Multimillion Dollar Questions for the School District


In 2015, the Bainbridge Island School Board and approved a capital projects levy request for $81.2 million to replace Blakely Elementary and High School Building 100.

The bond levy was based on a $39 million estimate to replace Blakely Elementary, and  $42.2 million to replace Building 100.

At the time of the bond campaign, Bainbridge.exposed researched the current building costs and school comparisons used by the School District and approved by the School Board and concluded in a January 25, 2016 posting:

“Conclusion: A bond amount of $39M for Blakely is about $9 million more than what the school should cost. Blakey Elementary replacement should be in the range of $29M-$30M.”

This civilian cost estimate was totally dismissed by the School District, some members of the School Board, and  very strongly disparaged by some school supporters on social media.

As would be expected on Bainbridge Island, island voters approved the school bond capital projects levy.

Mithun, the School District’s architect for Blakely Elementary has completed a 290 page Educational Specification Document, and it is now posted to the school district’s website. The budget page:

__________________________________________________________________________

screen-shot-2016-09-08-at-3-40-47-pm

___________________________________________________________________________

Using the additional costs experiences at Wilkes Elementary and adding an inflation factor, the additional soft costs will likely be between  $4.8 million and $5 million (they were $4.6 million for Wilkes discounting land acquisition and a new water main costs). That includes an extensive laundry list of costs including architect fees, special consultants, permit fees, utility fees, new furniture and playground equipment, new computer and tech equipment, building commissioning costs, etc.

An additional $5 million (high estimate) for additional soft costs would leave some $7.7 million of the bond levy’s advertised $39 million for Blakely Elementary still unexplained IF the construction cost of Blakely is  $26,291,948 as the recently released Educational Specification document states. However, that “fixed” construction cost figure may change as the project is designed and actual construction bids are considered per Tamela Van Winkle, BISD’s capital projects manager.

For Wilkes, there is still slightly more than $3 million of the bonds $32 million the school district seems not to have informed the public how the money has been or is planned to be used. Capital projects staffing likely accounts for some of that, but that’s a small staff, and  there was also an additional $10 million in the Wilkes replacement  bond levy for additional BISD capital expenditures, none of which were specifically detailed to island voters.

Bainbridge.exposed position is that voters who approve multiple millions of dollars in property tax levies deserve full and open transparency on where the bond(s) money is being expended.

Pretty simple, straight forward concept.

The Blakely Elementary School capital project is still an early  work in process …and this blog is just following money trail.

 

 

 

 

Part 6: BISD $81.2M Bond, Post Election Comment

Not surprisingly, the BISD $81.2 Million Capital Improvements Bond was approved.

The 23,410 Bainbridge Island residents will now have an estimated $145 million in new taxes to pay starting in 2017 and running for the following 22 years … $81.2M in principle, $64 million in estimated interest payments.

On the positive side, the two new buildings should be state of the art awesome. Can’t wait to see what Blakely Elementary that the School Board and general public approved a bond for $10M more than the cost of Wilkes will look like. It will likely be the highest cost per student elementary school ever built in Washington State … but that won’t be known until Blakely is opened and the contractor’s checklists and change orders have been resolved, and final bills have been paid. The new Bldg. 100 should be something to behold … curious to see what $2 million in theater lighting and electronics (above the $2 million a year in tech levy money) brings to the new 600 seat theater stage. Another big smile and wow experience I suspect.

On the negative side, Bainbridge Island has just become less affordable. This capital bond will cost the average residential property owner between $10,000 and $12,300, and the BISD has an even larger bond planned for a 2019 vote ($102.3M is the preliminary bond estimate). This capital bond approval averages about $500 of new taxes a year for the average residential property, but that adds up year after year, especially to the 39% that the director of the Housing Resources Board says live on Bainbridge Island  but don’t have the income to qualify for a single family house on the Island.

As a side thought, this school bond approval (i.e., increasingly higher property taxes) could be a strong talking point for one of the affordable housing options for the Suzuki parcel.

How does a bond this cost bloated get a 62% approval?

