Camden Select Board issues letter on Camden-Rockport Middle School financing
The following letter has been submitted to the public by four members of the Camden Select Board, Robert Falciani, Alison McKellar, John French and Jenna Lookner. The letter was authored by Bob Falciani based on concerns expressed to him by John French, Jenna Lookner and Alison McKellar. The four of them issued the statement. Tonight's Select Board agenda has been amended to include a formal vote by the Select Board on their position regarding the CRMS project. A dissenting letter to the public has been submitted by Camden Select Board member Marc Ratner (see sidebar).
Over the past two weeks, with news that the bids for the voter approved middle school project came in nearly $6 million (26 percent over what was budgeted), we have fielded many questions and concerns from the public.
Because many residents are confused about the steps moving forward, we encourage you to read the fact sheet published by the school district and familiarize yourself with the warrant article being put before voters at a special district meeting in the Middle School gymnasium on June 11 at 6 p.m. We sympathize with the difficult task facing the school board and we recognize that there are no easy answers, but we also share many of the concerns we have heard from residents who are having trouble keeping up with the rapidly changing process and escalating costs.
Letter from Marc Ratner, Camden Select Board member
The other members of the Camden Select Board have chosen to write a letter discussing their concerns with the process that the Camden-Rockport School Board has taken regarding the over-budget bids for the construction of the new middle school and how they're proposing to handle it.
I won't go into all the specific issues here - they're covered very well in the town letter and Superintendent Maria Libby's outreach about the process.
My problem with my fellow board members' concerns is that it has a negative tone to it and does not - and Maria Libby's letter also does not - examine the issue in a bigger context.
Yes, this is not the situation we wanted to be in.
Yes, I'm concerned as well about the proposals.
But I believe and I know that the school board's primary concern through all of this is what best serves our students.
As it should be.
I have been involved in the middle school committee meetings making these decisions and recommendations since before I was on the select board.
Here's what I know from being involved in the process every step of the way.
We need a new school.
In every examination we did about the best way to move forward - a brand new school was the least expensive way to proceed in the long term.
Less expensive then doing repairs to the old building.
Less expensive then doing a more extensive refit of the old building.
A new school would also give us a much better education campus for our children.
(Let me state here - my son goes to the middle school now - but he will have moved on the high school by the time the new building opens.)
I remember that the way we used to operate in this country - in this world - generation by generation - was that the parent generation sacrificed so that their children would have a better life then they did.
If we find a way to continue this process and build this new school - our children will benefit and our town will benefit as well.
Let's examine why.
The first thing that pops up on a real estate search online for housing in a city or town - is a rating of the schools.
That's important.
Excellent schools will help attract families to our towns.
We need that more than ever.
One of the big issues facing Camden and beautiful cities and towns all over the world is the number of people that are buying houses and not living in them. Coming for a few months in the summer and often renting them out with Airbnb or some other rental service.
It's a huge problem in Camden. The select board just received a letter from a woman questioning whether she could continue to live in town - now that she's retired - because her property tax keeps rising and she sees more and more of her neighborhood being bought up by remote owners.
Here is a quote from her letter:
"In my neighborhood alone I'd estimate half of the homes are not occupied by year round residents; every house recently sold by a long time resident has been purchased by a 'seasonal resident' who returns in time to avoid paying state income taxes. Long term what kind of community do we want Camden to be."
If you're interested in how other places have dealt with this issue - research Vancouver, Canada or Amsterdam in the Netherlands. It's severe.
Think about our downtown. If we have a town of seasonal residents - we will have more and more closed storefronts in the winter and more t-shirt shops in the summer. Wanna go out for a nice meal in Camden in January? There won't be any open restaurants.
Schools can make a difference. Schools are for year-round residents with families.
Let me also mention that the vote for the new school was moved up from last November to last June - because our committee was very much aware that costs were going up and there were many new schools on the drawing board statewide. It was important to stay ahead of that building boom. On top of that - with employment figures showing there are fewer workers available - there are not enough companies and workers to build all the new schools (and other construction projects of every type) in the state. Prices will and already are skyrocketing.
So here's the deal - if we find a way to build the school we need now - we will save money long term.
A lot of money.
No question about it.
If we miss this opportunity - the new school we need will cost us a whole lot more.
Construction costs will be up and interest rates will be up.
Remember what the auto mechanic always says about doing maintenance when it's needed?
"Pay me now or pay me later."
We can fumble around here and lose this opportunity or we can look to the big picture and the future and do what's best for our community.
It's your choice.
And one more point. The last time the Camden Select Board wrote a letter complaining about the cost of a new school - the 2015 vote turned down the proposal at the time.
If we had voted yes then - the new school would be almost finished and the cost would have been less than we're asked to spend now - and the complete renovation of the MET building would have been a part of it.
Let's not make that mistake again - it'll cost us.
Marc Ratner
How different will the project be, both in design and cost, from what voters approved? How much is too much?
