Progress continues on ES community center deal

Tuesday, July 19, 2016

The Eureka Springs Highlander Community Center Foundation and the Eureka Springs School Board are a few steps closer to signing a lease-purchase agreement for the old high school property.

Diane Murphy, chairwoman of the foundation, met with the Eureka Springs School Board at a workshop on Thursday, July 14, to discuss the details of the lease-purchase agreement. Superintendent Bryan Pruitt began by addressing approximately $88,000 in bonds that are attached to the property. The district plans to issue new bonds that would guarantee the existing ones, Pruitt said.

"We have contacted our bond people, and they are working on it," he said. "It's not done yet, but they are working on it. They have not given me a time frame."

School board president Chris McClung pointed out that the district needs to issue the new bonds before signing the lease-purchase agreement. Kristine Kendrick, the district's attorney, said she didn't think it would take too long to figure that out. Time was once an issue, but Murphy said it's not that big of a deal anymore.

"We had a sense of urgency at one point in time because we thought we were going to have a tenant there, but that's not going to happen," Murphy said. "The urgency on that end is removed from all of us, so it's just a matter of being able to go through the process."

The board also discussed approximately $120,000 left from an insurance settlement connected to the old high school property, with board member Al Larson saying that money should be used for repairs to the property. He said the damage resulting in the insurance proceeds occurred when the foundation was beginning to negotiate with the school board. Larson suggested putting that money into an escrow account, where it can be used for construction projects on the property as needed. Murphy agreed that the district needs to find some solution for the leftover money.

"We didn't know that necessarily there would be funds left over at that time," Murphy said. "Now that we know, we're on the verge of being able to sign the lease and there's still money to spend."

Pruitt weighed in, saying he spoke with lawyers about establishing an escrow account for the insurance money. He said the lawyers don't think it is a good idea but it in't illegal, either.

"They all said, 'I don't like it and it don't smell good, but you can do it,'" Pruitt said.

"What did you ask them?" Larson asked.

"I asked, 'Can we take these unused insurance proceeds and put it in an escrow account and spend it on a third party agency?' '' Pruitt responded. "The first thing they said is, 'Spend it on the kids.' "

Murphy supported the escrow account, saying it's comforting for the foundation to know the board has money allocated for the repairs needed at the old high school property.

"We'd want either to see the funds expended or deposited in an escrow account, because that's our only guarantee it's going to get expended," Murphy said. "The foundation doesn't have any enforcement ability or recourse if the school board doesn't do what it's agreed to do."

She continued, "You guys have the ability to enforce things on us, but we don't have the ability to enforce things on you."

McClung asked Pruitt if the district could put the money in an account earmarked specifically for improvements at the old high school, and Pruitt said that was possible. The district could also leave it as is, Pruitt said. Kendrick presented the options to the board, saying the money could be spent before a specific date instead of before the lease-purchase agreement is signed.

The board agreed and set that date for June 30, 2017. Murphy asked if Kendrick could stipulate that the money will be designated to improvements at the old high school, and the board agreed to do so.

"I think it just provides clarity for everybody," Murphy said.

The board moved on, discussing part of the lease-purchase agreement regarding subletting. McClung said the agreement says the foundation may sublet the property only for activities that persons under 18 can participate in. The board amended this to specify that the foundation can sublet the property only for activities it's zoned for.

The board also addressed the insurance on the property. McClung noted that the values to rebuild the property total more than $9.5 million. With the community center foundation agreeing to pay $400,000 for property insurance, McClung said he was concerned it wouldn't be enough.

Kendrick pointed out that the community center foundation is hoping to sign the lease-purchase agreement soon, saying both parties could look into how much it will take to insure the property while still moving forward with the agreement.

"You could all investigate from both ends the insurance situation, and the lease can always be amended to conform to whatever we end up doing," Kendrick.

The board's next regular meeting is scheduled for 5:30 p.m. Thursday, July 21, at the administration building.

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