MOUNT VERNON – On the morning of Saturday, Sept. 15, the Mount Vernon Board of Education held a special meeting. It was publicized, although no members of the public attended. It lasted four hours.
After a 90-minute discussion on how to maintain and redirect future district tax revenue, Superintendent Bill Seder revealed to the board a startling reality – the district had underestimated the cost of building its athletics fieldhouse by approximately $2 million.
While the district had estimated that a two-court fieldhouse would cost $2.7 million after working with criterion architects at Green Valley Design this summer, bids for the two-court option recently came back well over $3 million. Adding in a third court would add another $400,000-plus to the cost.
But what also drove the price up – and what Seder said “shocked” the district – were contingency and administrative costs. Those fees added up to over half a million dollars in Seder’s presentation to the board during the special meeting, as they account for unknown costs (such as extra materials needed during construction) and paying those who are doing the work.
“We didn’t really take into any large consideration contingency or administrative costs,” Seder told the board. “We think about ‘DIY’ and doing it ourselves, but for somebody else to do it, there’s going to be a fee. And they also build in these contingencies when they do these things – that shocked us, quite frankly.”
In September, the district chose Adena Corporation (out of Mansfield) over Mull & Weithman Architects, Inc. (out of Columbus) to build the fieldhouse. Seder said that Adena had proposed a charge of $3,297,000 for a two-court fieldhouse, while Mull & Weithman would have charged $3,778,330. Adena also had a less expensive third-court option, coming in at an additional $427,000, while Mull & Weithman offered the work for $497,000.
If the district were to choose the three-court option, Adena set the ‘guaranteed maximum price’ for the project at $4,899,159. That price includes “miscellaneous” fees, such as the installation of flooring, scoreboards and baskets (which the district had already accounted for in its estimate), as well as contingency and administrative costs.
Seder said that the district’s original estimate of approximately $3 million was “very preliminary, and just kind of what we thought about the building.”
“Little did we know that along the way, there are all kinds of hidden costs when you truly talk about construction,” he told the board.
Seder noted that the cost for two courts was “significantly higher than what we anticipated” and that only having two bids limited the district’s choices as far as pricing. He said the district advertised the project statewide.
“Was I surprised that we only had two? I was surprised and a little disappointed,” Seder said.
Seder said he spoke with administration in Ashland City Schools, however, who said they also received two bids for a project of similar scope. David Conley, a financial expert present at the meeting, said there are currently a number of large school construction projects taking place in Central Ohio, which likely impacted the number of bids Mount Vernon received.
“Especially in the Central Ohio area, with Upper Arlington with a $400 million project – there’s a lot of big, big, big projects going on. So that’s one factor,” Conley said. “The other factor is just that it’s short-term inflation. The supplies and concerns over tariffs are also driving prices up. We’ve got a shortage of labor and cost issues that are affecting that.”
Seder added that the lack of competition for this project likely allowed costs to rise well past the district’s estimates.
“I wish we would have had more (bids),” Seder said. “The higher the competition, the lower the cost gets driven down. But we have what others comparably have, in relativity to this design-build process.”
Seder and the board seemed to agree that, given the inflated cost of the project, it would be worthwhile investing in the three-court option. The district would not be able to add a third court in the future because of the fieldhouse’s proposed layout.
“If you have one chance to do this, three courts just makes more sense and presents that space to be the most usable space we can get,” Seder said. “Once we build it, we can’t really add it ever again, because quite frankly, the court space is right in the middle. So it’s not like you could have it at the end and just build on another court later.”
On a positive note, Seder also mentioned that the district might not have to pay the entirety of the contingency costs if Adena does not spend the full amount ($210,000). He also said that Adena is willing to take on the construction of the new bus garage, along with the fieldhouse (which would sit side-by-side), and doing so would allow the contractor to initiate a ‘value-add’ process. This would mean that Adena would give the district advice on ways to make each structure more cost-efficient, which could save the district money.
