I have received a lot of emails regarding the monthly costs presented at the forum. The following post is on the High School Renovation Blog to explain how the numbers were arrived at:
"During the Community Forum presentation a slide was included to show what the range of project costs would look like in terms of monthly tax increases for a $225,000 home in Mt. Lebanon (the average price of a home sold here in 2007). The numbers are based on bond schedules prepared by the District’s financial advisors using municipal bond rates as of July 18, 2008 and assuming State reimbursement of 16% of the cost of the bond payments. Based on that information, a $90 million project would cost a homeowner about $45 per month, a $110 million project would cost that same homeowner about $55 per month, and a $130 million project would cost about $65 per month."
There were some residents that were confused a bit by the projected monthly numbers juxtaposed against the total project cost. I believe the above information mostly solves that mystery. The post with the linked spreadsheet I had earlier did not include this 16% reimbursement rate.
Thanks for reading.
James
Saturday, July 26, 2008
Wednesday, July 23, 2008
Forum Update
The School Board held the Community Forum on the High School Project last night. There was a wealth of information that was distributed. The documents given out last night is available now on the MTLSD website.
Today I will give an overview about what was talked about last night and later I will post at length about each of the options presented.
There were really four options presented at the meeting last night. Dollar estimates were given last night for each of the options but really, those numbers are still so early in the game (we still do not yet have a Construction Manager for the project) that they really are just educated guesses at this point. I think we ought to take the estimates and give them a range of +-10%. So with that, these were the options presented.
Option 1 was a renovation of the existing structure. This option would essentially bring the existing structure up to code and fix the problems that exist. It would address the seriously outdated mechanical systems in the building and provide for asbestos abatement throughout the structure. I like to compare this option to what was recently completed at all of our elementary schools. Estimated cost of this option was $77.8 million.
Option 1A was a complete renovation with additional significant improvements to certain parts of the existing structure. While this would not include a 'new' building, it would completely change the current Administration building into a learning center for the future while keeping the rest of the school largely the same. Estimated cost of this option was $97.3 million.
Option 2 was a plan to construct a largely new 'wing' of the school. This option would keep intact the existing front on Cochran Road of the Auditorium, Little Theatre, and the current face (B Building) of the school. Buildings behind the front would be demolished in a phased approach that would lead to the large majority of classrooms being held in the new wing built in place of the demolished buildings. This plan would create a 67% new school and 33% renovated school. Administration would be moved into the B-Building. Estimated cost of this option was $118.3 million.
Option 3 was a plan to build a new school. The new building would be built largely on the upper parking lot and practice fields. This would involve very little phasing. Once the construction was complete we would simply move students to the new building. This option also renovates the B-Building on Cochran Road. Administration would again move into this building. Estimated cost of this option is $131.6 million.
Last night was the first time the Board really had a chance to sit down and see all the information presented at one time. It was also the first time that we had a chance to see estimated costs. I think that, given our current economic environment, we all understood that the estimates would come in higher than what the Dejong study showed in January 2007.
Last night it was mentioned during the meeting that for every $25 million we need to finance for this project, it would equal roughly a 1-mill increase in taxes. So a $100 million project could force a 4-mill increase and a new $131.6 million new school would surpass 5 mills. Actually, that rule of thumb is a bit high, but still, these are not insignificant numbers. The page in the presentation that lists monthly costs includes the 16% State reimbursement rate. That monthly number equated to a total millage increase of 3.5 mills, not more than 5. I was able to create a spreadsheet that approximates these numbers however, bond coupon rates over the term of the bond will not be fixed as a simple PMT calculation in a spreadsheet would be. As I get more information on the possible bond issuance, I will let you know.
While it is extremely important to get information out to residents about how this project will effect their pocketbooks, we need to also have the vision to do what is right for our students and our community.
That's all for now. I am going to review the documents again, listen to feedback and post more later this week.
James
Today I will give an overview about what was talked about last night and later I will post at length about each of the options presented.
