Bill would let Air Force base schools use state low‑interest construction loans; committee hears concerns about funding and local match

Senator Don Shively told the House Education Committee the bill would allow schools on Air Force bases selected from a federal priority list to participate in North Dakota’s low‑interest school construction loan program on the same terms as other districts.

Under current law, the superintendent of public instruction prioritizes loan awards based on student occupancy, academic need, building age and other statutory criteria; the bill adds language to treat approved Air Force base projects as eligible for 2% low‑interest loans and sets an Air Force‑specific loan cap in statute.

Senator Shively said most construction for base schools is funded through federal programs with an approximate 80% federal match and a 20% local match; because bases do not levy property tax, the local share would be paid from in‑lieu‑of‑tax funds the bases receive. "The intent of this bill is to make a 2% loan available to our Air Force bases, which are selected from the priority list," Shively said.

Committee members pressed details about how the loans would be repaid and whether the loan fund would be held aside for base projects. Shively said the bill does not create a separate pot of money; loans would come from the existing School Construction Revolving Loan Fund and would still follow the fund’s priority list. He warned this could create competition between base projects and other districts and said a possible solution is additional capital put into the revolving fund.

Kylie Merkel of the Bank of North Dakota told the committee the fund typically revolves about $30 million annually, or about $60 million per biennium, and that House Bill 1369 (a separate appropriation measure) would add $75 million to the fund if enacted. Merkel said, "That increases that biannual revolving from 60,000,000 to a hundred and 10,000,000 every biennium available for new loans with that 75,000,000." She also ran estimates for demand under the changed loan thresholds passed in the prior session.

Lawmakers asked for project‑level figures. Senator Shively said a Grand Forks project under discussion could be about $100 million, though he was not certain whether that is strictly an elementary project or a larger grade span. He said an Air Force base project approved on the federal priority list would qualify for the state loan but still would need the 20% local match, which Shively suggested could be covered by the bases’ in‑lieu funds "to make the loan payments".

Representative Longmire asked whether the bill’s language simply referred to the Bank of North Dakota as "the bank" in several places; Shively said that is a drafting change by legislative counsel and does not alter the policy. Representative Marshall asked how much additional funding would be required to make the revolving loan fund self‑sustaining; Bank of North Dakota staff said demand fluctuates and that a larger fund increases the number of projects that can be supported, noting two known projects with combined demand of about $39 million at the time of the hearing. Committee members did not take a committee vote during the session.

Supporters said the loan program provides intrinsic property tax relief for districts that borrow; opponents or formal opposition testimony were not recorded. The committee closed the hearing without action; committee staff indicated further work is needed to identify a funding source and any language changes to protect other district applicants from being displaced by base projects.