Bids for the construction of the bus garage also came in higher than expected, as it will likely cost $1.9 million. The district estimated the garage would cost approximately $1.3 million. Seder noted that the extra costs centered mainly around site preparation, as well as developing the fueling and parking areas for the buses.
The estimated cost of the Yellow Jacket Drive extension remains $500,000, as the Ohio Operating Engineers Apprenticeship and Training Center is willing to donate equipment and labor to complete the project. Seder confirmed that the City of Mount Vernon has committed to civil engineering and site work for the project, while MVNU has agreed to donate the land necessary to make the extension possible.
Originally, the board estimated that of the $3 million it would cost to build the fieldhouse, the board would fund two-thirds of the cost while the athletics boosters would take care of the rest.
With the knowledge that building the facility will now be more expensive, however, the board began examining additional financing options near the end of the Sept. 15 meeting.
Seder laid out one option, which includes funding for only the fieldhouse. Paying off the $5 million (Seder rounded up) over 20 years at 4.5 percent interest would cost $376,000 per year, while paying it off over 25 years would cost just over $337,000 annually.
The board could contribute $250,000 per year, based on casino and pay-to-play revenues it receives. The boosters could contribute approximately $58,000 per year through fundraising commitments and Community Foundation matches. This would give the district $308,000 of the $337,000 needed each year to pay off the facility, without accounting for additional booster revenue, which Seder expects to come in.
Seder then laid out a second option, which includes the Yellow Jacket Drive extension in the cost total, raising yearly dues from $337,000 over 25 years to approximately $370,900 annually during that time span. With the same fundraising structure, that would mean the district would be around $62,000 short of the annual goal.
However, Seder noted that the district could use Personal Improvement (PI) funds to assist with Yellow Jacket Drive extension costs (as the board has previously told the public that taxpayer money would not be used for the athletics fieldhouse).
This is where the board’s previous discussion over maintaining and redirecting tax revenue comes into play; if the board were able to gain an additional $838,000 in PI money from taxes each year (which would not increase what district residents already pay), it could use some of that money for projects like this.
The third option would be combining the fieldhouse, Yellow Jacket Drive extension and bus garage into one cost. That would cost the district $505,000 annually to pay off over 25 years, which would be nearly $200,000 more than the district could currently pay per year. However, the district could also use PI funds for the bus garage and Yellow Jacket Drive extension portions of that bill if need be.
Seder believes that regardless of which option the board chooses, booster fundraising will likely increase once the public can see tangible movement on the project. Those funds will likely be crucial in closing the gap between what the district has and what it needs to fund the projects annually.
“Once there was a board resolution to move forward and they start to see things happening, then (the boosters) believe they will begin to get this extra impetus and maybe even some corporation interest, and all of the sudden you’re getting some bigger kinds of donations,” Seder said.
Another way to potentially finance the projects would be to pursue COPs. This would be a way to pay for the facilities without putting a bond issue on the ballot.
Conley, president of Rockmill Financial Consulting, LLC., explained that a Certificate of Participation (COP) is a non-debt, lease financing option, which is subject to annual appropriation from the district.
Essentially, the school district would make yearly payments to a bank, which in turn would distribute those funds to investors who had made the down payment for the construction of the facility. Those payments are called Certificates of Participation, or COPs.
Conley said that the process is simple and would not require action from the community. The board would simply have to pass one resolution to use a COP. The resolution would lay out the structure of the lease, including proposed interest rates and the timing of the project.
However, one of the potential cons of pursuing COPs is the risk of board changeover and the mindset shift that comes with it. The current school board would need to feel confident that future boards would agree to pay the bank for the facility each year, although Conley said that is typically not an issue.
Conley, who has worked as a governmental finance expert for 29 years, said COPs are common amongst schools looking for debt-free ways to fund major projects.
