posted by Joe Polk at 9:18 PM /
NOTE: The following letter to the editor appeared in this week's The Almanac
In my role as a member of the Mt. Lebanon Board of School Directors, I would like to clarify some points in Mr. Taylor's recent letter to the editor concerning the Mt. Lebanon School District high school renovation.
Mr. Taylor is correct in listing the deduct alternatives presented to the school board at its Aug. 9 discussion meeting. As an engineer, Mr. Taylor should be well aware that preparation of bid alternatives is an industry best practice and remains typical for large construction projects like Mt. Lebanon's.
This project has undergone intense scrutiny through the years and many options and variables have and continue to be reviewed. As a result, many design and material changes have been incorporated into the project with the intent to reduce costs.
Other alternatives, such as relocating the tennis courts or removing a gym frequently used by community members, are more difficult to assess. A well-rounded board member recognizes that there are citizens to whom these items are important just as there are those who don't care about tennis courts or gyms and would prefer to simply reduce the cost. It is a balancing act to provide for our students while accommodating community needs, both fiscally and in the high demand for our high school to serve as a form of community center. The question to ask is if the board would jeopardize the remainder of the project for any of these items?
Mr. Taylor's assertion that the deduct alternatives were developed to "cheapen the bids" conflicts with his ongoing criticism that the cost is too high. Deduct alternatives are created to give the school board flexibility to reduce costs if needed when the bids come in without jeopardizing the project as a whole.
Dozens of people who work on this project daily tell me that the current and near future bid environment is competitive and Mt. Lebanon could see significantly lower bids than the budgeted estimate of $113.2 million. It is my hope that the project will get underway as soon as possible to take advantage of this helpful bidding environment.
Readers should also note that, while Mr. Taylor asserts there is no budget, the project cost is indeed budgeted and, by law, no more than $113.2 million can be spent on this project. Act 34 documents set this limit on cost and, by law once again, referendum would have only been necessary if the cost was millions of dollars more.
Mr. Taylor is incorrect in stating that our taxes will increase another 35 percent if the project continues as designed. At most, our taxes may increase by just over 4 percent for the remainder of the project and only at that level if indeed we are not able to realize any savings from the current projected cost.
As a board member, I listened to experts in their respective fields and all community dialogue, knowing that no one man or woman had all the answers on design or cost. Mr. Taylor is no exception. It has been a long six-year odyssey to address the needs of this aging facility and many people have assisted in the decision-making process. The renovation is sorely needed and costly, but I think it will be worth it in the end. We will have an energy-efficient and 21st century education building of which we can all be proud, extending our community legacy of educational excellence.
Sue Rose
Vice President
Mt. Lebanon Board of School Directors
In my role as a member of the Mt. Lebanon Board of School Directors, I would like to clarify some points in Mr. Taylor's recent letter to the editor concerning the Mt. Lebanon School District high school renovation.
Mr. Taylor is correct in listing the deduct alternatives presented to the school board at its Aug. 9 discussion meeting. As an engineer, Mr. Taylor should be well aware that preparation of bid alternatives is an industry best practice and remains typical for large construction projects like Mt. Lebanon's.
This project has undergone intense scrutiny through the years and many options and variables have and continue to be reviewed. As a result, many design and material changes have been incorporated into the project with the intent to reduce costs.
Other alternatives, such as relocating the tennis courts or removing a gym frequently used by community members, are more difficult to assess. A well-rounded board member recognizes that there are citizens to whom these items are important just as there are those who don't care about tennis courts or gyms and would prefer to simply reduce the cost. It is a balancing act to provide for our students while accommodating community needs, both fiscally and in the high demand for our high school to serve as a form of community center. The question to ask is if the board would jeopardize the remainder of the project for any of these items?
Mr. Taylor's assertion that the deduct alternatives were developed to "cheapen the bids" conflicts with his ongoing criticism that the cost is too high. Deduct alternatives are created to give the school board flexibility to reduce costs if needed when the bids come in without jeopardizing the project as a whole.
Dozens of people who work on this project daily tell me that the current and near future bid environment is competitive and Mt. Lebanon could see significantly lower bids than the budgeted estimate of $113.2 million. It is my hope that the project will get underway as soon as possible to take advantage of this helpful bidding environment.
Readers should also note that, while Mr. Taylor asserts there is no budget, the project cost is indeed budgeted and, by law, no more than $113.2 million can be spent on this project. Act 34 documents set this limit on cost and, by law once again, referendum would have only been necessary if the cost was millions of dollars more.
Mr. Taylor is incorrect in stating that our taxes will increase another 35 percent if the project continues as designed. At most, our taxes may increase by just over 4 percent for the remainder of the project and only at that level if indeed we are not able to realize any savings from the current projected cost.