There were really four options presented at the meeting last night. Dollar estimates were given last night for each of the options but really, those numbers are still so early in the game (we still do not yet have a Construction Manager for the project) that they really are just educated guesses at this point. I think we ought to take the estimates and give them a range of +-10%. So with that, these were the options presented.
Option 1 was a renovation of the existing structure. This option would essentially bring the existing structure up to code and fix the problems that exist. It would address the seriously outdated mechanical systems in the building and provide for asbestos abatement throughout the structure. I like to compare this option to what was recently completed at all of our elementary schools. Estimated cost of this option was $77.8 million.
Option 1A was a complete renovation with additional significant improvements to certain parts of the existing structure. While this would not include a 'new' building, it would completely change the current Administration building into a learning center for the future while keeping the rest of the school largely the same. Estimated cost of this option was $97.3 million.
Option 2 was a plan to construct a largely new 'wing' of the school. This option would keep intact the existing front on Cochran Road of the Auditorium, Little Theatre, and the current face (B Building) of the school. Buildings behind the front would be demolished in a phased approach that would lead to the large majority of classrooms being held in the new wing built in place of the demolished buildings. This plan would create a 67% new school and 33% renovated school. Administration would be moved into the B-Building. Estimated cost of this option was $118.3 million.
Option 3 was a plan to build a new school. The new building would be built largely on the upper parking lot and practice fields. This would involve very little phasing. Once the construction was complete we would simply move students to the new building. This option also renovates the B-Building on Cochran Road. Administration would again move into this building. Estimated cost of this option is $131.6 million.
Last night was the first time the Board really had a chance to sit down and see all the information presented at one time. It was also the first time that we had a chance to see estimated costs. I think that, given our current economic environment, we all understood that the estimates would come in higher than what the Dejong study showed in January 2007.
Last night it was mentioned during the meeting that for every $25 million we need to finance for this project, it would equal roughly a 1-mill increase in taxes. So a $100 million project could force a 4-mill increase and a new $131.6 million new school would surpass 5 mills. Actually, that rule of thumb is a bit high, but still, these are not insignificant numbers. The page in the presentation that lists monthly costs includes the 16% State reimbursement rate. That monthly number equated to a total millage increase of 3.5 mills, not more than 5. I was able to create a spreadsheet that approximates these numbers however, bond coupon rates over the term of the bond will not be fixed as a simple PMT calculation in a spreadsheet would be. As I get more information on the possible bond issuance, I will let you know.
While it is extremely important to get information out to residents about how this project will effect their pocketbooks, we need to also have the vision to do what is right for our students and our community.
That's all for now. I am going to review the documents again, listen to feedback and post more later this week.
James
Saturday, July 19, 2008
Current MTLSD Debt Obligations
One of the things I have tried to get a good handle on is the District's current financial obligations. One of the places I look to is the current and future debt service payments for the District. In order to better understand what we can do, it's important to understand where we are.
First, let me throw some numbers out there. Most of this information can be found on pages 84 and 109 of the 2008-2009 Budget. The District is currently about $72,580,000 in debt. Our average debt service payments between now and the 2029-2030 school year (when current debt will be paid in full) will be $4,958,052. Total payments on this debt will equal $118,993,268 if we do not refinance any of our obligations. Current debt service payments equal about 7% of our budget or 2.4 mills ($240 per year per $100,000 assessed value).
The District currently has four outstanding debt issues. The 2002 bonds are a refinancing of the 1997 Middle School Bonds. The 2002-A bonds are a refinancing of the 1998 Middle School Bonds. The 2004 bonds are a refinancing of the 2000 and 2001 bonds. The 2005 bonds are a refinancing of the elementary school renovation bonds originally floated in 2003.
Below is a chart that shows how these obligations are paid and when they will come off the books:
Click on image for larger picture
You can view the data for the chart here on Google Docs.
Bond payments have been structured in a way to make the payments consistent over time. This consistency allows for the District to plan more easily for future budgets.