•  BISD is the largest employer on the island.  Most school employees vote and support the bond.
• Full page ads with a long list of who’s who of community leaders names listed as bond supporters.
• An aggressive “letters to the editor” campaign.
• Financial support from local businesses that may benefit from construction.
• The “It’s for the Children” standard educational statement.
• Vote “YES” signage.
• Street corner “YES” sign shakers and holders.
•  Not a single sharp pencil (meaning an auditor or accountant) on the School Board that approved the bond amount and the payback schedule.
• No Washington State “truth in advertising” law(s) that require school districts provide full and accurate financial disclosures or accurate cost comparisons to the general public for a school bond that the public will be required to pay.
•  A BISD financial group is hand picked by the BISD … it’s more of a support the BISD  group than a financial knowledgeable body that performs value engineering and cost reasonableness tests. (I’m basing that on the the Wilkes Elementary financial board … this $81.2M bond appears to have similar type school district financial oversight).

High quality  schools are a priority in wealthy communities, as they should be. But a new and best school scenario also drive up housing prices because families with school age children are willing to pay a premium housing price to be located in a highly rated school district. As Bainbridge residential assessment values increase, the school taxes also rise, but so do annual taxes to both the state and Kitsap county because the relative assessed parcel values increase faster than the rest of Kitsap County. So for taxpayers, it’s a triple tax whammy.

I look at the long list of names of Bainbridge Island community leaders published by the Bainbridge Review of “Our Schools Our Future” supporters and wonder if any of them actually took the time or made any effort to consider due diligence to the cost and tax implications of the bond. I suspect the answer is no.

That’s a long list of elected and community leaders I would not want as my financial advisor(s).

The only organized group that considered the bond details and tax implications was the Editorial Board of the Kitsap Sun … they rarely (if ever) conclude a school bond is not worthy of a yes vote, but this one was just too bloated and the tax implications too onerous … they concluded it should be rejected and resubmitted at a more realistic bond amount. Well done, Kitsap Editorial Board for your financial due diligence … something the who’s who of community supporters failed to do.

So what now besides paying the new taxes and admiring the new buildings when they are constructed?

So what might the School District now do to show that they are using the taxpayers money for this bond wisely and for the purposes for which they stated in the bond literature?

Here is one suggestion submitted by a reader who has past experience with a California school district where the general public was wary of how the school district was spending their capital bond money:

Put in place a capital projects citizens oversight committee (not school district employees) to monitor and report what was being done and what was being spent. They would not interfere with BISD capital projects staff … the committee would have only an observe, report and comment function. The independent citizen’s report could be a quarterly report that perhaps might be even published in the Bainbridge Review.

Like that idea.

 

Part 5: BISD $81.2M Bond – Pros, Cons, and Comments

Some PROS:

  • BISD has made a reasonable case that Blakely Elementary and Bldg. 100 are dated and are in need of updating or replacing.
  • The total BISD bonds repayment schedules and planned levies will keep year to year local school taxes increasing at a measured and calculated pace … no dramatic annual increases.
  • The planned square footage of Blakely is larger than OSPI recommends per student, but these school buildings should last 50-75 years, and growth will happen, so they are not oversized. Lower student to teacher ratios will also require more classrooms and larger schools.
  • Replacing Blakely Elementary would level the playing field between the North end and the South end of the island’s elementary school facilities.
  • Bond interest rates are historically favorable.

But more CONS:

The $81.2M bond is about $13 million in excess of what it should cost to replace Blakely Elementary and Bldg. 100 to the size and quality of construction proposed by BISD.

The proposed bond to replace Blakely Elementary is about $10 million more than Wilkes Elementary replacement actual cost.

Backloading the bonds means an estimated $62.5 million in interest costs. That adds about $30 million in interest costs over the 22 years of bond servicing to keep school bond taxes from rising too quickly.

Total BISD total bond debt is about $114 million (roughly $80 million in principal and $34 million in interest) BEFORE this bond proposal, and this bond will more than double that public debt. There are only 23,400 (est.) residents on the Island. Current Bainbridge Island property taxes are about double those of the remainder of Kitsap County. No problem for the many island wealthy, but not everybody on the island makes a six figure or greater income a year.

FINAL COMMENTS:

The BISD is (and this is a serious statement) materially deceiving the public with their bond literature for both school cost comparisons and tax implications. There is no Washington State “Truth in School Bonds” requirement similar to consumer protections and full disclosures with a home mortgage, financing a car, or even applying for a credit card. This is too much money not to have a full disclosure law.

