Tolleson board approves $25 million lease-leaseback to fund Isaac payroll amid objections

Tolleson Union High School District on Tuesday approved a resolution authorizing a $25 million lease-leaseback arrangement intended to provide immediate cash for the Isaac Elementary School District so it can meet payroll for roughly 5,000 students and staff.

The board approved the resolution after a public hearing that included teachers, parents and state legislators who urged Tolleson to act quickly; several speakers opposed using Tolleson funds to cover what they described as another district's fiscal problems. The motion passed in roll call voting with a majority in favor and one board member saying she could not vote yes.

Superintendent (name not specified) and district staff described the structure as a 12-year lease-leaseback at 6% interest, not a title transfer. Under the plan Tolleson would acquire leasehold rights to an Isaac facility and lease it back to Isaac. The superintendent said the total payments over 12 years would be about $35.4 million, meaning Tolleson would receive approximately $10.4 million in net interest if the arrangement runs the full term. The transaction includes no prepayment penalty, an estimated $100,000 in delivery costs and contractual limits designed to protect Tolleson, including a clause that Isaac may not close more than two schools during the lease term without paying the outstanding balance in full.

Why it matters: supporters said the infusion would allow Isaac to meet a near-term payroll deadline and avoid displacing students midyear; opponents said Tolleson taxpayers should not underwrite another district's mistakes and raised legal and financial concerns.

Public comment and legislative support

Several teachers and community members from Isaac and Tolleson urged the board to approve the measure. Eddie Nunez, who identified himself as having family ties to Isaac, told the board, "you guys are our neighbors ... this is community helping community," and expressed gratitude if the board moved forward. David Koehnauer said he is a Tolleson resident and an Isaac-area teacher and asked the board to "vote in favor of throwing this lifeline to the Isaac School District." Melissa Grimshaw, speaking as a union member, said Isaac staff "need to be paid" and thanked Tolleson for a "creative solution." Senator Annalise Ortiz said, "it's my understanding that this will not have an impact to the district's immediate finances and that this money will be paid back with interest." Representative Cesar Aguilar and other legislators also urged support, saying the students should not be displaced.

Opponents framed the item as an inappropriate use of Tolleson funds. Mark Medrano called the proposed $25,000,000 "very inappropriate" and said, "It's illegal to loan this money at 6% interest," arguing the funds should remain in Tolleson schools. Other speakers asked the board to delay the decision to allow more community study and legal review.

District presentation and safeguards

The superintendent said he first learned of Isaac's fiscal crisis on Jan. 10 and that Isaac was placed into receivership; once warrants and payroll were frozen, the district had no cash to continue payroll. He said standard bank financing would take weeks, so Tolleson explored a lease-leaseback that could provide cash by Friday to cover payroll. Key terms the superintendent reported:

- Principal: $25,000,000 - Term: 12 years - Interest: 6% (structured as lease payments) - Estimated total payments: $35,400,000 (Tolleson would earn about $10,400,000 over full term) - Estimated transaction/delivery costs: $100,000 - No prepayment penalty - No title conveyance; Tolleson would hold leasehold rights and lease the property back to Isaac - Contractual protections: limits on school closures (no more than two closures without full payoff) and default provisions - Receiver has demonstrated approximately $9,000,000 in budget capacity after the transaction, the superintendent said, and Tolleson staff reported having $73.8 million in maintenance and operations funds and $6.2 million in capital carryforward.

The superintendent said he had consulted the Arizona State Board of Education, the Auditor General's Office, the Arizona Department of Education, the county superintendent's office and other legal advisers and that legal questions raised had been addressed.

Board discussion and vote

Board members who spoke framed the vote as a choice about community responsibility and student stability. Member David Del Glazio said he believed there would be "no negative or adverse impacts to our students and staff" and described the district's surplus as enabling the action. Member Miguel Ortega said the structure "brings some sort of comfort" because the funds are expected to be repaid. One board member, identified in the meeting as Dr. Luna Herrera, said she had studied the structure but could not, "in good conscience," vote yes that night because she believed the proposal needed more legal review and because of constituent concerns.

A motion to approve the resolution authorizing the lease-purchase agreement and ground lease for property related to Isaac Elementary School District No. 5, Maricopa County, Arizona was moved and seconded. The board conducted a roll call vote; a majority voted to approve the resolution and the meeting record shows at least six named board members voting yes and at least one board member voting no. The resolution passed and the district announced plans to execute the transfer the next day and to process a budget revision so Isaac employees could be paid by the next payroll.

Discussion vs. decision

The board separated discussion from formal action: public comment and staff presentations were part of the discussion. The formal action taken was the vote to approve the lease-leaseback resolution; the superintendent and staff were directed to proceed with transaction steps as described, including coordinating with the county treasurer to release funds for payroll and preparing any necessary budget revisions.

Next steps and caveats

According to the superintendent's presentation, Tolleson planned to transfer funds and revise its budget the next day so Isaac payroll could be funded that week. The district said Isaac could prepay the lease at any time without penalty; staff suggested the district in receivership could issue a bond in the future to retire the lease payments. Opponents warned of potential legal challenges and urged more time for review. Several board members said they had received petitions and significant public input both for and against the plan.

Votes at a glance

- Motion: Authorize resolution approving lease-purchase agreement and ground lease relating to lease-purchase financing of certain property to fund current obligations of Isaac Elementary School District No. 5, Maricopa County, Arizona. - Outcome: Approved by majority; one board member stated she could not vote yes and declined to support the motion.

This article summarizes the publicly stated terms, public comment and the board's action as reflected in the meeting record. It does not assert outcomes beyond the board's authorization and the superintendent's stated next steps.