Tax increase needed for new schools?

Published 1:00 pm Wednesday, August 21, 2019

IWCS plan now calls for $32M replacement Hardy Elementary


An increase in real estate taxes may be in store for Isle of Wight County residents to fund the county school division’s revised Capital Improvements Plan, which now calls for a $32-million replacement Hardy Elementary School rather than the $13.4 million renovation proposed last year.

According to Isle of Wight County Schools Superintendent Dr. Jim Thornton, replacing Hardy had been the consensus of a joint meeting between the county’s School Board and Board of Supervisors on Aug. 1, following the School Board’s review of an architectural study by Alpha Corporation, which the Supervisors had commissioned earlier this year to evaluate the costs and benefits of renovating Hardy versus building new. The School Board had commissioned the firm RRMM to do its own study of Hardy in 2018, which had resulted in the initial $13.4 million estimate. The Alpha Corporation study, however, estimated the cost of renovating Hardy to be closer to $23 million, and the cost of building new at $32 million.

One reason Alpha Corporation’s estimate was so much higher, Thornton explained, was because it included renovating some spaces in Hardy that the RRMM study had proposed leaving as-is. The Alpha Corporation study had also included cost estimates for adding a sprinkler system and replacing the building’s existing well and septic systems with water and sewer mains — all of which would be required in a new building — so that the Supervisors and School Board could have “true parity” when comparing overall costs.

Alpha Corporation’s $23 million estimate, he said, equates to more than 70 percent of what it would cost to build new. He added that 70 percent is frequently used in the construction industry as the threshold after which it is more practical to build new than to renovate.

“The driving force for replacement is the age and condition of Hardy and the infrastructure,” said Lynn Briggs, IWCS spokeswoman. “If the building were in good condition, we could expand it and not replace it.”

In August 2018, when the School Board had voted to adopt its roughly $78 million fiscal year 2020-2029 CIP, $36.6 million of that figure had been intended for the renovation and expansion of Hardy Elementary, Westside Elementary ($17.1 million) and the division’s bus garage ($6 million). Thornton had estimated earlier that year that a real estate tax increase of 6 cents could fully fund the debt payments for all three of these projects.

When asked how that estimated tax increase would change now that Hardy alone is projected to cost $32 million, he said that the Supervisors and School Board had not yet discussed the matter in detail, but added that, “There was some discussion from the Board of Supervisors that now might be a better time to borrow all the money at one time for Hardy and Westside, depending on what we do with Westside.”

The superintendent added that this would also mean implementing a one-time tax increase high enough to cover the new debt payments for multiple projects rather than doing a smaller tax increase for just the debt related to Hardy and then another increase when it came time to renovate or replace Westside.

“It’s too early to determine the impact on tax rates,” said Assistant County Administrator Don Robertson. “We need a better handle on the cost of the Westside project and further discussion about what other non-school projects might require debt-financing.”

Robertson added that on Aug. 1 during the joint meeting, the Board of Supervisors directed county staff to commission a study to compare the cost of renovating versus replacing Westside. The Alpha Corporation study of Hardy, he said, cost the Board of Supervisors about $19,000.

As for the amended CIP’s impact on the timeline Isle of Wight County Schools’ adopted last year, which originally called for Hardy and the bus garage to be expanded and renovated by 2020, Thornton said the Board of Supervisors was already “a month behind” on voting on the financing it would need to approve to have a replacement Hardy open in 2022. One thing that would help speed up the construction process, the superintendent said, is if the division were to look for a “prototype school,” meaning one that’s already been built to house 800-plus students in another school system, and build a duplicate of that school in Isle of Wight County. As for when the tax increase might need to be implemented, he said debt payments associated with the construction of a building “typically don’t come until you’re in that building.”

“The Board of Supervisors needs to move in the next few months,” Thornton said. “There needs to be public hearings, all that still needs to happen.”

According James Sanderson — senior vice president of Isle of Wight County’s financial advisor, Davenport & Company — the county’s 2020-2024 capital improvement needs as of August 2019 totaled roughly $81.4 million. This is based on the new $32 million cost estimate for a new Hardy, another estimated $32 million for a new Westside, and $2.5 million rather than $2 million for the IWCS bus garage, as well as other school-related and non-school-related projects.

Sanderson presented this information on Aug. 5 to the county’s CIP Committee, which the Board of Supervisors had formed last year for the purpose of obtaining recommendations on how to pay for the various projects included in the CIP. Committee members include Robertson, County Administrator Randy Keaton, Commissioner of Revenue Gerald Gwaltney, County Treasurer Judith Wells, Smithfield District Supervisor Dick Grice and Board of Supervisors Chairman William McCarty.

Of the $81.4 million, the CIP Committee is estimating that over $50 million would need to be financed via the county taking on new debt.

The CIP Committee’s next meeting will be on Monday, Sept. 9, at 9:30 a.m., and may include Thornton and/or a representative from the School Board. This will be in the county administration building at 17090 Monument Circle, Isle of Wight.