RFSD believes it’s budgeted carefully for this bond
Tuesday evening, we will know the voters’ verdict on Roaring Fork School District’s desire to issue $122 million in bonds for construction projects from Glenwood Springs to Basalt.
It’s a big figure, but RFSD has been able to rely on voters to support construction with bonds as far back as the 1950s.
Sometimes the proposals were relatively small, supporting one or two projects at a time. More recently, the district has tried to go to the voters only once a decade, which can lead to sticker shock when the total sum is unveiled.
After a pair of successful bond issues in the 1980s, RFSD went to voters for $37 million over 20 years in 1993 — a large purse adjusted for inflation and construction costs. The result was the construction of Sopris Elementary, an addition to Glenwood Springs High School, the first phase of Crystal River Elementary School and a new Basalt High School, among other items.
In 2004, a 22-year, $86 million bond supported additions and improvements around the district, including a massive overhaul of Glenwood Springs High and the construction of the new Roaring Fork High School. Several items, such as ballfields and auditorium in Basalt, were cut from the budget before the election. Others, such as new midvalley transportation facility, renovations to the Glenwood Springs bus barn and the demolition the former Carbondale Elementary School to make way for housing development, fell through after the fact.
“We saw record construction cost escalation over the next three years,” RFSD Chief Financial Officer Shannon Pelland explained. “It’s hard to project for that. Projects all across the state were having the same problem.”
Asbestos abatement around the district also went well over budget, and the district decided to prioritize projects directly related to student instruction.
Carbondale Elementary later became the Third Street Center, saving the district the cost of demolition. The transportation needs, however, are still present, and made their way onto this year’s bond issue.
The midvalley transportation facility, in particular, is integral to a plan to improve traffic flow in Basalt and make room for potential housing in Carbondale.
“We cannot make the improvements we need until we’ve taken care of that site,” Pelland said.
To prevent a recurrence of the 2004 crunch, the district put together detailed cost estimates with architects as part of its facility master planning process, then independently vetted and refined the numbers with projected cost escalation. For from-scratch projects without specific designs, cost was estimated on a square-foot basis.
“I think we have become a lot smarter about how we budget,” Pelland said.
“It’s finding a balance between putting enough escalation into cover your budgets and not so much that you’re charging taxpayers more than you need to.”
That also means tailoring the bond to a market that currently favors premium over par. The 2004 bond was consequently worth $5 million more than face value. This year’s proposal is anticipated to be worth $16 million more than sticker. The same estimates from August place the average interest rate around 3.7 percent.
It’s a different approach than a mill levy, and designed for a different purpose.
Mill levy increases currently provide the district with 18 percent more funding than it receives from the state. It’s an indefinite increase useful for ongoing costs, which in RFSD are mostly wages. Mill levies are capped at 25 percent above state support, so there’s not much more room for improvement on that front.
Bonds, by contrast, are designed specifically for capital construction on what is in effect borrowed money. The money is provided up front by corporate and individual investors and paid off by over time through property taxes. Like a mortgage, it allows districts to complete one-time projects that would be difficult to get ahead of with saving alone.
Taxpayers finished paying off the 1993 issue last year, while the 2004 issue has more than a decade to go.
If the issue passes, residential tax will increase about $55 a year per $100,000 of home value, while commercial tax would spike $260 per $100,000. If the district’s estimates are correct, that should be plenty to complete what didn’t happen in 2004, as well as the myriad needs that have presented themselves since then.
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