing districts, including school and fire districts, and funds overseen by the Treasurer’s Office, said Mike Volz, the county’s deputy treasurer. That $1 billion investment pool is separate from the county’s general fund, an account supported by taxes that is facing a potential $10 million shortfall, according to county officials, and has led county commissioners to begin asking department heads to slash their budgets for next year.

The county has made similar loans to school districts in the past, Volz said, but the impasse in the Legislature stalling $4 billion worth of construction projects over the next two years necessitated an abnormally heftier line of credit from county coffers.

“This is definitely one of the larger ones,” Volz said. “The circumstances are unique.”

Lawmakers in Olympia deadlocked through a regular session and three additional special sessions over what to do about a state Supreme Court opinion, commonly referred to as the Hirst decision, requiring developers to prove adequate water access before building. Republicans in the Senate said they wouldn’t approve a state construction budget without legislation addressing the court decision’s requirements. The disagreement with Democrats led to an impasse on what had been a routine part of the state’s budget process, allocating money for the construction of schools, parks and other public facilities throughout Washington.

Construction of a new Pines Middle School hadn’t originally been part of the $121.9 million construction bond district voters approved in 2015, Nunberg said, but the receipt of some class reduction grant dollars from the state last year allowed the district to push forward with design and construction of a new building. Central Valley received approval from the state last July to begin a two-year construction process for the new middle school, with state money supplementing bond dollars to pay for the work. The county’s loan will take the place of those state funds, Nunberg said.

Pausing construction while the Legislature worked out an agreement could have cost the district an additional $1 million, according to a news release from Spokane County announcing the loan.

“We were weighing out the cost of restarting construction later versus getting the loan and continuing with it,” Nunberg said.

The district may seek an additional $8.5 million, for a total loan amount of $17 million, if state funds don’t become available as construction continues, Volz said.

Rob Chase, the county’s treasurer, said the five-year loan carries an interest rate of 2.93 percent, which gives the county a better return on its investment than it would in the pool. The loan doesn’t require approval by county commissioners, he said.

Volz, who serves as both deputy treasurer and a Republican in the state House of Representatives, said he shared his colleagues’ belief that long-term legislation is needed to address the water rights issue. But he said the loan was exactly the kind of lending the county should be extending to the district, given their money bind.

“I absolutely think we need a permanent Hirst decision fix. We were there ready to work, and we didn’t get it done, even at the third special session,” Volz said.