THE VIRGINIAN-PILOT 
              Copyright (c) 1994, Landmark Communications, Inc.

DATE: Friday, September 16, 1994             TAG: 9409150144
SECTION: CHESAPEAKE CLIPPER       PAGE: 08   EDITION: FINAL 
SOURCE: BY FRANCIE LATOUR, STAFF WRITER 
                                             LENGTH: Short :   42 lines

CITY TO BORROW $12.6 MILLION TO PUSH SCHOOL BUILDING PLANS

The City Council adopted a resolution Tuesday requesting $12.6 million in school loans from the Virginia Public School Authority. The school bond targets seven city elementary and middle schools previously on waiting lists for state funds under Virginia's literary loan subsidy program.

The bond represents the city's first move to take advantage of state loan programs since the General Assembly passed legislation in January that exempted school improvement loans from Chesapeake's annual borrowing limit.

Prior to that legislation, said City Manager James W. Rein in the council session, the city had two choices: to squeeze citywide needs for school renovations into a yearly borrowing limit of $4.5 million, or go through a lengthy process of exceeding that limit. That process includes holding a referendum, as the city does with road bond projects.

``Now that we're eligible for loan subsidy programs,'' Rein said, ``we'll see a lot more improvements for our school at a quicker rate.''

In addition, Rein said, the literary loan program offers loans at reduced interest rates of about 3 percent. ``Even when you talk about that vs. 4 percent or 5 percent, that's definitely a good deal for the city,'' Rein said in an interview.

The projects financed by these bonds have either already been completed or are under way. They include roughly $2 million of renovations each at Deep Creek Central Elementary School, B.M. Williams Primary School and Southwestern Elementary School.

In adopting the resolution, Rein said the city was effectively moving to convert these ongoing projects from short-term financing to long-term financing.

The plan was approved by a unanimous 8-0 vote. Councilman Peter P. Duda Jr. was not present.

On Oct. 11, the Council will hold a public hearing to discuss the issuing of the bonds. by CNB