“There are probably about a billion and a half certificates outstanding (in Ohio), and I’ve probably done about 600 million myself,” Conley said. “I was one of the first people to ever use them.”
At the end of the Sept. 15 meeting, the board motioned to hire Conley as the district’s municipal advisor. Seder said Tuesday that Conley is currently drafting different COP proposals for board’s review, which will likely be presented at the next meeting (Oct. 15).
Conley said it would likely take 90 days from the time the board adopts a COP resolution until the day it can sell certificates and get money in the bank, which is when it would be able to award contracts.
COPs could help offset the cost of whichever option the board chooses to pursue in financing the three facility projects, which may be built around the same time, given their proximity; the bus garage will sit adjacent to the fieldhouse, and both will run along Yellow Jacket Drive.
The board emphasized that, despite the increase in project costs, it would strive to stick to its original vision – that taxpayer dollars would not be used to fund the fieldhouse project.
“We want to be up front about it,” district treasurer Judy Forney said. “We want to say, ‘We’re doing this right. We’re doing what we said we were (going to do).'"
Keeping momentum rolling
Amid financing discussions in the second half of the Sept. 15 meeting, board members discussed the importance of continuing progress on the facility projects, despite the increase in costs.
Board member Cheryl Feasel presented the idea of forming an economic advisory committee, made up of esteemed community members, which could both endorse the fieldhouse project and help move it forward. While the board agreed such an endorsement might help the community get behind the effort, members such as Steve Thompson also noted that if forming a committee would prolong the process, it might not be worth it.
Seder expressed confidence in the board and Forney in making decisions concerning the project.
“I mean, I don’t think you ever want to abdicate your ability to make decision to other folks,” Seder said. “There’s nobody in this community who knows more about school finance than our treasurer. And we’ve got some great business minds in the business world, but school finance is different.”
Three hours and fifteen minutes into the meeting, the board fell silent. Discussions of how to fund the projects had continued for nearly two hours, and while it all seemed feasible, there is still risk associated with each choice the board will make – not only for the board, but also for the future of the district.
The board is faced with vulnerabilities in the financing structure; will the future athletics boosters be willing to put forth the same effort as the current board to ensure future funding for the fieldhouse? Will the district continue to receive casino funds from the state each year to help offset costs? Will the future school board be fully invested in seeing the process through?
Thompson broke the silence with a message – a rallying cry, of sorts – to refocus the board on the importance of the mission at hand, and the importance of pushing forward.
“I think there’s so much need… there’s so much momentum right now that I think there will be a whole lot of people (who will be) very disappointed if they get any sense that we’re pausing or going back to days gone by of, ‘Well, good talk, but you didn’t do anything,’” Thompson began.
“And in addition to that, if we want people to come to this community, we’ve got to have some things. We have got to sure things up. We’ve not done enough over the years because we haven’t had it. I will say that I think it’s all of our responsibilities, as elected people, to be in touch with what people are wanting.
“Town to town, people have different expectations. But I would say, whether it’s an athletic facility or the bus garage… they want to see progress. They don’t want to go sit in the theater and sweat like crazy because the HVAC’s not any good. You hear those things, and that’s us being in touch and hearing them.
"I think we have enough knowledge and information to move forward. I feel that we’ve done enough financial research. I feel we have experts. I think it is also our responsibility, too, to take back out of here and to take those people for whom we have responsibility for, to make sure that they know that we are trying to be very responsible with their money.
“And we’re not going to be Olentangy School District, right? And I’ll leave other school districts out of it, but we can’t be like other school districts that have to have the state come in and take care of them. Fortunately, we haven’t had to do that. But I think we’re in a position where people would like to move this direction, but guess what, those people’s kids still aren’t coming to this school yet.
“So the dollars we’ve talked about, well only the future will tell how well that’s helped us. Or we can do nothing and continue to get what we’ve been getting.”
The board’s next meeting will be on Oct. 15 at Wiggin Street Elementary, beginning at 6 p.m.