School Districts have only one opportunity to tell their story (school supports have to do the rest), and therefore the general public only gets the most favorable spin on the bond from the school district. BISD titles their bond mailer as “Facts about the Capital Bond.” It would be more honestly labeled “Select and Distorted Facts about the Capital Bond.” Tough words, but the district deserves some tough feedback.

One relatively small but important point is that capital projects can have unforeseen problems and costs, and school districts generally increase their bond requests to include possible contingencies and cost overruns. School Districts could write a bond issue that would reduce the bond service should those contingencies not be needed, but they don’t. They most often keep the extra funds to use on other, unspecified capital projects or to pay capital projects staff. In the case of this bond, BISD is also asking for $12.5 million for other capital projects, and those additional capital funds could act as the contingency or cost overrun buffers. But that isn’t BISD’s intent.

If the $81.2 million bond is not approved (and this being Bainbridge Island the odds of that happening are unlikely), the school district would likely sharpen their pencil and bring forth a lower cost bond proposal. Unfortunately, a new bond issue will cost significant additional funds to prepare, promote, and put on the ballot, and construction costs will likely continue to creep upward.

It’s disappointing the BISD hasn’t put forth a more realistic bond proposal to the Bainbridge Island taxpayers. There are many players and decision makers that work on these bond decisions.

The school board and BISD need to make bond process and program changes to get back to reality and make greater use of common sense when asking taxpayers to support major capital projects.

There is nothing in these five blog posts that the school finance committee, capital programs staff, or school board couldn’t have done themselves.

Part 4: BISD $81.2M Bond • Feb 2016 •The 100 Building (Theater and ESL)

Note: This part does not begin with the key takeaways from Parts 1-3 because the list is getting too lengthy. It doesn’t take a great deal of time to read the previous posts.

….

The Robinson Co. cost estimate to replace the BISD’s 100 building:

Robinson Co. BISD Bldg 100 Cost Est. Nov 2015

The fundamental question: Is $30M a ballpark reasonable or excessive amount
to remove and replace BISD Building 100?

It should not be lost on readers this November 2015 cost estimate sharply escalates the project costs in 2017 (8.7%) and 2018 (13%) … clearly subjective and likely highly unrealistic inflated numbers to give an illusion that costs are going to climb very rapidly if construction is delayed, meaning if the bond is not approved.

……

NOTE: This is another cost detail analysis that those not interested in cost calculation details can skip by going to the BOTTOM LINE at the end of this post.

……

Let’s begin with the most discussed building element, the Large Group Instruction (LGI) auditorium, better known as the theater. BISD considered a number of different theater sizes and configurations and settled on the largest. Given the new theater should last 50+ years, and what is being done in other school districts, I view a 600 seat capacity and full stage performance LGI/theater as a reasonable visionary decision.

The 2016 National Building Cost Manual referenced in Part 3 (and now available at the Bainbridge Island Library) pencils out the highest quality secondary school construction costs for the proposed 22,260 SF masonry construction secondary school LGI/theater with a 35 foot average height after Seattle area and island construction (+11 and +5% respectively) price index multipliers are applied at $316.39 SF.

That totals $7.05M.

The instructional rooms of the remainder of the building (includes music, chorus, art, career and technical education, etc) are planned at 26,185 SF. Construction costs should be in the range of $302 SF (same local cost index multipliers) for an with an overall average building height of 20 feet.

That totals $7.91M.

Add to those basic construction costs $1M for general site work, .$5M to remove the existing building, and $.15M for a fire suppression system.

Robinson Co. adds $2 million for theater electronics. That seems high, but who really knows what they have planned or what it might cost. It will certainly be highest quality, state of the art. So let’s just accept that $2M estimate.

And since construction will take place 2017-2018, there might (or might not be since the economy is growing at a very slow pace) ) an inflation factor. I believe 4% is reasonable given current economic conditions.

That totals $19.27M for 2017-2018 actual construction costs that includes $2M for theater electronics.

Now for the HIGHLY, HIGHLY CONTROVERSIAL soft costs.

