The URL can be used to link to this page

Home My WebLink AboutAgenda - 03-01-2007-1ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 1, 2007 Action Agenda Item No. ~.... SUBJECT: Chapel Hill Carrboro City Schools (CHCCS) Elementary #10 Update DEPARTMENT: County Manager and Budget PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Attachment 1. Funding Options for CHCCS Elementary #10 Attachment 2. Elementary Level Capacity Compared to Student Membership INFORMATION CONTACT: Laura Blackmon, (919) 245-2300 Donna Coffey, (919) 245-2151 PURPOSE: To update the Board of County Commissioners on progress made since February 6, 2007 regarding Chapel Hill Carrboro City Schools Elementary #10. BACKGROUND: On February 2, 2007, Chapel Hill Carrboro City Schools Superintendent Neil Pedersen notified the County Manager that, on February 1, 2007, the Board of Education approved a total project budget for Elementary #10 of $24,282,751 and authorized him to submit the District's request to the County. The Board of Education requested that the Board of County Commissioners approve the project budget of $24.3 million as soon as possible in order to break ground next month so that the school would be on track to open in August 2008. At the February 6, 2007 Commissioners' meeting, the Manager and County staff reported to the Board that there had not been sufficient time since receiving the Board of Education's request to fully analyze outstanding questions and concerns related to the project. Examples of the outstanding issues included affordability and the County's debt capacity/limitations, design components including sustainable elements, regulatory issues, water, sewer and road infrastructure, student membership, district-wide elementary level capacity and Schools Adequate Public Facilities Ordinance. The school district indicated at that. meeting that the bids that they had received would expire on March 14, 2007. To that end, Commissioners directed the Manager and staff to update the Board on outstanding questions and concerns at the March 1, 2007 work session. Attachment 2 of this agenda abstract, Funding Options for Elementary #10, identifies two options for moving forward with Elementary #10. The options include: Option 1. Commissioners approve funding for both projects in accordance with County's September 14, 2006 debt issuance plans (planned debt for these projects totals $23.3 million with $22.1 million planned for Elementary #10 and $1.2 million planned for County's share of infrastructure) with active value engineering collaboration by County and CHCCS to reduce difference between budget and project costs or approve funding for sewer construction and have CHCCS re-bid the construction bids for Elementary #10. Option 2. Commissioners approve funding for Elementary #10 at requested $24.3 million ($1 million above the amount presently included in the County's current debt issuance plans for Elementary #10 and Twin Creeks Infrastructure) and approve a project funding plan whereby Chapel Hill Carrboro City Schools uses other funding source(s) to cover the project cost overruns. Other funding options that the Chapel Hill Carrboro City Schools might consider using to cover the $1 million shortfall includes aone-time increase in the special district tax, use of the district's pay-as-you-go capital funding stream and/or use of the district's fund balance or some combination of these revenues. FINANCIAL IMPACT: On September 14, 2006, the Board approved debt issuance plans for individual County and School projects totaling $96.2 million ($92.2 million in non-enterprise fund debt plus $4 million in enterprise fund debt). In addition to completion of Carrboro High School and a number of County related projects, those plans included $22.1 million for Elementary #10 plus $1.2 million for the County's share of water and sewer infrastructure to the Twin Creeks school/park campus. The County's Debt Management Policy sets the County's non-enterprise fund debt limit as fifteen percent of the .annual General Fund budget. Based on the project funding plans approved by the Board on September 14, 2006, the County will come very close to its debt capacity limitation over the next three to four years. The result of increasing the debt amounts already endorsed for individual projects would be that there would need to be a corresponding decrease in an individual project previously endorsed by the Board, or that the County would exceed its debt capacity limitation. With regard to the CHCCS special district tax, staff anticipates that one-cent will generate approximately $793,000 in fiscal year 2007-08. An increase of 1.26 cents in the tax would be required in order to generate $1 million. The current CHCCS special district tax equals 18.85 cents per $100 valuation. Historically, CHCCS has requested increases in the special district tax to fund opening of new schools. According to budget information presented by CHCCS staff at the Board of Education's Annual Planning Conference in mid-February 2007, new operational costs associated with opening Carrboro High totals $1.9 million (approximately 2.43 cents on the district tax rate) and programming of Elementary #10 totals $237,000 (approximately 1/3 of a penny on the district tax rate) for fiscal year 2007-08. RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners pursue Option 1 and that the Board review and consider the parameters within that option. ovz~i2oo~ Funding Options for Elementary #10 Including Infrastructure to Twin Creeks Park Site The information below provides options for moving forward with Chapel Hill Carrboro City Schools (CHCCS) Elementary #10 (including infrastructure to Twin Creeks Park Site). Option 