Our payments on the 2005 General Obligation Bond spike in 2018 (after all other bonds are paid off, payments on this bond increase) and the interest rate fluctuates between 3.0% and 4.7%. Interest rates today are probably a bit different. You can see here that Reading School District floated a $100,000,000 bond issue on July 15, 2008 and the bids all came back at just under 5% interest. Reading has a Moody's Bond rating of AAA. Upper Dublin School District floated $53 million in bonds on May 20th of this year and and the bids all came back just under 4%. Dublin has an A1 Moody's rating. Mt Lebanon's bond rating is between these two. We have an AA2 rating from Moody's. It's hard to say where our interest rate will end up. If I had to guess it would probably be somewhere in between the two issues mentioned above. It is important to keep in mind that the bonds are competitively bid on and that the interest rate will be determined by many factors outside of just the District's credit rating.
Once we start to get hard numbers on the high school project options, I will be sure to post calculations on the cost of each solution in dollars, mills, and taxes. I will also post how I see each of the solutions benefiting the students and the community.
Until then, I hope to see everyone at the High School Project Forum on Tuesday night.
James
First, let me throw some numbers out there. Most of this information can be found on pages 84 and 109 of the 2008-2009 Budget. The District is currently about $72,580,000 in debt. Our average debt service payments between now and the 2029-2030 school year (when current debt will be paid in full) will be $4,958,052. Total payments on this debt will equal $118,993,268 if we do not refinance any of our obligations. Current debt service payments equal about 7% of our budget or 2.4 mills ($240 per year per $100,000 assessed value).
The District currently has four outstanding debt issues. The 2002 bonds are a refinancing of the 1997 Middle School Bonds. The 2002-A bonds are a refinancing of the 1998 Middle School Bonds. The 2004 bonds are a refinancing of the 2000 and 2001 bonds. The 2005 bonds are a refinancing of the elementary school renovation bonds originally floated in 2003.
Below is a chart that shows how these obligations are paid and when they will come off the books:
Click on image for larger picture
You can view the data for the chart here on Google Docs.
Bond payments have been structured in a way to make the payments consistent over time. This consistency allows for the District to plan more easily for future budgets.
Our payments on the 2005 General Obligation Bond spike in 2018 (after all other bonds are paid off, payments on this bond increase) and the interest rate fluctuates between 3.0% and 4.7%. Interest rates today are probably a bit different. You can see here that Reading School District floated a $100,000,000 bond issue on July 15, 2008 and the bids all came back at just under 5% interest. Reading has a Moody's Bond rating of AAA. Upper Dublin School District floated $53 million in bonds on May 20th of this year and and the bids all came back just under 4%. Dublin has an A1 Moody's rating. Mt Lebanon's bond rating is between these two. We have an AA2 rating from Moody's. It's hard to say where our interest rate will end up. If I had to guess it would probably be somewhere in between the two issues mentioned above. It is important to keep in mind that the bonds are competitively bid on and that the interest rate will be determined by many factors outside of just the District's credit rating.
Once we start to get hard numbers on the high school project options, I will be sure to post calculations on the cost of each solution in dollars, mills, and taxes. I will also post how I see each of the solutions benefiting the students and the community.
Until then, I hope to see everyone at the High School Project Forum on Tuesday night.
James
Friday, July 18, 2008
Community Forum
On Tuesday there will be a community forum for the High School Project. This meeting will be held at 7pm in the High School Auditorium. Celli-Flynn and OWP/P will present their conceptual drawings and perhaps talk about rough cost estimates for each solution. For more information on the project, please go to the High School Renovation website.