Robison Co. estimate adds 48.2%, or $9.75M for soft costs.

This has a multitude of problems and complications.

First, the National Building Cost Manual includes (among other costs) usual architect and consultant fees, construction testing fees, usual permit fees, and contractor profits.

Robinson Co. adds many of those common and usual fees to their soft cost multiplier, not their construction cost calculation.

The current BISD pie charts summary page for Wilkes says the soft cost for Wilkes was 28%. Note: The same pie chart also labels soft costs at 38%, but that includes the still unspent $5.5M 2009 Wilkes and other capital projects bond money.

As an important side note, the original 2009 bond cost projections by Robinson Co. estimated the Wilkes soft costs at a completely outrageous 59%!! Voters didn’t take notice because it’s one of the in-the-weeds details … millions of dollars that just get put in a bond measure with little explanation.

Why is this important? After the school is constructed, the school district can claim the construction cost of the new school was lower or equal to other schools. That’s exactly what they did with Wilkes … they just don’t talk about the soft costs because that’s not construction costs by BISD and Robinson Co.’s definition of construction costs. And in Washington State, there are no standards for school costs and how they are to be measured, so school comparisons are difficult.

So why are Blakely soft costs 72% higher than the BISD’s claimed Wilkes soft costs? That’s many millions of totally unexplained dollars, and the BISD and the School Board know the public isn’t going to drill down into the numbers to question anything labeled soft costs because the public simply doesn’t understand soft costs.

So sorting all this out is beyond the scope of this blog or the attention span of the public. It should have been done by the BISD finance group, but if it was, it isn’t easily accessible public information. My guess it was just never done.

THE BOTTOM LINE FOR BUILDING 100:

Construction (and usual costs) and theater electronics (discussed above):   $19.27M
Taxes:                                                                                                                                              $  1.68M
Heating and Cooling (HVAC) (additive to National Building Cost):                       $  1.50M
Building Set Up, Furnishings, New tech equipment :                                                  $ 1.60M
Staff adjustments, relocations, etc.:                                                                                  $ 1.25M
Commissioning, Utility Assessments, Legal and Risk:                                                $ 0.50M

             Bldg 100 Cost Estimate:               $25.8 Million

Conclusion: The BISD bond request for Building 100 at $30 million is $4.2 million  on the high side.

Post 5: Final BISD bond comments and the pros/cons of the bond issue.

Part 3: The $81.2M School Bond • 2016 • Blakely Elementary Cost

Key takeaways from of Parts 1 and 2:

• Wilkes (opened 2012) cost (BISD data) $28.92M, BISD requesting for $39M for Blakely.

• BISD construction cost comparisons are significantly biased. Blakely Elementary is a 37% smaller school in both square feet and student load than 4 of the 6  the BISD cost comparisons.

 $175/yr tax for 2017 for median assessed value residence stated by BISD is understated. Actual is about $222, and that is for only the first of three bonds that will be sold in sequential years.

• Annual taxes to service the $81.2 M bond will rise substantially after 2017.

• Total median residential taxpayer costs will be in the range of $10,000 to $12,310 over the next  22 years.

• Bonds are backloaded and interest costs alone are estimated at $62.5M.

––––––––

Let’s look at elementary school costs. This is going to get a little detailed and technical, so try not lose focus. Or go to the conclusion line if you become lost,  bored,  or are detail adverse.

2016 NBCM

The 2016 construction cost estimator is the 2016 National Building Cost Manual (NBCM). The Bainbridge Island library has a copy available (they purchased one at my request). It’s call number is 692.5097 NATION, and there are too many pages and explanations to show every page reference in a blog, so visit the library if you feel you need to confirm the accuracy of the following cost calculations.

The NBCM cost of new elementary schools is divided into two major construction types: Masonry and Concrete (MC) or Wood and Steel Frame (WS).

MC construction is about 15% higher cost than WS. The architectural plans are yet to be prepared for Blakely , but for this estimate, I’ll use the higher masonry/concrete cost.

Next major determinate is the quality class of the building. The NBCM breaks schools down into four cost classes (best, good, average, low).

For Bainbridge, only the best will do. I’ll use best (No.1 quality).

A key cost determinate is average building wall heights. Wall heights will vary for classrooms vs. gymnasium, for example. I’ll use an overall building average height of 20 feet.

