Can the City Manage a Possible $100 Million Project…or Will It Be Another Mt. Daniel Debacle?

Passion is Insufficient to Address Financial and Capital School Needs

Assessments of Financial and Development Options Must Be Forthright

Options for Facility Needs Presented by Council and School Board Are Disjointed

Given the comments in reaction to the recent columns by Ira Kaylin in The Post on several facets of the financial challenges that confront the city and its schools, the publication is pulling up from the comment section those remarks for the reader to again consider.

These comment exchanges are between Erik Pelton, Ira Kaylin and Sam Mabry

The articles:

  • “Council’s “Ugly” Draft Financial Policy with a Touch of “Fake News”  December 14.
  • “Blue Skying” Financial Policy: The Good, the Bad and the Ugly—with a Helping of “Fake News” December 11.

Kaylin and Sam Mabry, both former members of the city council, and commenter Erik Pelton, appear to have distinctly different ways and means for evaluating a path forward to meet the school growth enrollment challenges.

While the reader can and may wish to revisit the above noted Kaylin articles, the Pelton, Kaylin and Mabry comment exchanges appear to be nearly self explanatory as to the issues and approaches to resolve these substantive matters—or not to to tackle them at all.

If your focus is on your children’ education, your home value or both, citizens need to be engaged.  We have all witnessed the financial and time consuming Mt. Daniel debacle and now the Council and Board want to manage a project that could be in excess of $100 Million.

The citizens should ask themselves: Are they up to the task?

From Erik Pelton
December 14, 2016 8:15 pm

There are many complicated factors, financial and otherwise, at play here. I think too often we look at them in a vacuum, instead of the big picture comprehensively. Here are just a few to chew on:

If we assume the projected student enrollment increases, then doesn’t the increase in annual school operating funds (I don’t know how you come up with your $20-25 mill. number, but whatever that number is) occur whether or not we build a new high school? I believe the answer is yes. In other words, we need new revenue (taxes or commercial development) to fund those expenses with our without a new high school. And if we don’t build a new school soon, where will we put those students. Trailers, building rentals, and other stop-gap measures will cost money.

What is the cost of *not* moving forward with a new or renovated school in the very near future? More space will be needed and will come with a cost. Money spent in repairs in the short term may end up sunk and lost. There is risk regarding the city’s property values (and tax revenue) if the quality of the schools overall declines.

A new high school can include central offices, which would presumably save considerable money on rent.

Without building a new high school (or significantly modifying the current one), most or all of the potential revenue from developing up to 10 acres on the site could be lost.

You opine that if the City fails then the Schools fail as well. Perhaps the converse is true as well. I do not believe this should be an debate or discussion about schools vs the rest of the city. Schools and education are important to the entire community, and always have been. When we each went to school, the entire community paid for and supported the schools. The schools serve the entire community, they are developing our future neighbors, bosses, employees, inventors, CEOs, leaders, elected officials, and more. Furthermore, the school campus is host to countless community events, meetings, church groups, athletics and more and is used by far more than just the students who attend.

Again, there are many more issues in play. This is the biggest decision and project that the City has faced in decades. I commend the City Council and the joint subcommittee for digging into the details this fall and laying out all of these particulars and complex issues to chew on.

From Sam Mabry to Erik Pelton
December 15, 2016 5:17 pm

Your comment is absent any recognition that the city must have the financial capability to meet the educational costs for the children who will come to our schools over the next decade as well as those decades that follow.

Those of us who question the financial wisdom of the Council also do so from a social perspective: That is, what is our civic and moral responsibility to those who are not now here but will come?
The municipal financial information and data that Mr. Kaylin, others and myself, put forward is rarely if ever disputed on substance. Rather it is dismissed in a blinding storm of rhetorical prose.
Challenging the financial assumptions of the Council is an imperative to protect the citizens from a constituency that advances what “we want now” over what should be done prudently to protect the school and community for the decades ahead.

Or, to put it another way, the Council, should bring forth recognized expertise that endorses a way forward financially for school construction and operating costs that doesn’t have the citizens and school children in 2027, 2037 or 2047 holding an empty bag depleted by those who only wanted current desires satiated.

From Erik Pelton to Sam Mabry
December 15, 2016 10:05 pm

Regarding your first statement, “Your comment is absent any recognition that the city must have the financial capability to meet the educational costs for the children who will come to our schools over the next decade as well as those decades that follow.” Is that a fact or an opinion? Because I certainly mentioned development, and space, and quality of facilities — all of which impact the financial capability to meet the needs for children in the future. If we don’t improve and enlarge the HS substantially, where will the future students attend class? In the parking lots? If property values (and thus city revenues) plummet due to school woes, how will that affect students of the future? If we fail to increase revenue via development, and to increase the percentage of city revenues that comes from commercial rather than residential taxes, how would that be assisting the students of the future you seem so concerned about given the increases in space, teachers, equipment, etc that they will require?

