By building a new aquatic and recreational center, the city is set to shoulder more of the burden than the school district.
Leaders of the Town and Lake Oswego School District (LOSD) have agreed by at least 2020, if not sooner, to evenly share the costs of building an aquatic and recreation center that is now slated for part of owned by the Chemin Stafford municipal golf course. But that’s not the way it seems to work, with the city on the hook for a growing share of a rapidly growing prize.
Initially, the project was to cost $ 30 million, not including transportation improvements to surrounding roads, etc., with capital costs to be shared equally between the City ($ 15 million) and LOSD ($ 15 million) . According to the most recent report to city council, however, the projected capital cost of the aquatic / recreation center is now $ 36 million and is changing (again not including transportation improvements). Yet the school district‘s contribution remains at $ 15 million. Meanwhile, the City’s share has climbed to $ 21 million and is changing – a $ 6 million increase that will be paid for by postponing or eliminating other parks and recreation projects and using reserve funds from the parks.
This is certainly a worrying trend, especially when you consider that the project is still in the planning stage and that it is not even expected to see the light of day before the summer of 2022. The City’s share is going it continue to increase exponentially? And is that fair, given that school district teams will likely have priority access to the pool and other facilities?
To be fair, shared use agreements between the City and LOSD are still being developed. The appropriate sharing of the net operating costs (revenue minus expenses) of the aquatic / recreational facility is also under discussion.
Nonetheless, the school district’s capital contribution remains at $ 15 million as all of the capital dollars from its upcoming $ 180 million bond measure in the November ballot are committed to rebuilding Lake Oswego Middle School and River Grove Elementary School; modernizing science, technology and engineering laboratories in secondary schools to expand technical education in STEM and careers; deal with priority repairs like roof replacement, HVAC upgrades, seismic upgrades, etc. ; improve accessibility; and upgrading of safety and security at district-wide facilities.
The investment costs of these projects include contingency funds, as they should, but no money has been allocated for possible increases in the cost of the planned aquatic center. Indeed, there has been no cession of any bond premiums from the proposed $ 180 million measure or interest earned on the difference between the time of bond issuance and the dollar expenditure. for projects.
The bond premium is the amount the school district will get because of issuing more debt than expected compared to expected cash flows or if it receives a lower interest rate than it included. in its budget projections when issuing bonds. LOSD is also likely to receive interest income for the period between when bond money is received and when it is spent by the district.
For comparison, LOSD’s audited financial statements for 2017-18 show that the last school bond measure approved by voters generated a bond premium of around $ 17.8 million. Given the likelihood of a similar financial outcome, it becomes absolutely clear that the equalization of capital contributions for the proposed aquatic / athletics / recreation project, including improved transportation, between city and school district should be the goal.
The City should require that any bond premium and interest earned be allocated to increasing the LOSD share to 50% of the final capital cost of the aquatic / recreational facility, including transportation improvements. If the expected cost of the aquatic / recreation center and necessary transportation improvements exceeds the $ 36 million and more projected today, the goal should always be equal contributions. There really is no other conclusion, especially when you realize that the school district has a bigger tax base than the city; that the LOSD will have priority access to the pool (s); and that the city is doing the school district a favor by letting LOSD withdraw from the “pool business”.
The City can in turn use the money it will not have to spend on water / athletic / recreational facilities and associated transportation improvements for other parks and recreation projects, including the purchase of land. already for sale in the Stafford area. This will allow everyone in the city to move our imaginations forward towards future needs, while also understanding what is really essential versus what is just desirable.
Jeff Gudman was a member of the Lake Oswego City Council from 2011 to 2018.
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