The cost per square foot for a school built for a student load of 450 students at 140 sq. ft. per student (state recommends 125 sq. ft., but most new elementary schools in Western Washington are being constructed about 140 sq. ft.):    450 (students) X 140 (sq. ft. per student) = 63,000 sq. ft.

That’s very close to the size of Wilkes, although the BISD has 8 different sq. ft. measurements for Wilkes depending on what question or position they want to make. There still is no agreed to Washington State standard for school size comparisons.

The NCBM high end cost with best construction for a single story school with a 20 foot average wall height is $245.12 sq. ft. X 63,000 = $15.44M.

The Seattle area is a higher than average national building cost area, and the 2016 construction cost index for Seattle is +11%, so the Seattle  regional building cost increases construction costs to $17.14M.

But, we are on an island, and that adds to costs … Robinson estimates +5%.  That is reasonable.

That brings the estimated construction cost to $18.0M, or about $286 per sq. ft.

The NBCM cost estimate includes foundations (normal soil conditions), floor, wall, roof structures, interior ceiling, wall and floor finishes (including carpet), exterior wall finish and roof cover, interior partitions, basic lighting and electrical systems, rough and finish plumbing, design and engineering fees, typical permit and hook-up fees, and typical contractor mark-up. Some of these costs mostly in bold) are what the BISD estimator (Robinson Company) considers as soft costs.

It does not include the costs of canopies and canopy lighting, public address, intercom and security systems, docks and ramps, fire extinguishers and fire sprinklers, heating and cooling systems, exterior signs, walkways, paving, curbing, or yard improvements.

Add $1.5M for a heating and cooling system, $.5M for fire systems, and $.5M for security and communications, and 8.7% for taxes (that’s generous … not all construction costs are taxed, and not all are at the local tax rate of 8.7%), and the construction costs total about $24.5M.

There are no known land acquisition costs at Blakely.

There is a fairly lengthy shopping list of additional costs when completing a school.The big ones (using Wilkes 2011-12 costs):
Furniture and equipment                $.75M
Technology Equipment                    $.35M (Note: BISD also has a Technology Levy)
Commissioning and Staff Costs    $.20M
Curriculum Material                           $.13M
Custodian Supplies                            $.03M

So roughly $1.5M in equipage and getting ready costs. Those were 2012 prices, so about $1.8 million in 2017-8 (inflation) costs.

Wilkes had nearly $.5 in off-site improvement costs, and that is still an unknown for Blakely. Those are generally sewer and water service costs.

Add $1M for exterior paving, playground improvements, sidewalks, etc.

Add another $.6 M for demolishing and removing the existing Blakely school.

So using the National Building Code Manual (best quality) for Blakely Elementary is in the general range of $27.9M.

That’s just slightly less than what Wilkes cost, but there should be a reasonable inflation cost kicker because construction will start in 2017. Although recent materials inflation has been negative, a 2% increase is logical to be on the safe side.

Bottom line … using the National Building Cost Manual, the cost of a new Blakely should be very close to what Wilkes cost …  in the $28.8M range.

That, of course, is mostly using data from a respected 2016 cost estimation book.  But it also comes close to validating  the cost comparisons of the six schools the BISD used for cost comparisons … they are about 37% larger that what is proposed for Blakely, and that would put them in the $40M+ range, and some of those schools have full food preparation kitchens which is high cost and Blakely is not expected to include (BISD generally uses a central kitchen and distribution to schools since they are not located long distances apart).

Conclusion: A bond amount of $39M for Blakely is about $9 million more than what the school should cost.  Blakey Elementary replacement should be in the range of $29M-$30M.

 

Part 2: The $81.2 Million School Bond • February 2016 • The Cost To Taxpayers

In Part 1, the key takeaways:

• Wilkes Elementary (opened fall 2012) cost $28.92M.

• BISD is asking for $39M to replace Blakely Elementary.

• The six schools the BISD chose as cost comparisons (all listed as higher construction costs) are MUCH larger, and often with full food service cafeterias, than what is now planned for Blakely Elementary.