Unlike many of the other school projects underway, the Camden-Rockport Middle School is not eligible for any state funding due to the fact that its condition and amenities are much better than many other schools in the state. Many assumed that news of the high bids would be cause to reexamine and redesign the project to scale it down to reflect market conditions and, therefore, remain within budget. Instead, the School Board has opted to pursue a path to move forward on the original schedule, but with escalated costs, by using a variety of tools such as additional borrowing, drawdown of the capital and maintenance reserve fund, deferment of the first principal payment, and an as yet unknown package of "value engineering". For those who believe we need a new middle school now, no matter what it costs, this may indeed be a viable path forward, but others may reasonably decide that the time isn't right and that redesigning or repairing what we have makes more sense. Each of us needs to decide if this project is on a clearly defined and well managed track, or one that is reactive and unpredictable.
The June 11 School District Vote in the Middle School gym will authorize $3 million in additional borrowing.
Borrowing money for school construction purposes has always meant seeking voter approval through the referendum process with a question on the ballot. Last June, voters approved borrowing up to $25.2 million dollars for building a new middle school. Much information was published ahead of time explaining to the details and restrictions of the choice we were making and everyone had an opportunity to vote in the typical way, including absentee and early voting. This year things are different. Authorization to spend up to $6 million more dollars is being sought through last minute financial maneuvering and changes to the school operating budget. Some of these amendments were already approved at the Annual School District Budget meeting on May 22nd, and the remainder will be voted on at a special School District meeting on June 11th at 6pm at the Camden-Rockport Middle School gym.
The school operating budget has become a referendum on increased construction costs.
Many have expressed confusion about this process and with early and absentee voting well underway, it has been difficult to answer questions about whether a yes vote on the school operating budget equates to voting yes on a school construction project that will cost millions more than originally explained. The School Board proposed budget became available in March, followed by a public input period, mailings, and presentations. Despite this, news of the high bids was followed with an emergency meeting the day before the Budget Meeting, and motions were drafted and voted on from the floor by school board members with no opportunity for public notice.
A ‘bond premium’ of $3+ million pushes the limits of what voters agreed to.
This function comes with higher interest rates, at taxpayer expense. Over the life of the bond, these additional interest payments will easily exceed $2 million. A bond premium of this size and for this purpose is not typical and is usually used to pay down the overall bond amount, not as a way of increasing the overall cost of the project. We are concerned that such liberal use of this strategy will lead to decreased voter confidence in approving future borrowing.
Deferment of the first principal payment comes at a cost.
This will take the first principle payment of $1.3 million (the amount outlined in the School Board approved budget and public information presentations), and use the funds toward construction instead. This will also extend the 20 year bond by an additional year. What we are essentially doing is using money intended to pay off a loan and instead using it to spend more than was planned.
Drawing down the Capital Reserve Fund means more money must be raised in future years.
These are funds, currently at $1.4 million, already appropriated for issues that might arise with BOTH the Middle and Elementary Schools. The funds in the Capital Reserve fund are derived primarily from transferring unexpended balances from the operating budget at the end of the year. Most of the unexpended balances are the result of over-budgeting for maintenance and repairs to both the Middle and Elementary Schools. 1.1 million was specifically set aside as part of a school district decision to defer maintenance on the middle school facility. The Capital Reserve fund can be used with voter approval for improvements to the facilities, new construction, maintenance that extends the life of buildings, and so on. Only $175,000 will remain in the fund if voters approve the transfer of $400,000 (in addition to the $1.1 million already transferred) for use on the middle school construction project.
Value engineering may have consequences.
This is the process of finding non-essential aspects of the project and cutting them out to reduce the overall cost of construction. Although a 10% cut, equating to $2.8 million, has been discussed, it is has not been decided how many of these cuts will actually be made nor what elements will be changed. One concern is that by choosing materials of lesser quality now, we are setting ourselves up for bigger costs later on. Value engineering is most often a transfer of costs from capital costs (i.e., construction budget) to operating and maintenance costs paid annually from the annual school budget funded by taxpayers .
How will we pay for any further cost overruns?
Even before a spade has gone in the ground, we are 26% over-budget, with only a 5% construction contingency to insulate taxpayers moving forward. In escalating construction cost cycles like we are in, the typical project will see change orders greater than 5%. In addition, during these cycles, schedules are in jeopardy due to subcontractor labor shortages and related construction quality rework. We are concerned that the stage may be set for many continuing cost overruns (like those we have seen in the bid cycle), and that taxpayers will be stuck with them once demolition and construction are underway and change orders start coming in. The project already has a very tight timeline in order to work around the school calendar
There is a well respected division of duties and responsibilities between the School Board and Select Boards, but there are also times when our roles overlap.
The Select Boards are responsible for overseeing the long term financial planning of the towns we represent and this is part of the reason that state law requires us to countersign the school district warrant articles before they go to voters. Even though the School Board is solely responsible for recommending and overseeing the school budget (which represents roughly 60% of the tax bill in Camden), it is municipal staff and elected representatives that calculate rates, distribute tax revenues, and send out the bills. It is the town office that hears the majority of the frustrations when taxes are due and fields most of the questions about all things related to the voting process.
We appreciate that the District has been extremely transparent in explaining their approach, but we worry that the process is so rushed and unconventional that it will exclude many people, especially those who are homebound or have inflexible work schedules. We encourage all voters in Camden and Rockport to review the available information and statements by the Superintendent so they can make up their own minds and join us to vote on June 11 at 6pm in the Camden Rockport Middle School gymnasium and on June 12 at the municipal polls.
Robert Falciani, Alison McKellar, John French and Jenna Lookner
