Private Financing Plan to Speed School Project

The Los Angeles Unified School District hopes to complete construction of a new high school in East Los Angeles in record time--two years instead of four or five--because of an unusual private financing plan approved by the school board Monday.

The Lincoln Medical Magnet High School, a proposed $45-million campus for 2,000 students interested in learning about health professions, will be built by National Medical Enterprises, a Los Angeles-based health services corporation, and underwritten by two major banks.

Under the novel plan, BankAmerica Capital Markets and Security Pacific Merchant Bank will provide the construction money through the sale of $45 million worth of certificates of participation, a type of private bond, said district chief financial officer Robert Booker. The district will lease the campus for $4.7 million a year and, at the end of 20 years, will own the campus.

Cost Is $73 Million

Including interest, the school district will pay out a total of $73 million over the 20 years--about the same cost as if a public school construction bond was used, Booker said. Ground-breaking is scheduled in mid-May.

District officials said the specialized campus will be the first public high school in the state to be built with private financing.

“It is a viable (method) as long as you don’t overextend your ability to repay” the loan, said Booker, who added that other district projects may be financed in a similar manner.

Since the passage in 1978 of Proposition 13, which made it virtually impossible for school districts to raise money locally for school construction, schools have been built primarily with state funding. The chief advantage of the arrangement approved by the Los Angeles school board is that it will enable the district to bypass a lengthy state financing process and thereby cut construction time in half.

Crowding Problem

Reducing construction time is crucial to the district because many of its schools are overcrowded. The new magnet school would help relieve overcrowding because it gives top priority for admission to minority students whose neighborhood schools are running out of classroom space.

The plan for the high school is the result of a series of agreements involving the district, National Medical Enterprises and USC. National Medical Enterprises, which owns or operates more than 400 hospitals across the country, is building a new teaching hospital for USC in the same area as the high school. To complete the hospital site, USC purchased about four acres of surplus district property and also donated $1.5 million to the district for construction of the medical high school.

The Lincoln Medical Magnet High School will be the first district school built exclusively for a magnet program, district officials said. A voluntary integration program encompassing 86 schools and centers, magnet schools attempt to attract a racially balanced mix of students through unique learning approaches, such as schools that focus on particular subject areas.

Because of its proximity to the County-USC Medical Center, Lincoln will offer special opportunities to learn about careers in health fields, in addition to providing a comprehensive high school curriculum, officials said.

The campus will include a five-story building with 60 classrooms and laboratories, a gymnasium, library, teachers’ lounge, student store, lecture hall and cafeteria.