Assumptions Built Upon Assumptions to Create a “False” Reality
Who Do You Believe: The Urban Land Institute or the City Council?
Parents Should Be Concerned About Financially Hollowed-Out Schools
Second of Two Articles
By Ira Kaylin
Kaylin is a Former Member of Council and Chair of the Budget and Finance Committee
The Ugly is very, very ugly. The document’s proposed changes, correctly, do not reflect or imply an analysis of the impact for correlated expenditures that accompany a $100 million new High School.
However, the City, in a Joint Session of the School Board/City Council, addressed the issue of affordability. The presentation is so methodologically flawed that it borders on “fake news”.
First, The City’s presentation (page 5) is based on an assumption that City expenditures grow at 2.5% percent per year. On that basis the City estimates that taxes would increase by 8 to 10 cents.
By excluding operational costs (page 6) related to an approximately doubling of school enrollment are included the City’s presentation represents a propaganda piece rather that a decision support document. School costs have increased on average in the high single digits to low double digits. The estimate that the tax rate will increase by 8 to 10 cents is false and misleading. By the time full capacity the school transfer amount is estimated increase, at least, to $20 to 25$ million per year. In other words the tax will go up to at least 16 to 20 cents.
To put that number in context the Rushmark (Harris Teeter) project is estimated to generate around $2 million in net revenue per year. The project added around 300 new apartments and used around 2.5 acres of land. Extrapolating from those numbers it would take ten Rushmark type projects to cover the estimated increase in school operating costs. It also implies an increase of 3,000 additional apartments and the availability of 25 acres of develop-able land.
The Urban Land Institute (ULI) estimates it will take 10 years before commercial development reaches capacity. The City claims that significant commercial development will take place in two to three years. The ULI has been consistently right and School Board/City consistently wrong.
Second, by excluding operational costs the City claims that $5 million in capital funding will be available, by 2022, every two years. That claims is based on taking the remaining $10 million water sale proceeds that was promised, by the City Council to be used for city capital projects and giving it the schools for operational uses (debt payments). The assumption that land proceeds will generate $30 million is based on speculation and verbal statements. No wonder trust in government is so low.
Conclusion: It is important to repeat a fact that merits repetition, if the City fails then the School Division fails as well. A $100 million school is not even remotely affordable. It exists as a possibility solely through gimmicks and methodological errors.
The City’s financial planning must factor in all costs not just capital costs.