I tried to have a dialogue with real questions balancing the needs at stake. There is no right answer, no one solution. If you want to participate in a cordial and balanced discussion, terrific. If you prefer to ignore or belittle any opinion that contradicts yours, that is your choice — but understand that (it is my opinion that) it is not helping your position, it is turning away others who may want to understand the explore your position.
Given the student population increases that are forecast (if you are disputing that forecast, I missed it) how would you prudently plan for the future (increased facilities age, more facilities space needed, growth in operational expenses) while also caring for the current students?

From Ira Kaylin to Eric Pelton
December 18, 2016 6:53 pm

There are number of conclusions contained in your comments none of which is supported by supporting analysis. It is essential to compare expected school expenditures with projected City revenues. Please recall that an almost doubling of school enrollment means:—Operational costs (primarily) teacher salaries and benefits will likely double as well.—We have to assume that there will be a doubling of enrollment of the feeder schools (TJ) and Mt.Daniel. They will have to expand as well to meet projected enrollment which means a corresponding increase in terms of operational and capital costs.—Please recall that the latest estimate available indicated that the City’s unfunded Pension liability to Teacher’s Retirement System (VRS) is approximately $30 million.

That shortfall has not been caused by the City but rather by the General Assembly which refuses to contribute meaningful support to the VRS. Nonetheless, the City will have to cover that liability. —The operational cost estimates was based on old data, with new information now available it is now estimated that operational costs have increased.
Your counter is that it can’t be true because you don’t want to believe that the City’s financial situation is very precarious.
Somehow you, and others believe, that economic development will come to the rescue.It would be very much appreciated if you could provide a projection of economic/commerical growth.

Please take into account that developers want more rental apartments and are very reluctant to make major investments in non-residential commercial development. What is the result of comparing projected school related expenses with projected revenue?Your comment that you are willing “to participate in a cordial and balanced discussion “ is appreciated. However, at the moment your views are entirely “conceptual” with practically no analysis buttressed by numbers. Where is the balance?There has been no independent analysis of various alternatives available to the Schools. Why was Kieran Sharpe’s suggestion that the GMHS be expanded on modular, as needed, basis dismissed out of hand?

A fair and balanced dialogue can only take place when hard analytical data is married to conceptual concerns.

That has not occurred.

From Sam Mabry to Eric Pelton
December 19, 2016 6:36 pm

There may be no precise answers now regarding the capital and operating needs of the schools, but there certainly are many “right” questions in order to get to the right answers–and they need to be put forward.

Opinion not buttressed any data and which do not question assumptions—is per se unbalanced and to challenge that construct is neither un-cordial or adversarial—and is certainly detrimental to the interests of our citizens and our children.

The City’s “Mixed Use Development Fiscal Impact Report, updated as of December 12, 2016, does not present a realistic basis for concluding that we can “develop” our way to a $100 Million + facility without unprecedented increases in operating and capital costs. The entire document can be found on the city’s website:

The updated May 2015 fiscal report shows that the NET fiscal impact from six completed projects was approximately $3 Million. Projected fiscal impact for two projects just coming on line—Harris Teeter and Tenner Hill—is approximately $2.5 Million NET.

These eight projects utilized some 18 acres and required over 15 years to complete.
The amount of revenue they produce or will produce would fall short of supporting a $100 Million bond—and interest rates are now even rising increasing the cost of financing.

During that same time period, notwithstanding increased development, the real estate tax rate increased by some 25 to 30 percent.

When Mary Ellen Henderson came on line approximately $1 Million in new operating funds were required—or about 3 cents on the tax rate at that time.

Based on this data, the Council has a responsibility to answer questions with credible and verifiable information—from experienced sources with a proven track record, including:

What alternatives to a $100 Million new school have been explored to meet growing enrollment needs?

In order to develop hard data, has the City issued a Request for Proposal for the construction of a new high school?

And in that same regard, has the City issued a Request for Proposal for the repair, renovation and expansion of the existing high school?

What evaluations and assessments have been done to quantify the impact of a $1.50 tax rate on supporting or suppressing home values?

What will be the projected operating cost impact of new high school facilities on the annual school budget request and tax rate?

Finally, Mr. Pelton’s comments do serve the purpose of underscoring the high risk that this $100 Million option poses for our citizens—and our children.





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