1. Commissioners approve funding for. both projects in accordance with County's September 14, 2006 debt issuance plans (planned debt for these projects totals $23.3 million with $22.1 million planned for Elementary #10 and $1.2 million planned for County's share of infrastructure) with active value engineering collaboration by County and CHCCS to reduce difference between budget and project costs or approve funding for sewer construction and have CHCCS re-bid the construction bids for Elementary #10. Pros/Advanta es Cons/Disadvanta es • Anticipated school opening date of August • Timing constraints do not allow opportunities to 2008 (although not a guarantee) explore alternative construction options such as Construction Mana er at Risk • Compliance with SAPFO bevel of Service • To school supporters, presents appearance of (LOS) for Elementary grade levels if project "cutting education" if project not funded at CHCCS moved forward instead of re-biddin requested level • Allows for K through Grade 3 class size .Requires school and County staffs to be more reductions (from 1:23 to 1:21 students per active in construction management class) for both school districts • Applies School Construction Standards • County has little or no understanding of principles including sustainable design construction project cost prior to awarding features contract • Requires fiscal discipline on behalf of school • If re-bid, anticipated school opening date later district and Coun than Au ust 2008 • Displays political will for cost control • If re-bid, K through Grade 3 class sizes remain at 1:23 until Elements #10 comes on-line • Allows County to stay within its debt • If re-bid, no guarantee on future school, limitation construction price -could be lower than current bids or could be hi her • Permits County to be more involved with • If new bids are higher, few options for funding project and costs additional costs to fit within the County s debt limitations • Offers opportunities to negotiate with bidders, other non-construction vendors furniture, technolo ,consultants, etc • Construction of sewer infrastructure could move forward even if school construction were re-bid oti27i2oo~ Option 2. Commissioners approve funding for Elementary #10 at requested $24.3 million ($1 million above the amount presently included in the County's current debt issuance plans for Elementary #10 and Twin Creeks Infrastructure) and approve a project funding plan whereby Chapel Hill Carrboro City Schools uses other funding source(s) to cover the project cost overruns. ~'~ t2> Pros/Advantages Cons/Disadvanta es • Anticipated school opening date remains • Timing constraints do not allow opportunities to at August 2008 (although not a explore alternative construction options such as uarantee) Construction Mana er at Risk • Complies with SAPFO Level of Service • Little or no understanding of project cost prior to (LOS) for Elementary rade levels awardin contract • Allows for K through Grade 3 class size .Requires little fiscal discipline on behalf of school reductions (from 1:23 to 1:21 students district and County er class for both school districts • Applies School Construction Standards principles including sustainable design • Displays little political will for cost control features • Allows County to stay within its debt • Blame of tax rate increase goes to Commissioners limitation and not Board of Education • Tax burden of $1 million increase in project budget shared by those residents • Limits opportunities for County to be involved with within the School's Special District and project and costs not to residents outside of the District • To school supporters, presents appearance of fully funding education if • Negates negotiations with bidders project funded at CHCCS requested level • Widens the funding inequity between CHCCS and OCS • Increasing taxes seen as a burden by many - particularly the senior population who have no children in the schools stem • Presents appearance of fully funding education if project funded at CHCCS requested level • Sets an expectation for fully funding future projects; keeping in mind that SAPFO projections (with K-3 class size at 1:21) identify the need for Elementary #11 to come on-line in school ear 2010-11 • Historically, CHCCS has requested increases in the special district tax to fund opening of new schools. According to budget information presented by CHGCS staff at the Board of Education's Annual Planning Conference in mid-February 2007, new operational costs associated with opening Carrboro High totals $1.9 million (approximately 2.43 cents on the district tax rate) and programming of Elementary #10 totals $237,000 (approximately 1/3 of a penny on the district tax rate) for fiscal year 2007-08. c2> (1) Examples of options that Commissioners might consider in funding the project overruns include one-time increase in special district tax, use of the district's pay-as-you-go capital funding stream and/or use of the district's fund balance or some combination of these revenues. (2) One-cent on the CHCCS special district tax anticipated to generate $793,000 for fiscal year 2007-08. Current year CHCCS special district tax rate equals 18.85 cents per $100 valuation. 02/27/2007 o• Elementary Level Capacity Compared to Student Membership School Year 2008-09 Chapel Hill Carrboro City Schools • K-3 Class Size At '1:23 Elementary Level Capacity -100% Level of Service (School Year 2008 4,921 09 Elementary Level Capacity -105% • Level of Service (School Year 2008 5,167 09 Projected Student Membership 5 273 School Year 2008-09 ~1 ~ , ~'~ Projection based on the preliminary November 15, 2006 date of membership as outlined in the Schools Adequate Public Facilities Ordinance (SAPFO)