- The Washington Times - Sunday, September 9, 2001

The tax bill that President Bush signed into law in June could be a boon to local governments who need to build new schools. The law encourages school systems to form partnerships with private investors, who would finance the construction of public school facilities with tax-exempt bonds and then lease or sell the facilities back to the school system. Call it school choice financing or a new twist on public-private partnerships. Either way, it is an idea whose time has come.
Indeed, the traditional approach to building new schools calls for taxpayers to foot the entire bill, usually through public sector bond offerings and often only after voter approval. After those issues are settled, the community haggling begins and the bureaucracy kicks into regulatory and environmentally correct overdrive. Along the way, stakeholders ponder design plans and reviews, oversee the competitive bidding process and lay out plans for project labor agreements (PLAs), which can mandate all sorts of things, including union-only labor, residency requirements, racial and gender hiring quotas and subcontractor set asides. This approach invariably creates unexpected costs and expected delays.
Moreover, this approach not only costs more and takes longer (an average of five years), but it forces governments to try to do what the private sector does best. "Under the conventional process, public school systems try to be both educators and real estate developers and often end up doing an inadequate job of both," says Ronald D. Utt, a senior fellow at the Heritage Foundation and author of the recently released backgrounder, "New Tax Law Boosts School Construction with Public-Private Partnerships."
Several school systems have already established new school construction partners. Faced with overcrowded classrooms, Houston, for example, partnered with Rhode Island's Gilbane Properties Inc. to build two new high schools. The schools, Chavez and Westside, were completed and ready for students within two years, and the cost was $20 million below original projections.
By contrast, consider two perfect examples of how the public sector, which borrows money to build schools, mismanages school construction. In the early 1960s, the census dictated that D.C. Public Schools needed another high school. Plans were made to build H.D. Woodson in Northeast. Original plans called for the nine-story, then-state-of-the-art school to have elevators and escalators for students and faculty and facilities for a top-flight marine science program. Cost overruns and labor delays, however, left the 1,000-student school with a single faculty-only elevator, one set of escalators and a swimming pool that's inoperable most of the time.
Another Northeast high school, the old McKinley Tech which was closed because of decreases in school enrollment, crime and other neighborhood problems is expected to reopen as part of the high-tech corridor along New York and Florida Avenues. The city expects to spend about $37 million to rebuild Woodson and $45 million on McKinley.
A lot is riding on how D.C. officials carry out the plans for Woodson, McKinley, and other construction. Considering the low marks the city makes on its academic programs and the ambitious promises it has made to raise achievement, D.C. officials would be wise to tap partners in the private sector.

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