At Monday night’s Finance Committee meeting Ed Collins, chief of facilities management and capital projects for Cranston schools, updated the committee on the current status of school …
At Monday night’s Finance Committee meeting Ed Collins, chief of facilities management and capital projects for Cranston schools, updated the committee on the current status of school construction projects and funds needed to complete the third phase of Eden Park Elementary and the construction of a new Gladstone Elementary School.
Collins said that phase two of the Eden Park Project is almost complete. The project only needs the acquisition of bullet proof glass before it can be finished. However, when it comes to phase three of the construction, Collins said that the School Department still needs about $14 million.
“The money we need for that is $14 million,” Collins explained. “There have been things secured. I know there’s conversations going back and forth that there’s been nothing secured or no direct path on how to get that.”
While some of the funds for that project have been secured, Collins explained, there is still a need for more, especially when you look at the lack of funds on hand for the Gladstone project.
In 2018 voters approved a $147 million bond for five school construction projects.
“Gladstone we’ve always had a target price of $83 million,” said Collins. “Which, after reimbursement, the city would only be responsible to pay $21 million for a brand new elementary school, but it’s $83 million. Presently right now, the city in approved money has about $77 million. In actual cash on hand is $79 million, and the difference in the $2 million is just the amount that the School Department has chipped in, so it’s a little higher than what the reimbursement is.”
The reimbursement that Collins refers to is in regards to a program provided by the Rhode Island Department of Education (RIDE). Collins said that the normal reimbursement rate that the city receives on school projects is 54%. Currently, however, as the result of temporary legislation that ends in June of 2024 the city has been able to take advantage of an extra 20% of reimbursement on bonds taken out to pay for construction costs, said Collins. This increase in reimbursement has already been used for multiple projects, he explained.
For example, Collins said that the Cranston High School East project, regarding roof repair and window replacement, required about $600,000, of which the city only need pay $154,000 thanks to the current 74% reimbursement.
Collins also explained this reimbursement rate has been used for bonds taken out to complete the Cranston High School West security and fire alarm system that required bonds of about $3.8 million. Of this $3.8 million, Collins told the finance committee that only $976,000 would have to be paid. He urged the Finance Committee to take this opportunity to file plans further work plans to finish and start new projects that would increase the strength of Cranston’s school system while the offer for increased reimbursement is still on the table.
However, Finance Director Thomas Zidelis said that while there is a 74% reimbursement rate through RIDE currently, the reimbursement only counts towards the principal on these loans.
“Not to spot Mr. Collins, the percentages that he’s projecting are just the principal not the interest. So, in terms of what we’re paying we are trying to work cooperatively with the School Department and the 800 pound elephant in the room is Gladstone. We’re trying to work through to see where we’re going to end up on that project.”
Zidelis said that these numbers are not accounting for the cost of interest associated with the loans.
“Most likely, if it is going to move forward it’s going to require an additional referendum approved by the voters to fund the schools,” Zidelis explained. “He said they’re working collectively and the School Department is doing a lot of work with RIDE to maximize the city’s reimbursement.”
Zidelis requested of the assembled committee that they understand that while the reimbursement rate is a good deal, the amount to be paid in interest still requires that the city take their ability to pay their debts into consideration before choosing to issue new bonds and loans to begin, or complete, more school projects. He said that it is important the city pay attention to its actual ability to pay back these interest costs while looking at a need for more money.
“I understand how cautious you are,” Councilwoman Aniece Germain said in response to Zidelis’ explanation of the city’s need to focus on its ability to actually pay back its debts. “At the same time, phase three needs to be done. So, it has to be done. Mr. Collins said there is a window of opportunity right now that we can take advantage of.”
Zidelis said that he fully sees the importance of schools, but the ability to repay obligations doesn’t change. He said he is working to find a feasible way to see this move forward, but the solution will most likely come forth with next year's capital plan. He also said that a large part of concern regarding the current loans taken out relate to the increased interest rates currently. Just because the reimbursement is high does not mean the overall cost of the construction is lower when the interest is added, he explained.
Zidelis stressed the term “measured risk.” While it’s true that the reimbursement rate will not last forever, Zidelis said that his department is quite sure that interest rates will be lower in the coming future and that the overall cost of the projects may well be lower in the future even without the 20% extra in principal reimbursement.
Chair of the Finance Committee John Donegan said that in order to help clarify these issues a representative of RIDE will be attending the Finance Committee’s next meeting on October 2 at 7 p.m. in order to provide their opinion on the situation.