LRP Committee October 22, 2007

Long Range Plan Review Committee
Minutes
October 22, 2007

Members in Attendance:
Harry Amend* Chris Hammons Mary Larson Dave Patzer Dianna Walde
Jerry Anderson Sharon Hanson Kathy Liverman Joel Palmer Michelle Williams
Hazel Bauman* Katie Harris John McLeod Tamara Poelstra
Steve Briggs* Christa Hazel Heather Montee Ronnie Semko
Jane Curtis Sharalee Howard Jill Neal Lori Smith
Jim Ferguson Doug Jaworski Vern Newby* Kevin Stevens

*Ex-officio members

Welcome:
Doug Jaworski called the meeting to order at 4:34 p.m. The meeting was held at the Midtown Center meeting room. Doug asked the committee members to introduce themselves.

Approval of the September 24, 2007 Minutes:
Motion by John McLeod, second by Jill Neal to approve the September 24, 2007 minutes, approved unanimously.

Vice Chair Position:
Doug asked the committee members to get in touch with him if they are interested in serving as the Vice Chair.

Approval of New Committee Members:
The following names were brought forward for approval by the committee as new members: Jerry Anderson, Kevin Stevens, Christa Hazel, Heather Montee and Michelle Williams. Dave Patzer made a motion to recommend to the Board of Trustees acceptance of the 5 people listed as new members of the Long Range Planning Committee, second by Jane Curtis, approved unanimously.

2006 Project List:
The 2006 priority list was provided to the committee. The 2006 priority list was discussed at length at the last meeting and Harry referred the committee to the September 24th meeting minutes. He explained that the purpose of tonight’s meeting is to continue that conversation with the goal of working towards presenting a recommendation to the School Board. The committee will need to decide on how many projects, duration and whether it will be a School Plant Facility Levy (S.P.F.L.) or a bond. Harry explained that an S.P.F.L. is spread out over the number of years that you run it (1-10 yrs.), for example if you had a 4-year S.P.F.L. for $20,000,000 you would receive $5,000,000 per year for 4 years. The building is paid for when it opens and there is no interest (unless short-term financing is needed). Bonds have two benefits, you receive the full amount of money up front (similar to a home mortgage – you pay principal and interest) and the payments are low because they are typically spread out over 20 years. The last time the District ran a bond was for Lake City High School. A bond requires a super majority of 66 2/3% and an S.P.F.L. requires 55% voter approval rate based upon the dollars per thousand of the levy proposed (under $2.00 per thousand – 55%, $2.00-$3.00 per thousand – 60% and over $3.00 per thousand is 66 2/3%). The role of this committee is to discuss these issues, get viewpoints from every school and present a recommendation to the Board.
Harry brought the committee’s attention back to the four projects that were on the last S.P.F.L. ballot (Lakes, Winton, new elementary and Borah) as well as technology ($3,200,000 over the 4 years). Other projects that were considered but did not make the ballot were Bryan, Canfield, Sorensen, new classrooms at Lake City, possible kinder center, possible preschool center, expansion of Coeur d’Alene High School’s new gym and a new Central Office. Harry asked the committee if there was substantial agreement that Lakes Middle School should be the next project (there were several nods). He asked if anyone was in favor of speaking of another project to be the first one out. The following comments/questions were made:

• In addition to the 2006 priority list, last spring Vern challenged the committee to come up with some out of the box thinking i.e. K-6 or K-8 scenario, etc. These still need to be discussed. The list is not locked in stone.
• Where is LCDC at in regards to Winton and Sorensen (providing funding)? LCDC is Coeur d’Alene’s urban renewal agency (economic development tool). Recently it was determined that both Sorensen and Winton met the criteria to be included in the Lake District. LCDC voted to make a recommendation to the City Council. They will analyze this proposal and hold public hearings. This will take several months. Approximately $405,000 has been discussed in order to make Sorensen A.D.A. compliant. An amount for Winton has not been discussed.
• What were the amounts for the five projects listed? The construction costs have increased approximately 30-40% since then. The March 2005 projections were Lakes $19,800,000, Sorensen $4,500,000, Winton $4,500,000, Borah $5,000,000, Bryan $5,000,000, Canfield $10,000,000, new elementary $7,000,000 and technology $2,500,000.
• Has the District considered trading some of their assets such as Person’s Field and Hayden Lake Elementary? Will that building ever be put back into use with the overcrowding at Atlas? The District owns 3 acres of Person’s Field and the City owns 3 acres. Right now the District and the City have no future plans for the field. The District is not using the Hayden Lake building this year. The City of Hayden is interested in purchasing that building and has the first right of refusal through 2010. The District has held onto that building for use as a transition school during construction at another school (bus kids in). Is it useable as an elementary school right now? Some of the issues that drove a new elementary school were size and safety issues (Government Way widening). It was built in 1936. It is not impossible to use that building but it would be problematic. There have not been any significant improvements to that building in the last 10 years. There are pending issues that need to be addressed. What is the value of the property? The last appraised value we received was $2,200,000.
• Inter-city schools are on busy streets all over the country.
• Right after the Lakes project is the need for more elementary capacity in the north. There is only so much relief that shifting boundaries can provide. We need to look at elementary capacity side-by-side with the Lakes issue. We need a new elementary school in the north or a remodel/expansion at Winton or re-opening Hayden Lake for 2-3 years as a transition school. We are approximately 200 students over capacity in the north without counting portables.
• Has anything changed with Bryan, Canfield and Sorensen to move them further up on the priority list? How do we know this priority list is good as it sits right now? We already touched on the dollar pieces, we don’t know exactly what LCDC’s contribution will be and the increased construction costs would have to be recalculated.
• If Winton was going to be renovated or replaced, would the children be disbursed to multiple locations or bused to a single location? When originally discussed, Winton was going to be built on the east corner of the property (playground area) so that the students could remain at that site.
• Is the Winton site big enough to build a new school? It is not a huge site but it is large enough for an elementary school.
• How is the population shifting? Stay tuned. Due to shifts to the west side, there were three classrooms available at Hayden Meadows and students are being bused to that school. Atlas, Skyway and Ramsey have the highest enrollment numbers right now.
• Class size and school size both have impacts.
• Why not tear down Hayden Lake and rebuild on that site or renovate it? It is more costly to renovate than to build new. The site is only 6 acres and ideally we look for 10 acres for an elementary school. The District has a 10-acre site on Thomas Lane.
• What if Winton, Borah, Bryan and Sorensen were rebuilt but kept as smaller schools? Dollars would be saved if these buildings were not expanded. Could we do that and maintain as many small schools as possible at the elementary level? For over a year the committee did some research on small schools and presented it to the Board. The best student/teacher ratio is 1 to 1. It is a blending of what is the most desirable and what makes the most sense economically. It is a balancing act.
• When does the LCDC meet? They meet the third Wednesday of every month at 3:00 p.m. at City Hall. It is also posted on the City’s website and it is broadcast live on Channel 19.

