Ken Larsen's web site - School Issues - Todd Lofrese presentation Nov. 25, 2017


Bond Project Update and Capital Funding Needs


Assistant superintendent of Support Services Dr. Todd Lofrese gave this presentation on November 25, 2017. 


The meeting was 1:26:03 in length.  Todd's presentation was 30 minutes long.  It was followed by almost an hour of questions from the audience.


An estimated 120 people attended.  It was held in the auditorium of Chapel Hill High School.


The various segments were:


Segment (click on to jump to it) Time segment
 on the video
School Board member Rani Dasi 0:00-0:38 Rani kicks things off and introduces Todd.
Todd's presentation 0:45-30:56 Topics:  District needs (e.g. older facility needs) + Fiscal challenges

How did we get to this point? ... where so many of our facilities are in a state of disrepair?  Well, we've had steady growth since the 1990s.  We grew about 1.5 to 2% per year.  To keep up with growth, we had to open up a new school every 3 to 5 years.  Building new schools is expensive.  Nearly all of the capital money [which came from the county commissioners] was spent on building new schools.  This left very little money to spend on maintenance of older schools.

There were other changes which happened along the way. 

The NC General Assembly used to have a State Public School Building Fund.  They eliminated it during the recession of 2009-2010.

The district receives lottery proceeds to take care of capital expenses; however, those funds have been decreasing as the NC General Assembly has been struggling with their own budgets.  They've used the lottery money to pay for classroom teacher positions instead of maintenance.

In the spring of 2017 the NCGA eliminated Orange County's ability to charge impact fees.  In our community that was a source of $ 3M/year in revenue.

Our district has a capital investment plan.  We receive $ 4.02M/year for school facilities.  $ 2.01M goes for computers; $ 2.01M goes for facilities.

$ 2.01M/20 schools = $ 100,523 per school.  If you consider the life cycle of a building, it has major infrastructure needs such as roofs, ATFC (?) systems, flooring, window systems.  All of those things are expensive.  If we compiled all the money, we might just have enough money to replace the school's roof every 20 years ... but not have any money for anything else.

We wanted to provide a 50+ year solution.

Many older schools have handicap access limitations.

There are traffic congestion issues - cars competing with buses for access to schools.  Older schools were designed when most kids rode the school bus.

We have Orange County school construction standards.  We wanted to see what it would take to bring older schools up to these standards.

Some buildings need to be replaced.  We need to increase school capacity.

We can't fix all of the problems all at the same time, so we created a three phased project that is spread out over 10 to 15 years.

McDoogle was built in 1996.  East Chapel Hill Hill School was built in 1996.  Those schools are entering their life cycle where the major infrastructure has to be replaced.  This will be costly, but it must be done or else they'll fall into the same state of disrepair that Chapel Hill High and other older schools are in.

Phase 1:  Glenwood Elementary School.  We corrected handicap access conditions.  Glenwood is plagued by flooding issues.  This was a small project - $ 1.2M.  We paid for it with our district fund balance.  Long term, we don't know what the future holds for Glenwood.  It's located on a small site behind a shopping mall.  Light Rail is planned behind it.  It's not an ideal site for a school.

The second phase 1 project was the Lincoln Center campus.  The majority of the project is building a pre-K center.  One aspect is to improve the safety of those students.  Many of those pre-K students are located in multiple classrooms scattered across the district.  The Lincoln school increased capacity by the greatest extent because it frees up space in our elementary schools.  The funding source for this is the 2016 bond money.

The NC General Assembly passed class size reduction legislature last year.  It reduces class size for grades K-3 by an average of 21 students in a classroom to 20 students in a classroom.  Next year, it'll be 17 students in a classroom. 

This reduction will cause us to exceed the SAFO threshhold which tells us when a new school is needed.

The Lincoln Center creates 189 seats.  It is the only project that we have that's shovel ready that could address this class size reduction issue.

Chapel Hill High School is also a phase 1 project.  It includes a new academic building.  We would renovate the auditorium building that we are in as well as the gymnasium, locker rooms, and cafeteria.  It would address traffic and safety issues out front + new parking to separate buses and cars.  Chapel Hill High is the building in most need of repair.  A few years ago we had to close the library for a week while we addressed mold issues. (13:23)  That would be tackled by this project.  Also, handicap access issues would be addressed.  We'd increase capacity by 105 seats.  It too is slated to be funded by the 2016 bond funds.

(13:50) The next few slides show some of the conditions.  The front entry to Chapel Hill High is not handicap accessible. There is a security/safety issue.

(14:32) Traffic is starting to build up at Chapel Hill High.  Cars build up to drop off car riders. Traffic backs up all the way to Homestead Road and sometimes further than that.  The only way to address these issues is by a building replacement.  We're looking at replacing the academic building at Chapel Hill High School.

(15:08) Other reasons for replacing the A-building at Chapel Hill High are the deteriorating infrastructure:  flooding issues, mobile classrooms need to be renovating (a poor use of funds), foundation walls are cracking, asbestos floor tiles need to be replaced, moisture issues in some classrooms.

(16:56) The auditorium building needs renovation.  Ceiling tiles are damaged. That's cosmetic, but it's a funding issue nonetheless.  Stairs are in a state of disrepair and need to be renovated.  The sound system and and the lighting system are an old analog system. [Lofrese met with County Commissioners last week.]  (17:54) It uses a floppy disk.

(18:00) Our students are learning on equipment that they're not going to find anywhere once they graduate from Chapel Hill High.  Renovating all this outdated equipment will be a costly item.

