The Park Rapids School Board on Monday made further progress studying the funding options for a reduced package of school facility improvements.
A nearly $60 million bonding referendum was narrowly defeated in November 2020 and again, by only 45 votes, in April’s low-turnout special election.
So far this month, the school board has met weekly with Ehlers financial advisers and ICS educational consultants to rejigger its spending priorities before making another attempt.
Jason Splett with ICS recapped the progress they’ve made, noting that the school board previously removed the following items from the current bonding project, known as Project 309:
At the high school: band and choir improvements, activities commons and fitness lab, a suspended walking track and parking lot maintenance.
At Century School: adding three classrooms, parking lot maintenance, upgrading to LED lighting and replacing portions of the roof.
The remaining priorities at the high school include adding a wing for grades 7-9 to the high school with a two-station practice gym; rebuilding the south parking lot; updating the auditorium; adding a scene shop, updating existing classrooms; reduced improvements to the media center; relocating the high school office, kitchen and locker rooms; adding space for either art and agriculture instruction or the Alternative Learning Center; replacing the roof and exterior metal wall panels; improving non-handicap accessible restrooms and upgrading the dehumidification and cooling system.
Century School priorities include relocating the administration offices to better secure the entrances; improving parking, pickup and drop-off areas; replacing playground equipment and the boiler-chiller plant; building a bus garage; buying furniture, fixtures and equipment as needed; and rebuilding the tennis courts.
Splett estimated the total construction cost of these items at about $55.2 million. He said this does not include bond issuance costs, such as capitalized interest and bond origination fees.
Four funding solutions
Splett then presented four potential funding solutions for that dollar amount:
Plan A: Fund the entire $55.2 million project through a single, voter-approved bond.
Plan B: Use $2.5 million in long-term facilities maintenance (LTFM) funds to do the roofs, exterior metal wall panels and tennis courts; use a $1 million capital facility bond for the boiler-chiller; use a $1 million health and safety indoor air quality (IAQ) bond for the dehumidification and cooling; and have a voter-approved bond fund the remaining $50.6 million in construction costs.
Plan C: In addition to the above LTFM, capital facility and IAQ bonding, use a $930,000 abatement bond to build Century’s parking, pickup and drop-off area; use a $2.7 million lease levy bond to build the art-ag or ALC addition; and fund the remaining $47 million with a voter-approved bond.
Plan D: Without seeking a voter-approved bond, use unspecified board-approved funding to move eighth grade to the Frank White building, lease levy for the art-ag/ALC addition, abatement for the Century parking, pickup and drop-off area and IAQ for the high school dehumidification and cooling system. Splett noted that no funding source exists for educational improvements without a referendum.
Again, Splett cautioned, all of these dollar amounts are for construction costs only, and do not include issuance costs.
School board chair Sherry Safratowich stressed that the school board would only move forward with Plan D if a ballot question on either Plan A, B or C fails.
Pros and cons
According to Greg Crowe with Ehlers, options A, B and C all have pros and cons. Despite the varying sticker prices of each plan’s voter-approved referendum, he noted, the total construction cost of all three plans is the same, and the annual impact of all three plans on the average property owner’s taxes only varies by a handful of dollars.
Crowe explained that each type of bond, whether voter or board approved, would have a tax impact, including issuance costs. And while the amount of capitalized interest – money spent up-front to buy down the monthly payments – scales to the size of the voter-approved bond, the other funding sources’ issuance costs will add up.
In brief, the consultants said, the tax impact of the project may be the same or more regardless of how many pieces are taken out of the voter-approved bond.
Dave Bergeron with ICS added that each type of bond is structured differently, requiring to be paid off on different schedules.
School board member Dennis Dodge urged communicating clearly with the public about the total tax impact of the project, and not just the voter-approved part. Otherwise, he hinted, if a ballot question sells voters a bond with one tax impact, and the board approves other bonds that raised taxes even more, the public could lose confidence in the school board.
Board member Stephanie Carlson called Plan A “a little cleaner” and “much easier to explain.”
Special meeting June 28
The school board decided to have a special meeting at 6 p.m. Monday, June 28 at the Frank White Education Center to make a final choice of funding solution for Project 309 and to set a date for a bonding referendum.
Safratowich asked Ehlers personnel to come back with more complete cost estimates for the voter-approved bond to allow the school board to move forward with a decision.
Safratowich also asked school board members which of several possible election dates they should aim for. Dodge replied, “as soon as possible” – meaning Tuesday, Nov. 2.
Splett said the school board’s review and comment for a Nov. 2 referendum would be due to the Minnesota education commissioner by Aug. 4. He suggested planning to pass the review and comment at the board’s next regular meeting on July 12.