A few weeks ago, we held a community meeting for the task force that has been instrumental in the high school renovation project. It seems hard to believe, but this task force was created just over a year ago to examine our high school facility and determine which updates and renovations were necessary for a building that is now 25 years old. The work of the task force culminated in voters approving an $11.65 million bond issue in September 2022. Since that time, our team has been working hard behind the scenes on a major construction project that we expect to begin this summer. Our most recent meeting was an opportunity to share the progress that has been made, review the timeline, and discuss the budget.
Until just this last week, our budget projections have been calculated on what is known as schematic design (SD). This means construction estimates are based on cost per square foot. Those budgetary numbers were right around $12.05 million. When we met with the board last week, the numbers became more refined—and larger—because we are far beyond SD and now at the design development stage (DD) of construction. This is where we begin to see a truer cost of our project.
At the same time, we will not know the costs for certain until the construction documents are completed (CD) and the project goes out to bid. Nonetheless, with our DD largely complete, we are confident that we are within 5 percent of the total cost at this stage in the process.
You want to know the number, right? Hold on to your hats!
It has been a bit of a moving target over the last week, but the DD budget got as high as an “all-in” cost of $15.6 million. This included a base bid projection of $14.6 million and a series of alternates that add up to just over $1.05 million. It’s also before figuring in a new bus barn that has not yet been designed, which we anticipate somewhere around $1 million.
Fortunately, these higher numbers were no reason to panic. I have watched many of my colleagues, who are also at varying stages of project development, go through similar evolutions that made them want to pull their hair out. (Not a problem for me.) Instead, it was an opportunity to call the team together and engage in a process known as value engineering (VE).
Before we get to that, it is important to know that the DD phase is when we look at everything. We get lots of input from the people who will be using the space. What do they like? Carpet or tile? How many fixtures? My approach to this phase has been to allow the creative process to unfold, knowing that, ultimately, we were going to need to reel in our expectations. That is where we now find ourselves.
At this point, we have value-engineered $1.64 million of the total budget. That makes our base bid estimate right around $12.9 million, with about $1 million of alternates. That get us to an all-in cost of about $14 million. We also have the bus barn to consider.
Value engineering is ongoing, as our construction manager, architect, and engineers have all been challenged to continue this process to make sure we are being both efficient and responsible. I am eager to see the outcome.
Now, you may be wondering: will we end up at $11.65 million? No, probably not.
This was the crux of the conversation at our most recent school board meeting. We focused on two key themes during our discourse. First, is there a financial path forward to fulfill our vision? Second, are wholesale changes to the project needed to bring it closer to the original estimates?
To the first question: Yes, we have a pathway forward. During initial planning for this well over a year ago, we knew that $11.65 million was close to the maximum debt allowed on our bond issue, while still fitting within the confines of a $2.70 tax levy. Anything beyond that would require a levy of $4.05, and no one was interested in that. Further, we need to be mindful of our constitutional debt limit, which is right around $16.1 million. This means that even if we wanted to, we could not complete a project more than that amount. With those known variables, we can consider other financing options that do not impact the debt limit or tax rate.
To do so means leveraging both our SAVE and PPEL resources. At the same time, it is imperative that we do not risk other district priorities. In our financial testing, we consider annual commitments from these funds somewhere in the vicinity of $600,000. This includes expenditures like computers for classrooms and students, school buses, and other emergency expenditures. To finance a project budget of $15.5 million, we will need to sell a revenue bond of roughly $2.3 million and a PPEL note of roughly $1.2 million. According to my analysis, this will enable us to still meet our current district priorities and end each fiscal year with a capital fund balance of about $1 million. Clearly, we have a path forward.
Now, to that second question, which really drove to the heart of the conversation the school board had at our last meeting: Do we make wholesale changes to lower the project cost? The only real way to do so is to cut significant square footage out of the project. In the final analysis, the board must wrestle with the idea that, at some point in the future (say 15-20 years from now), none of us will be satisfied with our legacy if our successors question the wisdom of the decisions we make today.
Granted, we are still a few months away from seeing the final budget. That will remain unknown until the bid date. There is still ample time for unwanted surprises. But for now, we have a vision and we have a plan to execute on that vision.