(18:28) Our progress thus far:

Lincoln Center was designed and bid.  Unfortunately, bids were $ 10M over budget.

CHHS design is underway.  We expect to get our special use permit in March of 2018.  In March/April of 2018 the project bidding will begin.  We expect that we will be further over budget with Chapel Hill High.

(19:10) Why are we in the budget predicament?

We did the facilities study in 2010-2012.  In 2013 we did our project estimates.  During 2014-2015 the County Commissioners were discussing a possible bond referendum.

(20:00) We got caught by the NC General Assembly legislation in the summer of 2014 that limits school systems and counties from having bond referendums.  Bond referendums now can only be held in major elections (even numbered years ... 2014, 2016, 2018, etc.) for public school improvements.  That delayed our ability to go out with the bond referendum until 2016.

(20:39) As I mentioned, the Lincoln Center bid came back $ 10M over budget.

(20:55) There have been Construction cost increases:  Regional demand (school and commercial construction) is high.  There is construction going on all over.  There are cranes up all over the place.  Wake County schools passed an $ 850M school bond in 2014, so they're in school construction mode.  Construction demand has skyrocketed in recent years. 

(21:40) Wake County has talked about a $ 1B school bond for 2018.

There are limited contractors.  Some weren't able to survive the recession in 2010, so find ourselves in a situation where there are very few contractors bidding on these jobs.  Typically for a project like the Lincoln Center, we would have 12 to 18 interested contractors bidding the project.  We had only 4.

(22:17) There's been unfortunate national disastors in Texas and in Florida.  The timing of those have driven up construction costs.  They need for concrete and drywall have been substantial.

(22:39) The Department of Public Instruction (DPI) maintains data on the cost of school construction, so we pulled information from their website that included 19 schools that were built in the Triangle area from 2013 to 2017.  In 2013 the average cost of for school construction was $ 156/square foot.  In March of 2017 (when we were bidding Lincoln Center) the average cost wa $ 248/square foot.  That's nearly a 60% increase.

(23:26)  The Lincoln Center project originally was estimated to cost $ 28M.  The bids came back at $ 38.5M.

Based on the Lincoln bids, we now estimate that the CHHS (originally $ 48M) will now cost $ 63.6M.

(24:07) The district has some funding (about $ 8M) that can help to be applied to our construction cost overages. 

Putting the two projects together and doing an overall summary, the Lincoln Center is $ 38M; CHHS will be $ 63M.  That's a total cost of $ 101M.  Our district is to receive $ 72M in bond funds.  That leaves a $ 30M shortfall.

(25:20) We've been doing work to reduce that shortfall, but that's a huge number to try to overcome.  We've been able to reduce the Lincoln Center cost by $ 1.2M.

(25:36) The NCGA passed legislation this year that required the department of transportation that requires the closest municipality (in this case the Town of Chapel Hill) to reimburse school districts for any off-site improvements by are required by the ??? or the municipality.  So, the Lincoln Center had about $ 624K in off-site improvements (road widening, adding bicycle lanes, traffic light, bus stations, ... things of that nature.

(26:12) At Lincoln Center that's about $643K.  We estimate that CHHS will be at least $ 1M in offsite improvements that are required, so according to the new law, that will be reimbursed to the school district.  We accounted for that on this slide.

(26:30) That leaves us with a shortfall of $19,280,000.

Our dilemma isn't a good one.  It's basically a series of compromises and tradeoffs.  If we move forward without Lincoln Center, without any additional funding, it jeopardizes the integrity of what we're trying to do at CHHS.  Not moving forward with Lincoln Center results in re-bidding at a later date.  We think we'll see continued cost increases and delayed capacity increases ... which are necessary to address that class size legislature that I showed you earlier.

The School Board most recently met with the BoCC and learned that there is no more money at this time to address these projects, so the $ 72M for now is all we have available to us.

(28:21) Regarding next steps:  The Lincoln Center bid expires on December 26, 2017.  We're trying to figure out how to navigate our reality with these two projects.  We're looking at a school board meeting on December 17th - for discussion and a possible decision in terms of what to do next.

(28:50) I mentioned that we have many other schools which are in a major state of disrepair, so we have to have a serious future discussion with our community and our school board and our county commissioners about what's feasible with the remaining 7 projects.  Will there be additional money, and what's the target date for that additional funding?  (29:17) If it's 15 or 20 years out, then we may need to think differently.  We may need to think about building new schools.  If we're going to increase capacity, we may have to build a new elementary school.  That will require additional funding, but there are very few school sites left in the Chapel Hill-Carrboro area.

A facilities workgroup has been formed to brainstorm ways to address all of these issues.  [Ken:  I hope they use Kepner-Tregoe decision analysis!]
Ken Larsen (speaker #1) 31:15-33:15 I explain that in April 2017 the Board of Orange County Commissioners "kicked the school budget in the groin" by approving the Durham-Orange County light rail project (DOLRT).  I predicted that DOLRT will eventually have to cannibalize other projects such as schools, affordable housing, etc. to pay for DOLRT.  To properly tell this story would require several hours.  I directed everyone to my website,  The address for the DOLRT piece is
Remaining speakers 33:16-end The parents objected to the Lincoln Center being given priority over Chapel Hill High for the bond money.  At the time the bond was announced, pro-bond people told voters that the Chapel Hill High maintenance issues would get priority over the Lincoln Center.


I will update the Summary column over the next several days ... as I get time to listen to the video.


The sound quality of the video is not great ... which is one more thing that needs to be fixed.  The school issues keep growing and growing!  There are too many issues and not enough money.



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