On March 10th, residents of Durham, Lee, and Madbury will be voting on the proposed new building for Oyster River Middle School. Plans for the building include many changes including a recital hall, a new turf field, larger classroom sizes, and increased security.
In this article, you’ll find an overview of the main financial impacts of the project that you’ll likely need to know before casting your vote. The building will cost a maximum of $49,842,000, and the construction company, the Bauen Corporation, will cover any additional costs that exceed that amount, according to ORCSD Assistant Superintendent, Todd Allen. What that overall price includes is $45.1 million of construction and demolition costs, and $4.75 million of “soft costs” for internal finishings, furniture, etc., according to the November 20th, 2019 school board meeting minutes where Andre Kloetz from Bauen Construction presented to go over how the guaranteed maximum price was determined. The district hopes to start construction this spring and have the school done by spring of 2022 if the proposal passes.
Last year, there was a vote to approve $800,000 in order for the district to hire the architects and construction manager to plan out the project. This $800,000 was used for working with geothermal engineers, solar energy engineers, and architects, doing tests and receiving permits, according to Allen. The March 10th vote will be approving the $49,842,000 project in its entirety.
In order to get all of the money necessary to carry out this proposal, this will be a bond project. This is borrowing money for the purpose of a project, similar to a mortgage for school construction. The district will be taking out two bonds to finance this. The bonds will be paid off in 25 years, according to Allen. The first bond will be taken in the summer of 2020, and the second bond will be taken in 2021.
As for the timing of the bond itself, the district has yet to pay off the high school bond. That bond’s interest rate is about 4.5%, which was financed around 2002. The current rate available for bonds is 2.15%, according to Allen. Interest rates are at an all time low, and that is a big reason the district feels now is the time to go through with the project. It would save $400,000-600,000 a year to do the project now, Allen said.
Another factor going into the timing of the project is that according to the construction company, construction costs will not go down, they will only increase. The construction company has said that the costs will go up 4-6% a year, so if the district waits that year, the overall cost could go up $2 million.
Along with construction costs adding up, Allen explained that the amount of money to fix each issue that arises in the current building will not be effective in the long term, and will be costly. “I just think we’re at a point where the middle school is literally falling apart around us, and if we don’t do it now, we’re going to have to invest a lot of money that’s going to be wasted long term,” said Allen.
However, since a bond will be financed for this project, 60% of votes must be in favor of the proposal in order for it to pass. “Assuming a higher turnout for such a significant vote, we anticipate a need for 2,000 ‘yes’ votes,” said the Frequently Asked Questions page of the orcsd.org website. Allen mentioned that only about 20% of voters have direct connections to public school systems, regardless of the town. Essentially what this means is that passing this vote will also require and rely on support from people in Durham, Lee, and Madbury who may not have connections to the ORCSD.
A big question many voters, regardless of school connections, may be thinking when hearing the proposal of a large project such as this is the effect it will have on taxes. Residents in the district have voiced concerns about a tax increase and the timing of the project.
On this issue, Allen said, “we are looking at roughly 1% per year over the first five years, and then leveling off or dropping after that because it’s timed around the final payment on the high school bond which is in the year 2022/23,” shared Allen. He continued to say, “because of the way taxes are calculated, each town’s tax rates are calculated based on the number of students that they have from their town, and the property values in their town, so there is some variation from town to town. In this proposal, the Lee impact is the least, and the Durham impact is the most.”
In order to make sure tax increase stays low, the district has multiple plans in place. The first plan being that the Bauen Corporation has given the guaranteed maximum price of $49,842,000, as mentioned earlier.
The second thing is that the district has made a conscious decision to use the money that would have gone towards repairing the current middle school to finish all of the other projects needed, like renovating the elementary schools. “Usually when you start talking about taxes going up dramatically after a big building project, it’s because something else comes up […] there are no additional projects that are going to come up after this.”
The third major tool that the district has put in place is a retirement incentive. For teachers who are ready to retire, they are given a sum of money to consider retirement, Allen explained. If the teacher chooses to retire, the district would no longer pay their salary, and you hire someone who is on the lower end of the spectrum who does not get paid as much initially as a newer teacher. “The school board is planning to offer an incentive next year to correspond to the highest cost year so that people who are planning to retire anyways will decide to retire that year instead of this year, for example.” The district plans to save a lot of money through this incentive to help with the cost of year two.
Allen explained that year two of the bond will be the most difficult. To help with this year, there are tools in place, all of which have been approved by voters. One of them is taking the two bonds so the district will only have to pay the interest on half of the money in the first two years, which means the bond payment is lower.
Another tool is the expendable trust funds, which are in multiple accounts. According to Allen, the various funds are for capital projects, benefit cost stabilization, and special education costs. The money would be spent in those designated areas, however those funds would still contribute to keeping taxes low.
The district feels that this project is necessary for many reasons. Although there are more than these, here are some of the major reasons the town feels this is necessary. The biggest reasons the town believes we need a new middle school are classroom size, handicap accessibility, temperature control, spacial inefficiency and lack of technological accommodations.
According to Allen, the plans for the new school include solutions to all of the aforementioned issues along with a turf field for athletics, a 900-seat recital hall specifically for musical performances, updated security and safety features such as a new traffic pattern, a net-zero building, and “an efficient and well-designed school focused on a logical organization of classrooms and traditionally non-instructional spaces to create an integrated learning environment; which minimizes travel time by providing right-sized and conveniently located student storage spaces,” said the Vision section on the ORCSD Proposed New Middle School page. For more information on the project in general, click here.
“We want it to be a building that our community will be proud of for generations to come. We are trying to take into account all of the things that people in this community value, and I hope that when all is said and done, people will say it was the right thing to do at the right time. It’s going to be a major gain for the kids of our community, but also for our community at large,” shared Allen. So, get out and vote on Tuesday.
Images courtesy of the ORCSD Proposed New Middle School Page