Now that voters have approved a bond to build new Toll Gate and Pilgrim High Schools, the biggest question facing some members of the City Council is whether the two schools can be built for $350 …
Now that voters have approved a bond to build new Toll Gate and Pilgrim High Schools, the biggest question facing some members of the City Council is whether the two schools can be built for $350 million. Steve Gothberg, school director of capital projects and construction, is confident the answer is “yes,” but he’s not relying on projections made before interruptions in supply chains and shortages fueled inflation and sent construction costs skyrocketing.
The school administration has moved ahead in securing a third party projection of construction costs based on today’s prices before formally requesting City Council approval for release of the funds and moving toward construction.
“Excellent,” City Council President Steve McAllister said of a current analysis of building costs.
“I’m very excited. We need updated costs. This will be really helpful and it’s important,” he added.
Mayor Frank Picozzi, who voted for the bond issue but has made it clear he won’t support any more than the $350 million for the schools, likewise thought a review of costs a positive step.
In an interview Tuesday, Gothberg said Saccoccio and Associates, Cranston architects retained to design and oversee construction of the schools, have contracted an independent firm – PM&C of Hingham, MA – to review and update cost projections. Gothberg’s plan is to have those numbers in time for a January City Council meeting. He is hopeful that not only will the new projections show the schools can be constructed for a total of $350 million – that includes the soft costs such as the architectural, engineering and fees related to the issuance of the bonds – but that the council will give the green light to issue the funds. He is anxious to start construction of the two schools simultaneously in order to comply with conditions for state reimbursement. The two schools must be completed within five years of voter approval of the bonds for state reimbursement.
“I’m confident in the number projected,” Gothberg said of the estimates provided the School Committee for the basis of the $350 million and the bond later approved by voters.
But what if those numbers are no longer reliable in the opinion of a third party?
Gothberg said, “there are ways to cut by reducing the size (of the schools) and value engineering.” Value engineering would weigh the cost of aspects of the project against the importance of those elements. As an example he cites the solar panels planned for the two schools. He said the payback on solar “doesn’t work” and that is one means of reducing costs.
“We can cut down on the bells and whistles,” he said.
The escalating cost of building materials that community activist Rob Cote and Ward 5 Councilman Ed Ladouceur highlighted in opposing approval of the bond has slowed and even declined in recent weeks. Gothberg said the cost of steel has dropped from its high.
In an interview, Ladouceur remained skeptical that the schools can be built for $350 million. Also, he believes the city should build one high school for the city.
“I haven’t changed my mind about anything,” Ladouceur said. Restating a request he made of City Finance Director Peder Schaefer, Ladouceur said he still hasn’t seen a five year projection of city taxes.
“I want to see what the anticipated tax rates will be,” he said
Gothberg is also considering the cost of borrowing funds. Like building materials, interest rates have soared. An interest rate of 4.5 percent was built into the overall 20-year projected cost of $475 million for the schools as advertised in the Oct. 13 edition of the Warwick Beacon. There’s speculation with the prospect of a recession that interest rates will turn downward which would offer relief to taxpayers faced with paying for the debt over 20 years. Under consideration, Mayor Frank Picozzi said Tuesday, is the use of bond anticipation notes (BANS) that would enable the city to borrow funds in smaller chunks than the full $350 million at one time. This would allow the city to participate in the state’s “pay as you go” program.
Gothberg said Warwick schools were recently approved for an additional $8.9 million for a total of $23.5 million in state funds under the program. He explained that those funds would be allocated as portions of the projects are completed at the city’s 35 percent base rate of reimbursement. Once the two schools are completed, the city would receive an additional 17.5 percent in reimbursement to bring the total to 52.5 percent reimbursement.
Gothberg said a meeting to discuss issuance and timing of funding with City Finance Director Peder Schaefer, a representative of the Rhode Island Department of Education and the city’s bond counsel Karen Grande was scheduled for Wednesday.
Assuming council approval of the release of bond funds, McAllister said he is looking to form a committee comprised of key school and city personnel that would meet on a regular schedule to ensure all parties are on the same page and there are no surprises.
“Communication is going to be the key. We should all be on the same page,” he said. “This is a once in a generational project.”
Ever since RIDE rejected the department’s proposal to renovate the two schools on the basis that it would interrupt the educational process and cost close to building new, Gothberg has pushed for the new schools. The schools would be built on the athletic fields of the existing schools and when completed the old schools would be demolished with that space being used to build the athletic fields.
“The need it there and if we don’t do it now what’s the cost later,” he said noting that the Toll Gate heating system is 50 years old and that most of the Pilgrim systems are as old. “You’re talking tons of money.”
As for obtaining an updated cost estimate of the schools, Gothberg said, “We (the administrative team) knew right away we had to do something to prove that the schools could be built for $350 million…we needed a more current estimate.”
Gothberg said Saccoccio is underwriting the cost of retaining the third party review and cost projections.
“I can’t thank the voters enough, the community is solidly behind it (new schools). There is a great need (for new schools) and the alternatives are not good.”
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