As a board member, I listened to experts in their respective fields and all community dialogue, knowing that no one man or woman had all the answers on design or cost. Mr. Taylor is no exception. It has been a long six-year odyssey to address the needs of this aging facility and many people have assisted in the decision-making process. The renovation is sorely needed and costly, but I think it will be worth it in the end. We will have an energy-efficient and 21st century education building of which we can all be proud, extending our community legacy of educational excellence.
Sue Rose
Vice President
Mt. Lebanon Board of School Directors
Labels: high school renovation, school board, school district, sue rose
8 Comments:
I sent this response to the Almanac.
I believe Mt.Lebanon School Board Director Sue Rose is not in line with Policy BBAA when she wrote “ML board member sets record straight” in The Almanac’s 8/25/10 Letter to the Editor. The policy states:
Direct media inquiries concerning an official District position to the Board President, Superintendent or official designee, provided, however, that this does not preclude Board members from providing their personal opinions so long as they are identified as personal views.
I do not believe Mrs. Rose ever stated that this was her personal opinion.
Mr. Dirk Taylor is spot on with his letters to the editor, presentations made to the School Board, and involvement with the Community Advisory Committee (CAC.) Unfortunately, the School Board majority does not listen to the 4,000 residents of Mt. Lebanon asking to cap the renovation at $75 million, Mr. Taylor, the CAC, the Mt. Lebanon Zoning Hearing Board, and the Mt. Lebanon Planning Board. We have an architect who is making quite a bit of money submitting plans that are not in code. And the School Board’s solution is to take the Municipality to court. Great. We, the taxpayers, pay for both sides' legal battle.
Elaine Gillen
PS Please be sure to read Dirk Taylor's original letter to the editor since it was never featured on Blog-Lebo.
Can anyone explain to me why our community's clay courts are not considered as an alternative to school courts? It seems like almost everyone wins that way.
Many people might not know this, but exposing our youth to tennis was one of the primary goals of Martin Tressel, a Mt. Lebanon resident, a president of the USLTA, and a key co-founder of our clay courts and indoor tennis.
This was a disappointing letter to the editor. It is another case of failing to listen with both ears.
For example, Mrs. Rose writes:
Mr. Taylor is incorrect in stating that our taxes will increase another 35 percent if the project continues as designed. At most, our taxes may increase by just over 4 percent for the remainder of the project and only at that level if indeed we are not able to realize any savings from the current projected cost.
The fact is Mr. Taylor was right based on the District's estimates. Mr. Taylor was referring to the total increase in real estate revenues projected by the District by FY 2015-2016. Mr. Taylor was not singularly referring to the HS project, but the whole Kit & Caboodle, including PSERS and other operating expenses making up the bulk of the remaining projected increase.
Let's look at the numbers, in the District's most recent, public forecast (02-03-10):
Projected real estate revenues in 2015-2016: $70,172,709
Budgeted 2009-2010 real estate revenues: $48,240,359
Difference: $21,932,350
Increase: 45.5%
If the MTLSD forecast includes a 45.5% increase in real estate revenues and we already have a 10.5% increase, how much is left to be raised? 35%, recognizing there are other moving parts, such as PSERS, that will likely continue to flex.
On a side note, Mr. Kubit wrote to every MTL home: When you combine all three of these factors the assumption that our taxes will increase 50% in the next few years is not accurate.
Mr. Kubit is correct -- 45% isn't 50%, we can all rest better.
(It will probably take another school year to hit the 50% increase.)
I would like expose another misleading and erroneous aspect of statements Ms. Rose makes in her letter to the editor.
In paragraph 7 of her letter to the editor Ms. Rose asserts that "..the project cost is indeed budgeted and, by law, no more than $113.2 million can be spent on this project.." And just what law is that ? Act 34 deals only with control of the "new/addition" portion of the overall project, not the total project cost. There is nothing in the PlanCon instructions for Part D referring to any legal control over total cost or penalties for exceeding this total cost estimate. The Part D form entry for such a cost is on page PLANCON - D03, line I. TOTAL PROJECT COSTS (F plus G-9 plus h-10). Nor is there anything in the Act 34 Hearing handbook or instructions about such a law.