———

The BISD school superintendent (at community presentations and the Inter-Governmental Working Group) and the school bond “facts” pamphlet and School Supporters website:

“If the measure is approved, local school taxes in 2017 will increase an estimated $0.36 per $1,000 of assessed property value, or $15 per month ($175/year), for the median home.”

Every Bainbridge Island tax paying citizen should have sufficient math and life experience skills to know an $81.2M bond cannot be paid off in 20 years (school bonds are typically 20 year bonds) at an annual bond repayment of $175 a year. There are many variables, but $175 for the median assessed Bainbridge Island parcel a year would pay off somewhere around a $23M-25M bond.

So what gives with the $175 a year bond tax impact statement BISD presents to the public?

Is that reasonably accurate or a “tax deception” to help get the big bond passed?

Let’s analyze that.

It starts with the way the bonds will be sold.

New school buildings take roughly a three year process … about 18 months of planning and designs and bidding, and about 14-18 months to construct the school and get it ready for occupancy.

The $81.2M bond authorization will actually be three bonds that add up to the total bond amount less the cost of the administrative side of planning and selling the bonds. One bond will be marketed for each of three sequential years, and they currently are planned to be of near equal amounts per BISD’s bond consultant.

The BISD tax deception is that the tax cost of the bond is … you might have already guessed it … ONLY the FIRST of the THREE bonds, and even that understated.

If you ignore two of the three planned bonds as the school district and the school supporters do, the tax implications are not all that shocking. It’s akin to one of the common practices in marketing … and enticement rate for X months, then the costs increase to what you need glasses to read in the minuscule print buried somewhere on the reverse of the promotional literature.

The school district isn’t exactly lying … they are just simply providing the first year, first bond tax impact, and that is NOT reflective of the total bond tax impact actually be.

Not even close.

BISD  only discusses the  2017 tax increase. Problem is, of course, that first year tax projection is only repayment on one bond expected to be $27.07M and sold mid-year 2016. The bond debt service is only  $2.6M in 2017 … in future years, the annual debt service will up to four times that amount, and the tax for these bonds  is paid each year based on the debt service that has to be paid for each specific bond service amount due each year.

The other critical money and tax point they fail to mention is that the bonds are not going to be paid off at a standard annual amount … the bonds are being “backloaded.”

Backloading bonds has been a common practice with BISD, and the concept has some significant pros and cons with major tax implications.

The pros are that the early years of the backloaded bond payments, the taxes required to pay the annual bond obligations are initially lower. In the case of the the $81.2M bonds, tax rates stay relatively lower for the first ten years. Then, the bond obligations increase substantially. That means the majority of the bond obligations are going to be paid by Bainbridge Island residents paying taxes in 2026 – 2038. It’s a tax obligation that falls most heavily on property owners ten to twenty-two years in the future.

The cons are that the payments for the bonds are heavy on interest and light on principle for the first decade, and that means the total bond interest payments are much higher.

BISD’s bond consultant, D.A. Davidson, projects the bond’s total interest obligation will be approximately $62.5M. Add the $81.2M principal payback, and Bainbridge Island taxpayers will have a $143.748M total debt obligation to pay off in the next 22 years for this $81.2M capital bond.

This is the projected payback schedule, and I’ve color coded it so the larger tax obligations are in reds.
___________________________________________________________________________

Projected new taxes for a $81.2M School Bond for a typical Bainbridge Island residence with an assessed value of $486,295 in 2015. There will be three nearly equal bond sales in 2017, 2018, and 2019. The first bond is a 19.5 year bond, the 2017 and 2018  are 20 year bonds.

BISD BOND $81.2M SCHEDULE

___________________________________________________________________________

The Kitsap County Assessor’s office has calculated the 2015 new tax for each $1M in bond service at $0.17620397 per $1,000 in parcel assessments. That rate drops to $0.161794 in 2016, but the median assessed value will increase. The Kitsap County Assessor’s office does not yet  know exactly what that median assessment will be until the 2016 assessment book is released in February, 2017. The 2016 median assessed residential value is expected to be about $536,170, and that would make the 2017 tax increase about 1% higher than the above graph.

There are a large  number of variables, and there simply is no absolutely precise numbers that can be put on the per parcel cost of a bond for the next 22 years.

