Alexandria high school referendum: Part III – The cost

• high school site

The land purchased for the future school site is located near 50th Avenue and Pioneer Road.
• project drawing

The drawing of the proposed high school.

Talk about it

School District 206 voters will cast ballots on September 27 for or against building a new high school in Alexandria.

This article is part three of a four-part series explaining the $65.15 million building bond referendum, focusing on the project, the need, the cost and answering questions posed within the community.

THE COST

The total estimated cost for the project is $70.5 million.

The land for a new high school was already purchased in conjunction with a referendum approved by voters in 2007.

The estimated construction cost to build the high school is based upon $160 per square foot for 280,000 square feet, according to district officials, totaling $44.8 million.

Comparatively, the construction of East Ridge High School in Woodbury cost $165 per square foot. Woodbury opened two years ago.

The cost per square foot does not include site work, non-fixed furniture, fixtures, equipment, contingency funds, management and services, and some other related construction costs such as permits, testing and insurance.

The $70.5 million total cost would include fixtures, furniture, equipment and all fees and costs associated with the design and construction of the school as well as related contingencies.

Kraus-Anderson prepared the estimate, drawing on information obtained in similar projects, including Wadena High School, Spring Lake Park and Duluth schools.

To relieve some of the cost, the energy-efficient building design would produce a projected cost savings of about $65,000 annually. It would also offer an annual economic boost in the community of up to $1 million, according to the district.

For comparison purposes, updating JHS carries a price tag as well. The mechanical systems currently in place at JHS are outdated, according to Superintendent Terry Quist.

School officials estimate a cost of about $17 million to update the mechanical and electrical systems and fix water intrusion problems at JHS. Major renovation to the school would cost about $40 million – not including additional space for academics, athletic and extra-curricular programs and other items depicted in Part II in this series.

While school officials encourage local contractors to bid for the school’s construction work, all public projects using public funding must adhere to the Minnesota bidding process, requiring the hiring of the lowest qualified bidder.

CAPITAL CAMPAIGN

A capital campaign sponsored by the Alexandria District 206 Board of Education and the Alexandria Public Schools Education Foundation raised pledged contributions from individuals and businesses in the community for a new high school.

Donors included $1.5 million from Tastefully Simple, Inc., $1 million from The Aagard Group, LLC and $300,000 from Viking Savings Bank.

$3.35 million in funds are due to be received before 2014 and another $650,000 in campaign pledges are due after 2014. These funds will be applied to reduce the $70.5 million anticipated cost of the project by about $4 million.

SALE OF PROPERTY

Brent and Sally Smith completed a purchase agreement to buy the Jefferson High School (JHS) property “as is” for $2 million. These funds will be applied to the total project cost as well.

According to school officials, the sale price was based upon the land value, not including the value of the building.

The JHS land was appraised at about $1.8 million. School Board Chair Dean Anderson indicated that no potential buyers were interested in the building.

The Alexandria School District 206 Board of Education approved the purchase agreement for the sale of the JHS property at the board’s June meeting. The agreement is contingent on a successful 2011 bond referendum to build the new school.

The buyers of the property plan to keep it available for purchase by other entities in the community. Alexandria Technical and Community College and Douglas County Hospital have expressed interest in potentially purchasing the property some time in the future.

EXPENSE TO TAXPAYERS

The amount that will be financed by taxpayers is $65.15 million to be paid over 25 years, with interest.

Based upon the assumption of a 4.68 percent interest rate, the total of principal and interest over the 25 years would be $124.25 million, according to estimates provided by the district.

Tax impact estimates (and the district’s web tax calculator) include payment of both principal and interest, based upon a 4.68 percent interest rate.

The actual amounts may fluctuate depending on the interest rate of the bonds sold.

The final principal and interest payment associated with the construction of Discovery Middle School is scheduled to be paid February 1, 2013.

If voters approve the referendum, taxpayers will begin paying for the cost of the new bond issue in February 2013.

As an example, a residential homeowner whose property has a taxable market value of $175,000 would pay about $125 more in annual property taxes related to the costs of the new school, according to estimates prepared by Springsted. (See related chart for additional examples.)

“The board has worked hard at trying to reduce the cost of the project,” Quist said. “It is tough economic times and yet, at the same time, the interest rates for bonding are at an extremely low level and construction costs are at an extremely low level, too. If we were going to do this building in 10 or 20 years, the cost would be substantially more.”

A tax calculator and additional information about the referendum may be found on the school district’s website at www.alexandria. k12.mn.us.

Said Quist, “Take the opportunity, get informed, make a decision…and vote.”

Estimated Annual

Tax Impact

Taxable market value Estimated tax increase

Residential Homestead

$75,000 $37 annually

$100,000 $58

$150,000 $103

$175,000 $125

$225,000 $169

$300,000 $236

$500,000 $406

Commercial/Industrial

$100,000 $122

$150,000 $183

$250,000 $345

$500,000 $752

$1,000,000 $1,565

Apartments

$200,000 $203

$500,000 $508

Agricultural Homestead*

80 acres $142

160 acres $223

320 acres $386

640 acres $869

Agricultural Non-Homestead*

80 acres $163

160 acres $325

320 acres $650

640 acres $1,301

*House, garage and one acre

valued at $102,500. Estimated value per tillable acre $2,500

Figures are based on school district taxes for debt service only, and do not include tax levies for other purposes. Tax increases shown above do not include the impact of the state “Circuit Breaker Property Tax Refund.” Figures do include the new “Market Value Homestead Exclusion” as estimated by the MN Department of Revenue.

Figures prepared by Springsted Incorporated.

Informational Sessions

Saturday, September 17 at 9 a.m. at Jefferson High School; and Tuesday, September 20 at 11:30 a.m. at Jefferson High School. Optional tours available.

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