Council goes after schools for $88M decade-old loan - FOX13 News, WHBQ FOX 13

Council goes after schools for $88M decade-old loan

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    Friday, October 4 2013 3:43 PM EDT2013-10-04 19:43:45 GMT
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DOWNTOWN MEMPHIS, Tenn. (FOX13) -

Instead of creating an installment plan to pay Shelby County Schools the $57 million debt owed to Memphis City Schools from 2008, the city of Memphis will be going after an $88 million loan dating back more than 10 years.

The school system says it's owed $57 million, which is supported by a court order. The city says it's owed $88 million, as spelled out in a counter claim.

DOWNLOAD: Read documents presented to council Tuesday

A third party mediator has finally been hired to help sort the whole thing out.

The payment of the $57 million came up in council Tuesday because Councilman Lee Harris brought forward a resolution that would create an installment plan to pay Shelby County Schools $5 million at a time until the court ordered debt was paid off.

But that resolution didn't even get to a vote.

Council attorney Allan Wade suggested the council vote to stick with its legal plan, going after $88 million in loans to the school system. A 1985 bond agreement said legacy Memphis City Schools should pay back loans to build new schools.

Wade said a total of just under $88 million was borrowed between 2002 and 2008. So with this counter claim, the city's position is the schools owe Memphis, and there should be no $57 million debt.

"The city is aggressively and actively pursuing all amounts it is owed otherwise our citizens are baring a responsibility for debts it does not owe for assets, it does not owe for schools that are no being closed," Wade said.

"For me it is anti-courageous to hide behind our lawyers," Councilman Harris said. "Come out behind the curtain and be the decision makers I think we can be."

Councilman Harris was the only no vote on the resolution to go after the $88 million debt.

As for the mediation, the mediator, and when the sessions will take place still has to be decided according to Council Chairman Jim Strickland.

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