St. Paul property owners can expect to pay a little more than usual for school district construction projects in the coming years as the district rebuilds and renovates amid declining enrollment.
When the school board committed to a dramatic increase in facilities spending in 2016, the goal was to raise taxes every year by about $30 for the average homeowner. But over the next four years, the average annual increase should be around $40, according to a presentation to the school board Tuesday.
By 2026, the district projects it will tax local property owners around $78 million to pay off construction debt, up from $33 million in 2016.
Total outstanding debt is projected to be $860 million in 2026, up from $393 million a decade prior.
“Is this not concerning?” school board member Uriah Ward asked in response to the presentation.
“That is a significant level of debt that the district will have,” Chief Financial Officer Marie Schrul said. “We’re pointing this out as something to consider as a board.”
Baker Tilly director Kelly Smith, who gives the district financial advice, said that legally, the district is allowed to hold as much as $4.6 billion in net debt — 15 percent of the estimated market value of all property in the city. But he’s never worked with a school district that ever came close to that statutory limit.
Bond rating agencies historically have considered the St. Paul district’s debt to be “moderate” and paid off in a “reasonable” amount of time, Smith said. But he said he’s “not sure” whether they’ll still feel that way as the debt keeps growing.
Facilities Director Tom Parent said inflation last year for commercial construction in the Twin Cities was around 20 percent. Market conditions are driving up costs for the district and dragging projects out.
“We’ve seen some really wild things happen” with the cost and availability of materials and labor, he said.
FIVE-YEAR PLAN
This year’s update to the district’s rolling five-year construction plan, SPPS Builds, includes a few big changes to align with a reorganization this fall that will see the closure of five schools — plus one more in fall 2023.
Obama Elementary, once imagined as a potential early-learning hub, instead will become a pre-K-8 school with a Montessori emphasis. Its renovations in 2023-25 should cost $50 million to $57 million.
Bruce Vento Elementary will be rebuilt on its current site in 2023-27 at an estimated cost of $80 million to $85 million and will include an early-learning hub and community services.
Cherokee Heights Elementary was slated for a remodel to support its Montessori program. Now that the school is dropping its Montessori model, the renovation is being scaled back to $15 million to $20 million, which will pay for classroom finishings and ventilation and roofing work.
The new workscopes and earlier timelines for those projects and others should save around $8 million in inflationary cost increases.
New additions to the five-year plan include a renovation of the Bridgeview special-education school in 2027 and federally funded air-quality upgrades this year at Creative Arts Secondary, Highland Middle, the Rondo building and Maxfield and Mississippi elementary schools.
SCHOOLS CLOSING
Closing next fall under a plan the school board approved in December are Galtier, Jackson and John A. Johnson elementary schools, as well as the lower campus of L’Etoile du Nord French Immersion; Parkway Montessori Middle School will close but reopen as a Hmong studies middle school.
Obama will close a year later for the renovation, then reopen as J.J. Hill Montessori closes.
The many construction projects throughout the district are intended not to increase capacity but to make the spaces more appealing and functional. That should help with student and staff retention, said Monika Watkins, capital project delivery manager.
“It’s a lot better to be in spaces every day that truly correspond to their needs,” she said.
The district expects enrollment to fall by another 1,877 students next year.