These discussions will be the backbone at the next meeting. The committee members were encouraged to e-mail any further ideas or questions that they might have to Harry, Hazel or Steve.

Bond Financing vs. S.P.F.L.
The committee was provided a handout titled “Quick Analysis Bond Financing vs. SPFL.” Steve Briggs explained that this handout illustrates the costs and ramifications of a $100,000,000 bond at three different levels of payback (20, 15 and 10 years) and there is an analysis of five 2-year S.P.F.L.’s which would also secure $100,000,000. He stated that a 20-year bond is the most typical bond used in school districts and that was how Lake City High School was built. The money is received up front with bonds and this handout illustrates the bonds being issued on August 1, 2008 which is predicated on the spring of 2008 voter approval. There are certain limitations on how that money is held. If the timelines are not met, we could receive penalties. A common set of assumptions were used for assessed value growth in this handout, 2009-2012 is at 5% and 2013-2030 is at 2% (conservative position). The higher the assessed valuation, the lower the tax rate is on securing the number of dollars asked for. True interest costs were used and they do burden the District over time. The average levy rate per thousand is based upon the assumptions. For the S.P.F.L. projected election dates and certification dates were used and the assumption of $10,000,000 was used for each election. The average levy rate is $0.84 per thousand. It is a higher levy rate going in because we are collecting more money up front and it is a pay-as-you-go. A benefit of bonding is the construction can be done up front and a benefit of an S.P.F.L. is there is more flexibility. The $10,000,000 per year does not apply our S.P.F.L. logic the way it used to be applied. Years ago, we told the taxpayers we would not go above $2.00 per thousand in terms of our bonded indebtedness and our S.P.F.L. rates which made a lot of sense at that time. The District’s current debt is going to retire in 4-5 years which means some authority could be attached. The $10,000,000 rate, which right now is $.98 per thousand (it is a declining average over time as the values go up), and if the $.98 per thousand was used as the new peg, you could generate between $15,000,000-$20,000,000 more dollars maintaining the same tax rate and applying the same logic that was previously applied. The committee made the following comments/questions:

• What are the short-term interest rates for an S.P.F.L.? This has not been projected because a lot of decisions would need to be made (several options). The last time the District borrowed it was approximately $29,000 in interest for $2,000,000 over an 18-month period. What are the election costs? The cost to run an election is approximately $6,000.
• There is money, right now, set aside in the S.P.F.L. fund for completion of the technology levy and the majority of it for Lakes.
• Could the District manage 6 projects at one time? Is there a limit? Getting the bonding authority is one thing and issuing the bonds is another. It depends on how the financing comes together. The capacity to build multiple projects in the past has been a challenge. There would be some kind of limit, there is only so many things that we can efficiently do. Statutorily, we are not approaching our bonding authority. This is a realistic figure based upon the number of projects on the table.
• Bond authority requires 66 2/3% voter approval. The bonding capacity is set by State law. We currently have a triple “A” rating (favorable) based upon our financial circumstances.
• A bond requires a super majority. We will have to spend substantially more money to get it passed and it would be a difficult uphill battle.
• Once the committee has come to a consensus on the scope of the next projects, it might make more sense to decide then whether to run a bond or an S.P.F.L. If we decide on multiple projects, a bond may be the way to go and we could hire a construction manager. If we decide on a smaller project, an S.P.F.L. may be the way to go.
• What is the District’s current debt? It will cost approximately 15¢ per $1,000 to pay it off. There is roughly $6,000,000-$8,000,000 left to pay off. The original date for payoff was 2013.
• What are the limitations on a $100,000,000 bond? Do you receive it all up front or over time? It depends on how it is structured. Arbitrage is one of the restrictions. If you don’t spend the money in the timeline established with the bonds, then you have to pay a tax.
• Can you have multiple bonds and S.P.F.L.’s? Steve will check on this. The capacity and amount of money that you can statutorily potentially levy on the taxpayers is driven by Idaho code.

Board of Trustees Report:
Vern reported that it has been a pretty quiet month. The Board is gearing up for their training and annual conference in November.

Next Meeting:
The next Long Range Planning meeting will be held on Monday, November 12, 2007 from 4:30-6:30 p.m. at the Midtown Center meeting room.

Adjournment:
The meeting was adjourned at 6:02 p.m.

Respectfully submitted,

Cheri Beard
Administrative Secretary

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