Mon, 06/11/2018 - 6:15pm

Lynda Clancy

Meeting is being livestreamed. -https://m.youtube.com/watch?v=4UbiFH048Ic

CAMDEN — On Monday evening, June 11, the School Administrative District 28 School Board will ask voters to transfer money within the district’s budget to cover construction costs of the new Camden-Rockport Middle School. SAD 28 is also asking for approval to use a bond premium, or issue new bonds, of up to $3 million to fund the construction, as well.

This meeting is not the regular school district budget warrant that appears before voters on an annual basis — that proposed spending for 2018-2019 will appear on the June 12 ballot at the polls, on voting day.

But this special meeting is crucial for the success of a proposed plan to cover the financing of the new middle school. The June 11 meetings comes on the heels of extensive discussion and calculations to resolve a $5.8 million gap between what voters approved in June 2017 to fund a $26 million middle school and the actual construction cost, which surfaced less than one month ago when bids were open.

The voting at the June 11 district meeting will be done by secret ballot, and not a show of hands on the floor.

“The June 11 meeting at 6 p.m. regarding the warrant article is a ‘district meeting’ by law and will be run just like our district meeting for the budget warrants (like the one on May 22),” said SAD 28 Superintendent Maria Libby, on June 7. “It is our meeting, but the town is involved in the voting piece of it. We will have a moderator and town clerks will be there signing in voters and counting votes. We plan to do a written ballot vote where each person will check yes or no on a slip of paper that will be handed out for the warrant article in question.”

The meeting will take place in the Camden-Rockport Middle School gym at 6 p.m.

The warrant for the meeting is as follows:

ARTICLE 1A: ARTICLE 1:

To elect a moderator to preside at the meeting.

In addition to the Current Funding Sources for the New Camden Rockport Middle School Project (the “Project”) identified below, shall the District:

(a) Appropriate $400,000 from Capital Reserve Fund balances for the Project; and
(b) Authorize the School Board to make additional fund transfers of up to $1,484,248 to the Capital Reserve Fund for the Project as described below, and appropriate those transferred funds for the Project; and
(c) Authorize the School Board to accept and use bond premium in the amount of up to $3,000,000 for Project construction costs (in addition to premium for issuance costs described below) and, to the extent the Board does not accept or receive such $3,000,000 bond premium, to issue additional Project bonds, and appropriate those bond premiums and/or additional bond proceeds for the Project?

Current Funding Sources	Amount
School Construction Bonds (referendum on June 13, 2017)	$25,200,000
Capital Reserve Fund (budget meeting on May 22, 2018)	$1,100,000
Bond premium to pay issuance costs (estimated)	$120,000
Investment earnings on Bond proceeds (estimated)	$450,000
Total of Current Funding Sources	$26,870,000

Additional Funding Sources if this Article is Approved	Amount
Capital Reserve Fund balances	$400,000
Fund Transfers to the Capital Reserve Fund, as follows: $1,323,748 from 2018-2019 operating budget allocation $60,500 from the Gym Floor Account (insurance proceeds) Up to $100,000 from unallocated balances	$1,484,248
Bond Premium for Construction Costs (and/or Additional Bonds)	$3,000,000
Total of Additional Funding Sources, if Approved	$4,884,248

BACKGROUND

The issue surrounding the June 11 meeting has been the subject of many meetings and presentations since May 16, when the school board, building committee and district superintendent learned that the two construction bids were at least $5.8 million over what had been budgeted for building the new 84,000-square-foot school on Knowlton Street in Camden.

While the total project cost (before bond interest payments) was $26 million, the construction budget for the new school, to be built on Knowlton Street, had been set at $22.3 million.

Bu when the construction bids were opening, Ledgewood Construction submitted a base construction bid of $28.1 million. while PC Construction Company submitted a based bid of $29.8 million.

That left the school board with a glaring 26 percent increase in new school costs, and district staff scrambling to figure out how to cover the funding shortfall.

Just one year prior, Camden and Rockport voters had endorsed borrowing $25.2 million for the project, but now SAD 28 needed to produce an additional funding plan.

The June 11 meeting will be district’s request that voters approve moving money within school district coffers, and borrowing more to keep the middle school project on its planned construction schedule, with a construction company (Ledgewood) that has given the school board until June 15 to commit to its bid.

Last week, SAD 28 School Board member Carole Gartley and Business Manager Cathy Murphy met with the Rockport Select Board at regularly scheduled select board meeting to explain the current district proposal to transfer internal district funds, use financing tools (either obtaining a bond premium from the market, or issuing more bonds), withhold one bond payment and applying that money toward the construction budget, apply an anticipated $450,000 from earned interest on the $25.2 million bond (once received from the bond purchasers), and cut up to $2.8 million in costs from the project itself, all in an attempt to bridge the budgetary gap.