Following is a list of upcoming meetings:
James
Following is a list of upcoming meetings:
- July 21- Board Review of revised Alternatives
- July 22- Community presentation of Alternatives- High School Auditorium- 7pm
- August 5- Policy Committee Meeting- Conference Room B -7:30pm
- August 11- Board Discussion Meeting
- August 18- Community comment/Architect Update at pre-Board meeting- 6:30m
- August 18- Regular Board Meeting- 7:30pm
- August 27- Design Advisory Committee meeting for community input- 7pm
James
Wednesday, July 9, 2008
Pennsylvania School Construction Buzz
We are getting closer to making the decision on the high school project. I have posted here recently about future discussion and community meetings. One of the reasons I started this blog was to share my sources of information with readers. Besides listening to folks and getting an idea about how much each possible decision will cost an individual taxpayer (which I have broken down and will post when we have actual numbers), it is important to understand data that is out there that can help in the decision making process.
Today I will point out two sources of information, each from the Pennsylvania Department of Education, and I encourage you to read them. They both contain very important information about costs, community involvement, decision making processes, and even PlanCon reimbursement guidelines.
The first source is called "Renovate or Replace? The case for restoring and reusing older school building". This publication was produced by the PDE, Pennsylvania School Boards Associations, Pennsylvania Historic Schools Task Force, and The American Institute of Architects. It includes sections on older school renovations, lifecycle planning and much more. An emailer had pointed out this document to me because it includes an entire chapter titled, "Mount Lebanon Achieves Academic Excellence, Retains Character with Renovated Neighborhood Schools." Even though it is 32 pages, it's a pretty quick read with a ton of examples of restored buildings.
The second source I want to point out is a study of renovations versus new construction costs that has been completed by The Pennsylvania Department of Edcation. This document is simply a list of completed school construction projects from 2003-2006. You can view the document here. The conclusion of this document is that new construction has on average cost $212.99 per square foot for the years in the study. Renovation has on average cost $114.16 per square foot for the same time period. Again, this study was based on PDE's own statistics.
I also have one final note. There has been talk in the community about obtaining a LEED certification for the high school project. As I understand it, a LEED certification can be gained for either new construction or for major renovation. The LEED for Schools 2007 Checklist can be found here. At the top of the page is a table that shows how many points you need to reach in order to obtain different levels of LEED certification. There are a lot of points to be gained under the Material and Resources section that have to do with re-use of building and waste management. There is a lot I don't understand about the form including the section on Optimize Energy Performance where you can gain up to 10 points towards your certification. I'll keep researching and let you know what I find. I don't know yet if LEED certification is the direction we should go but the option at least needs to be on the table for discussion.
Today I will point out two sources of information, each from the Pennsylvania Department of Education, and I encourage you to read them. They both contain very important information about costs, community involvement, decision making processes, and even PlanCon reimbursement guidelines.
The first source is called "Renovate or Replace? The case for restoring and reusing older school building". This publication was produced by the PDE, Pennsylvania School Boards Associations, Pennsylvania Historic Schools Task Force, and The American Institute of Architects. It includes sections on older school renovations, lifecycle planning and much more. An emailer had pointed out this document to me because it includes an entire chapter titled, "Mount Lebanon Achieves Academic Excellence, Retains Character with Renovated Neighborhood Schools." Even though it is 32 pages, it's a pretty quick read with a ton of examples of restored buildings.
The second source I want to point out is a study of renovations versus new construction costs that has been completed by The Pennsylvania Department of Edcation. This document is simply a list of completed school construction projects from 2003-2006. You can view the document here. The conclusion of this document is that new construction has on average cost $212.99 per square foot for the years in the study. Renovation has on average cost $114.16 per square foot for the same time period. Again, this study was based on PDE's own statistics.
I also have one final note. There has been talk in the community about obtaining a LEED certification for the high school project. As I understand it, a LEED certification can be gained for either new construction or for major renovation. The LEED for Schools 2007 Checklist can be found here. At the top of the page is a table that shows how many points you need to reach in order to obtain different levels of LEED certification. There are a lot of points to be gained under the Material and Resources section that have to do with re-use of building and waste management. There is a lot I don't understand about the form including the section on Optimize Energy Performance where you can gain up to 10 points towards your certification. I'll keep researching and let you know what I find. I don't know yet if LEED certification is the direction we should go but the option at least needs to be on the table for discussion.
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