Of course, there are differing island growth scenarios, and as Bainbridge Island grows and increases its tax base, the above chart is, in all fairness to the BISD, the worst case scenario. However, a growth rate of, say 1.2%, which is about what is currently happening, would  be about a 1% per year impact on these tax amounts. Much of the high cost waterfront has now been developed, and the majority new residential construction is tending to be in the more middle income range. And large new shopping or industrial centers?  Maybe, but not too likely.

It’s probably safe to say that the median priced residential property will pay at least $10,000 over the next 22 years in new property taxes if the $81.2M bond is approved by voters.  If the BISD disagrees with that amount, they can provide their own full term tax analysis.

The BISD and School Board is not being “blindsided” by these tax numbers. The payback schedule was provided to them (less the $1M they added to the proposed bond at decision meeting) before the decision was made to approve the bond level for a public vote. They had all this data before the “Facts” mailer was written/approved.

The bond levy amount details  are on the BISD website if you mine down far enough to find the spreadsheets. I located it in just under 30 minutes. It displayed sideways and was in very small print, but it’s there if you want to make the effort to validate the annual bond repayment figures.

 

Next in Part 3: Construction costs, soft costs, a little about the theater, and doing long term bonds for other capital projects.

Part 1: The $81.2 Million School Bond • February 2015

Fact:  New schools are expensive.

R e a l l y  expensive.

Most voters on Bainbridge Island generally don’t pay attention to such matters as what a bond issue will actually extract from their wallets and investment accounts. It’s just more money “for the kids” from a generally wealthy island population. Bainbridge Island schools are consistently rated excellent, and whatever is said or printed by the bond promotion and school supporter groups is accepted by most at face value.

The Bainbridge Island School District (BISD)  bond mailer is captioned:   Facts about the Capital Bond.

Simple definition of facta true piece of information.

Anyone ever question whether the BISD and the school bond supporters are providing facts, or are they providing financial distortions?

By law, the school district can provide factual information to the community, but they cannot advocate on behalf of the issue. But “facts” can be distorted, and so, let’s see how the district does with the $81.2 million bond issue now before the public.

For a basis, let’s start at a point the BISD generally ignores discussing at their public presentations and bond facts mailer.

The most recent addition to the school inventory asset list is Wilkes Elementary. It’s worth your time wandering through at an open house.

For a K-4 school, it has long and spacious corridors, multiple specialization rooms, loaded with the latest technology, lots of natural light, ample restrooms. It’s geothermal heating and pervious surfaces are in keeping with current environmentalism goals. It’s a very high end K-4 school campus.

Not only impressive, it has received school design awards, raves from the parents of the students, and is frequently toured as an example what can be done by other school districts planning new schools.

But let’s focus on money since that’s the primary focus of this blog.

The 2011 Wilkes bond was for $32.5 million for the school replacement, and $9.5 million for other general district capital improvements. Not much was said about what those funds would be used for, but a stadium renovationand new track were two of the funded improvements. Total bond approved by voters was $42 million.

The money focus point:   BISD asked for $32.5 million for Wilkes Elementary, and they are now asking voters for  $39 million to replace Blakely Elementary.

So what did Wilkes Elementary actually costs now that the bills have been paid?

It was one of Washington State’s most expensive elementary school replacements at the time … but the actual costs came in below the $32.5 million school district bond request.

It’s a pubic record and on the school district’s website:

Wilkes Elementary cost $28.92 million.

Wilkes Elementary Capital Project Budget Update as of 31 October 2015:

 

Wilkes Capital Budget Oct 2015

 

This raises two obvious questions.

First, what happened to the $3.58 million that wasn’t used for Wilkes?

According to the School District, the bond was written such that the bond money could be used for purposes other than Wilkes Elementary. Informally, I was told most of the $3.58 million was put into paying the School District’s Capital Projects staff present and for future work. BISD can clarify that if that is not factual.

Second, how does the school district reconcile asking for $10 million (a 34.8% increase) more to replace Blakely Elementary than they actually spent on a high-end Wilkes replacement 5 years ago?