Read more about the district proposal here or see attached PDF of the district-produced explanation of financing problem and proposed resolution.

While the district has maintained that the increase to the taxpayer will be not amatic, the specific effect on the Camden and Rockport taxypayer remains an unknown until two things happen:

1) The interest rate on borrowing is nailed down so that the local taxpayers know how much money they will be contributing toward paying off a 21-year bond; and

2) How much value-engineering is accomplished by next week. The value engineering, an industry term for trimming construction and project costs, is not to exceed $2.8 million, or 10 percent of the total project cost.

According to the U.S. General Services Administration, value engineering is:

“an organized effort directed at analyzing designed building features, systems, equipment, and material selections for the purpose of achieving essential functions at the lowest life cycle cost consistent with required performance, quality, reliability, and safety.

“In the design phase of federal building development, properly applied value engineering considers alternative design solutions to optimize the expected cost/worth ratio of projects at completion. Value engineering elicits ideas on ways of maintaining or enhancing results while reducing life cycle costs.

“In the construction phase, GSA PBS contractors are encouraged through shared savings to draw on their special 'know-how' to propose changes that cut costs while maintaining or enhancing quality, value, and functional performance.”

Camden and Rockport taxpayers are responsible for the new middle school project cost, given that the state of Maine’s Department of Education is not funding anything toward building a new middle school for the two towns.

The SAD 28 Building Committee will review value engineering options on June 19 at 4:30 p.m. in the Washington Street Conference Room. The school board, according to Superintendent Maria Libby, will ultimately make value engineering decisions at its June 20 meeting that will begin at 7:30 p.m., likely in the Bus Barn.

There are three board meetings that night: An SAD meeting at 7 p.m. to elect a chairman and vice chairman and a few other reorganization items, a CSD meeting at 7:15 p.m. to do the same, and then the SAD meeting at 7:30 p.m. to consider the value engineering options.

The public interest in the middle school financing prompted the Rockport Select Board to schedule a follow-up two-hour emergency meeting on June 5, involving a conversation with School Administrative District 28 board members Carole Gartley and Pete Orne, as well as SAD 28 Finance Director Cathy Murphy.

The point of the meeting was to determine whether or not to issue a statement on the SAD 28 Middle School Project in time for publication in newspapers determine the content of any statement on the SAD 28 Middle School project.

At that meeting’s conclusion, the Rockport Select Board voted 3 to 1 to issue a letter concerning the financing of the $26 million project. The board and the school district representatives had gone through, line-by-line, a drafted letter to the public, and compromised on its wording.

Voting in favor of that letter were Doug Cole, Owen Casas and Mark Kelley. Opposing was Ken McKinley, who said his concerns were based primarily on the fact that public schools operate under a different governmental entity than municipalities.

Read the Rockport Select Board letter here.

Click here to watch the meeting.

That same day, June 5, the Camden Select Board also issue its own letter about the situation, and later that evening, Libby presented to the Camden Select Board about the financing proposal.

While four Camden Select Board members signed their names to the letter, one member, Marc Ratner, submitted a dissenting viewpoint on the letter’s conclusions.

Read the Camden Select Board letter here.

Watch the June 5 regularly scheduled Camden Select Board meeting here.

At the June 5 Camden Select Board meeting, Libby also informed the select board that “contractor and architect have begun identifying areas to cut.” The contractor is Ledgewood Construction, based in South Portland, and the architect is Oak Point Associates, based in Biddeford.

“We don’t know what level of cuts we are going to make,” said Libby.

She told the board: “I hope voters understand we have two moving targets, bond premiums and value engineering.”

Board Chairman John French said: “I have supported the school, but people have come to me concerned about financing. There are a lot of people who are concerned about how the money is getting shifted around. They didn’t feel they had enough time to learn.”

Board member Bob Falciani said that many people are confused. He also warned the school district that there is no way, “to guarantee that this is the last escalation,” of project price tags.

He said that taxpayers are stressed.

School board member Carole Gartley said the school board is doing its best in a demanding situation.

“The school board is not doing anything untoward,” she said.

“I’m still waiting to hear some affirmation that the project costs won't increase,” said Falciani.

Libby responded that she would not commit that the costs are guaranteed, but added, “We are doing the best we can.”

Board member Alison McKellar noted that there are citizens who are “afraid of being against anything education because you [perceived] as anti kids, anti-education.”

She urged a breaking down of a school versus town mentality, for the “sake of community,” and to keep working forward.

“This is not a debate of whether its a new school or not,” said French. “I feel a little bit of a disconnect because I don’t understand this process. I’m not saying what you’re saying is wrong. I still don’t understand premium bonds. I’m hoping you can make it work. We’re all on these page, we want to see a new building. We’re all in this together.”