There is, however, a PA law that governs how much debt a District can incur before an electoral referendum must be held to approve debt exceeding that statutory limit. The District has very carefully and methodically established the total project cost of $113.2 million to be just under what in reality has been a projected debt limit that might exist at the time a second required and final bond issue would occur...leading one to assume that the entire project was to be financed with new, additional debt. A wrong and misleading assumption ! And here is why :
The initial bond issue to finance the HS project took place in Oct. 2009....premium bonds priced to generate $75 million in revenue having a par value of $69 million. Only the $69 million par value counts against the debt limit..the Additional $6 million is not counted against the limit, but are proceeds now in the school piggybank being paid for by higher bond interest rates being paid to bondholders...with our tax $. The District issued the bonds at least 15 months or more prior to shovels-in-the-ground , or actual commencement of construction under the pretext of (a)interest rates were at a record low (they are even now at record lows, and likely to remain so for many months), and (b) we had to issue bonds before Feb. 2010 in order to pay an initial minimum $700,000 of principal by Feb. 2011 so that the $700,000 could be added to our debt limit. In actual fact, the Bond Resolution passed by the Board in 2009 stipulated that the $69 million could be issued as late as January 1, 2011....bonds can be structured in almost any manner desired, and it would have been possible to structure the issue for 12/31/10 with an initial principal payment of $700,000 by the required Feb. 2011 date. We issued the bonds 15 months early at a penalizing taxpayer cost of over $5 million for 2 questionable reasons : (1) to commit or lock the Board & public into the project per se, and (2) to create a tax revenue requirement to service the bond debt in order to raise or increase the future debt limit.
I'll pause for a moment here and continue in a following comment as I am running past my keystroke limitfor this blog.
Bill Lewis
And another thing ...
Mrs. Rose writes:
Dozens of people who work on this project daily tell me that the current and near future bid environment is competitive and Mt. Lebanon could see significantly lower bids than the budgeted estimate of $113.2 million. It is my hope that the project will get underway as soon as possible to take advantage of this helpful bidding environment.
This is (I think) a continuation of Mr. Kubit's earlier theme contained in his Community FAQs:
"The maximum it could cost would be $113,274,765 ... and does not take into account that bids on recent school construction projects came in at 17% to 25% below their original estimates.
He later continued ...
Local school districts that have recently approved construction projects were able to take advantage of seriously reduced construction rates leading to building costs between 17% and 25% below their estimates. We are trying to take advantage of this excellent bidding environment for our project. A reduction in our construction costs by 20% could reduce our need to borrow money by $18 million. We do not know how long this favorable bidding environment will continue, so by bringing this project to bid we can save money for the residents of our community.
I have no quarrel with describing the current bidding environment as attractive. What I do quarrel with is the inference that the Construction Manager has NOT taken into account current market conditions.
Our Construction manager is both experienced and respected. Further, we are paying buckets of cash for their "best judgment" in our Construction Cost estimates.
This is exactly what we contracted for --
"the Construction Manager's best judgment as a person or entity familiar with the construction industry."
For Mr. Kubit and now Mrs. Rose to possibly imply we are getting anything less than what we contracted for is abominable. Instead of writing letters to resident's homes and editors of local papers -- they should be calling 1-800-Get-Me-The-Solicitor-Now!
I think the reality is the Construction Manager has used its best judgment and given an estimate that realistically has a margin of error. Maybe plus or minus five to eight percent. Note: plus or minus.
Continuing right along:
As budget revenue (from increased tax millage to pay for debt service payment requirements, PSERS, teachers contract, other wage & operating cost)increases year by year, and principal on issued debt is paid, the debt limit increases...and this is what the District is counting on ! Now lets get into some more $ figures. As of 6/30/10, the District debt limit would have been something like $90 million, less $69 million, for a net of about $21 million...not enough to finance the remainder of a $113.2 million project. But we can add to this the $6 million in bond premium revenue received as it is spendable and does not count against the debt limit. Now we have $96 million of allowable debt and spending capacity. Because budgets will be increasing, this added revenue will in fact allow increass in debt capacity....coupled with this is the debt limit increases allowed by reductions in overall outstanding debt through paydown of principal on that debt. These combined factors will permit annual debt limits to increase by roughly $7 million/year. Lets assume 3 years (ie. 2013-2014) or $21 million in increased debt capacity. Now net debt capacity has grown to $21 + $21 = $42 million of available debt capacity, added to the already issued $69 million, results in $111 million of the $113.2 million estimated to be required. To plug that gap is that previously mentioned $6 million in premium, but not par value, bond proceeds also in the piggybank....see, it can be done if all the pieces fall into place as designed and counted upon. And, we have not even touched the roughly $7-$8 million the District has also squirreled away in the Capital Projects Fund as a result of padded budgeting and over-taxationover a number of years.
Hopefully this long discourse has demonstrated that (a) Ms. Rose is not correct about some Act 34 law, and further (b)there is a lot of serious scheming going on about financing the project.
