Akron city and schools reopen review of CLC agreement, cite $18 million in bond proceeds and arbitrage risk

Akron City and Akron Public Schools officials met Oct. 10 under the Joint Board of Review to restart oversight of the Community Learning Centers (CLC) cooperative agreement and to review remaining bond proceeds, reserve funds and access issues.

The session focused on two pools of money: about $18 million in school-held bond proceeds from a 2016 issuance and an $18 million or so city reserve that helps guarantee debt service on the CLC bonds. City finance officials warned that federal arbitrage rules could require returning a portion of the interest earned on the bond proceeds unless the parties act to use the funds for eligible capital projects.

Why it matters: The CLC bonds and their associated income tax pledge remain on the city balance sheet through February 2033, and annual debt service is currently about $20.3 million. Akron Public Schools contributes $3 million of that each year; the city covers the remainder. If the dedicated quarter-percent income tax were insufficient in a downturn, the city could be required to use broader income-tax revenue to meet bond obligations, officials said.

City finance director Steve Fricker said, “So the bond proceeds, there's about $18,000,000 in bond proceeds, that is the remnants of what was last issued in 2016.” Dr. Thompson, responding for the school district, said $18,190,000 “sits in that account right now,” and stressed that the longer the funds remain unused the greater the arbitrage risk.

Officials gave multiple, related figures during the meeting: the city described total…