The Seattle price inflation increase between the two bond dates (May 2009 and Feb 2016 is expected to be 10.5%-10.6% (actual data will be available in March, 2016). Material costs rose rapidly after the recession, but they have rapidly fallen in 2015 to a five year increase of just over 1%. There are exceptions: concrete, for example. Because of booming construction  in the Puget Sound area, concrete costs are substantially higher. But on a whole, cost of construction has increased less than 15% in the past five years.

The first big unanswered question by the BISD is why Blakely Elementary replacement is $10 million more than actual cost of Wilkes Elementary, especially given the school district statement that “the design for Wilkes would be used as a prototype for eventual reconstruction of Blakely and Ordway.”

You might think the School District could save some architect and consultant monies from just having paid for a prototype school, but that just appears to be wishful thinking.

The BISD hires a Seattle consultant, Robinson Co., to do their school cost estimates. Robinson Co. has a fine reputation, but as the Seattle Times pointed out in 2013 when writing about the skyrocketing costs of Seattle area schools, Robinson Co., the firm that  did most of the high cost projections, says it’s just the way things currently are. No specifics … it’s just the way Robinson Co. observes local building conditions.  But, the Seattle Times reporter pointed out that the square footage per student on the new elementary schools was 140+ sq. ft. per school student, and the Office of Superintendent of Public Instruction (OSPI) recommends new construction goal of 125 sq. ft. per elementary level student. Robinson, Co. generally supports the larger schools approach. Probably logical to avoid portables as the years pass.

Most of the Seattle area schools are being built for a fast growing urban population.  We’ll talk about that and how the BISD is cleverly deceiving the Bainbridge Island public with the “facts” in their bond mailer.

Here are the elementary school cost comparisons in the bond mailer:

School Building Construction Comparison

 

Makes Blakely Elementary very reasonably costed compared to the ones the BISD chose to compared, right?

No elementary school is estimated to cost less then the Blakley proposed cost.

What a bargain Bainbridge!!!

Or not  ….

Here is the district’s cost comparison deception:

These six schools the BISD chose for bond cost are MUCH larger than the proposed Blakely Elementary , some have full food service kitchens which is the most expensive cost per square foot in constructing as new elementary school.

Some brief notes on the comparison schools picked by the BISD:

• Issaquah Elem. #16 is budgeted at $36.5M per the Issaquah District website, not $39.3 M. District wants their ementary schools to have 600 student capacity. Much larger school.

• Issaquah Elem. #17 is budgeted at $38.0M per the Issaquah District website, not $39.3 M. Again, target is 600 student capacity. Much larger school.

• Mercer Island Elem. (Northwood) now has a firm construction bid of $30,385,850, has a     prep kitchen, and designed for a school capacity of 550 students. Larger school.

• Arbor Heights Elem. is an 89,000 sq. ft. project designed for 660 students. Much larger school.

• Thornton Creek Elem. is 92,500 sq. ft. project  also designed for 660 students. Much larger school.

• Wing Luke Elem. is projected to be a historical landmark site (drives the costs up). It’s still pre-design, but the tentative plan is for a 90,000 sq. ft. school, up to 660 K-5 students, prep kitchen, and opening in 2020.

Blakey Elementary is penciled out for 63,000 sq. ft. and 450 students …  about the same as Wilkes. Blakey is considerable smaller than the schools the BISD chose to cost compare.

Could the BISD have chosen similar sized schools for cost comparisons?

Absolutely, but then Blakely Elementary would not appear to be the low cost school. Not the message they want to send to the public.

Blakey Elementary , as proposed, is  less than 70% of the size and student loads of the cost compatibles the district selected to use.

The BISD may be factually correct (or close enough) in their cost comparisons … the major deception is that these are much larger schools, and that isn’t revealed to the voting public.

Side Note: The BISD has eight different sq. ft. measurements for Wilkes … all valid, but which one depends on what is counted.  For example, one includes the crawl spaces, janitor cubbies, etc. Another includes anything covered on the playground. When BISD wants to make the case who reasonably priced the school was per square foot, they use one of the larger square footage calculations. Washington State has no standard of measuring different schools for square footage or cost of construction. (Note: The State legislature has directed OSPI to establish such measurable standards, but that hasn’t yet been done).

Part 2 will reveal the multiple $81.2 million bonds, their proposed amortization schedule, and what the bond is expected to cost a median priced residential Bainbridge Island parcel owner.