Now on to yet another misrepresentation by Ms. Rose...where she states in paragraph 7 that, continuing from the opening quotation at the beginning of my previous comment, "Act 34 sets this ($113.2 million) limit on cost (which I just demonstrated it did not)and, by law once again, referendum would have only been necessary if the cost was millions of dollars more (than $113.2 million). Not at all a true statement, Ms. Rose !
Lets refer again to what Act 34 and PlanCon Part D in law really control with regard to referendum requirement...recall from my previous comment posting that it has to do with only the "new/addition" portion of the overall project. Refer now to PlanCon Part D, page PLANCON-D20, dealing with new construction. The fist line on D20 reads : "Act 34 applies only to costs for new construction"...maybe it might even include all this so-called pervious pavement and permeable paver new construction as well ?
Now, cutting to the chase, turn the pages to D23 for a continuation of considerations on new construction, section E. AGGREGATE BUILDING EXPENDITURE STANDARD,and the following section F. ACT 34 MAXIMUM BUILDING CONSTRUCTION COST. Now refer to the statement following in bold, underlined type : "IF THE ACT 34 MAXIMUM BUILDING CONSTRUCTION COST (line F) EXCEEDS THE AGGREATE BUILDING EXPENDITURE STANDARD (line E), THIS PROJECT REQUIRES A REFERENDUM". This is the only stipulation for an electoral referendum in PlanCon, Act 34 or PDE law or regulation.
And there you are.... is this all the more evidence that some SB members lack necessary comprehension of critial factors related to their fiduciary & fiscal responsibilities ? In other words, do they not know of what they speak ? You be the judge.
Rose vs. Taylor
Rose said:
Readers should also note that, while Mr. Taylor asserts there is no budget, the project cost is indeed budgeted and, by law, no more than $113.2 million can be spent on this project. Act 34 documents set this limit on cost and, by law once again, referendum would have only been necessary if the cost was millions of dollars more.
Taylor said:
When the school board hired the architects three years ago, they did not have an established project budget. Prior to starting into multi-million dollar projects, most responsible building owners establish budgets based on a balance between known project needs and realistic ability to fund the project. That did not happen here ...
Gotta give this point to -- Taylor.
Taylor is correct in observing that a project budget was not established when the Architect was hired in 2007.
Rose mis-characterizes Taylor's comment and then proceeds to reference the budget established in accordance with Act 34 (January 18, 2010).
While I think Rose has done a fine herself job of validating Taylor's observation, I would like to review the budget issue in more detail.
The Construction Manager's contract, signed October 15, 2008 states: "The Owner (MTLSD) shall establish and update an overall budget for the Project based on consultation with the Construction Manager and Architect ..."
When I asked the School District for a copy of the "budget" established in accordance with the Construction Manager's contract, I was provided with a copy of the Act 34 booklet and a note that reads: "As per 4.2 (Construction Manager's contract) Owner will establish a budget - Act 34 sets max. cost"
So ... again to Taylor's point ... The $113MM Act 34 "budget" was set January 18, 2010, long after the Architect was hired in 2007.
While on the subject of the budget, I would like to address another of Mr. Taylor's points in his recent letter to the editor.
Mr. Taylor said:
If you are a Mt. Lebanon resident who would like to see a lower tax increase over the next several years, and if you do not like the manner in which the proposed project cost is being manipulated to keep it just under the cap that would trigger a referendum, please contact your school board members and let them know how you feel.
The discussion of referendum and its impact on the project keeps coming up AND I truly believe that since abandoning the "all new" school option, the Board has been focused on putting all it can into our 10 lb. sack, short of any referendum limit.
This is in part how the project's Master Design Team approached preparing the Act 34 budget estimates -- from their minutes:
September 21, 2009: “Dick Jaynes reported on the Plan Con and where he was with the Part D and indicated that P. J. Dick has to work with him to bring the cost of the addition down so that the rated pupil capacity that Harrisburg is willing to approve will arrive at a number that is less than the referendum requirement. P. J. Dick agreed to work with Dick Jaynes on this basis.”
November 9, 2009: “Tom Celli advised that Plan Con A has been totally revised by Dick Jaynes and the draft of Part D likewise. He indicated that the Part A will go to Harrisburg as soon as the estimate is available and the cost of the addition can be compared to what is contained in the Part D draft. We must be under the referendum number by a safe margin so that we can forward these documents to Harrisburg and Dick Jaynes believes we will have an A approval promptly thereafter.”
December 3, 2009: “… part D draft was also presented by Dick Jaynes and it shows the project to being about $480,000 under the referendum limit on the new addition.”
There is no doubt in my mind that the big budget number was set just under the debt limit that would have required a referendum.
Additionally, the cost of new construction, as governed by Act 34, likewise.
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