Press Release – Analysis of High School Cost 2.29.16

Approved Press release 2-29-16 edited by DRB 3.2.16

Recently CCJC stated to the community that if we didn’t get an explanation from the MVTHS Board of Directors (Board) of costs associated with the new high school, we would do our own analysis as a service to the District 201 taxpayers. Not receiving a response to our recommendation, the following is our analysis based on the best information we are able to obtain.

The referendum passed by the voters of District 201 gave approval to issue bonds in the aggregate of $19.8M (the local share) for the purpose of building a new high school. The State of Illinois would then pay the other two thirds of the cost through grants. At that time the taxpayers were told the school was expected to cost a total of $62.4M. This was an ‘all-in’ project cost including the buildings, infrastructure, campus, maintenance facilities, athletic facilities, theater, technology equipment, demolition of the old facilities, moving expense and soft cost such as land acquisition, engineering and construction management.

The Board estimates the current project cost to be $ 76.3M. CCJC estimates $5M of additional costs will be required to complete the following facilities that were anticipated in the original project but are NOT included in the Board’s projected cost.

  1. a) Completion of the Theater
  2. b) Maintenance facility
  3. c) Baseball practice field
  4. d) Greenhouse ($ amount to complete unknown)
  5. e) Demolition of the old High School
  6. f) Moving expense

Additional funding is expected from “private donations and naming opportunities” according to Superintendent Michael Smith, although CCJC or the public are not aware of the status of these funding sources. We are aware of $75,000 funds raised and a $75,000 contribution ($150,000 total) toward the total cost of the greenhouse.

Although not a “project cost” $ 7.0M of additional interest expense will be paid for selling bonds at ‘premium’ rates to get more cash up front.  This additional cash is necessary to pay the local share of one third of a larger project ($72.8M) subsequently approved by the state. This additional interest will cost approximately $ 350,000 per year to pay off in 20 years.

Summary:     $76.3M   Projected Total Project Cost (with no additional approved extras)

($62.4M) Less: Original Expected Total Cost

$13.9M   Project Cost Overrun

District 201 Liabilities associated with the new School include:

$ 19.0M  Premium bond debt (authorized by voters)

$   9.0M   Original interest (authorized by voters)

$  7.0M   Additional interest due to Premium bonds

$   3.5M   Local share of Overrun of State approved amount (76.3M-72.8M)

$    5.0M   Additional facilities to conform to the original scope.

(Note: Some of these items may not be done due to lack of funds.)

$ 43.5M   Total

In the opinion of CCJC, the project got off to a rocky start due to the lack of knowledge and experience in dealing with a major multimillion-dollar project. There were several decisions that negatively affected the project, such as selection of the architect, definition of the type and scope of the facility to be built, and the estimate of cost. The facility concept as shown to the voters in a series of public meetings was not the concept finally designed and approved by the Board. This concept required original design by the architect instead of utilizing designs and experience obtained on previous projects designed by the architect. A construction manager was hired to advise and help obtain bids and manage the project. Once the concept was established and requests for bids were sent out, the resulting bids indicated a major cost overrun ($29M). At that point, to redesign and rebid completely would have cost a significant amount and caused a delay in schedule. The Board then spent many hours in discussions with the architect and construction manager reducing the scope of work, revising design details and eliminating quality items in an effort to get the project cost back to the State approved $72.8M. This extra effort by the architect and construction manager was a substantial added cost.   Once rebids were obtained and negotiations with successful bidders were completed the project broke ground on September 15, 2014. The construction contractors moved on site and construction began. Through good planning, scheduling and cost control techniques by the construction manager, the project moved forward toward completion. Several significant change orders have been approved which have increased the cost. Additional architect and construction manager costs were incurred as a result of the earlier redesigns and rebids as well as the typical increases in project cost due to site issues and design and construction issues discovered during construction.

Once the slow, expensive, regrouping issues were resolved along with electing new Board members, the project smoothed out and is nearing completion, but still significantly over budget. CCJC continues to support the construction of a new high school as it has from its inception.

It is CCJC’s primary mission to hold public governing bodies accountable for prudent cost management and to advocate for sound fiscal and tax policies at all levels of government. We seek to increase awareness of issues affecting the public interest.

Sincerely,

CCJC, Ltd.

Dan Black, President

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