Q: What is a capital project?
A: A capital project is like a home improvement project but for a school. According to NYS law, all public schools must complete a Building Condition Survey every five years, which includes a review of all occupied school buildings and grounds throughout the district. The survey identifies and prioritizes potential capital improvements and must be submitted to the NYS Education Department.
The Building Condition Survey is studied and reviewed by the district and the board of education, items are prioritized and then translated into a capital project plan to make needed improvements to instructional and non-instructional spaces such as classrooms, roofs, plumbing, electrical, paving, and playgrounds.
Q: When was our Building Condition Survey completed?
A: Our last Building Condition Survey was completed in March 2023 and it was submitted to the NYS Education Department that summer. District administrators have been developing the proposed capital project with an architect and construction manager, and seeking input from school staff, parents and the community over the last six months.
Q: What will the proposed capital project include?
A: The proposed project includes items such as replacement of HVAC systems for improved indoor air quality and adding air conditioning throughout all five elementary schools, classroom additions at elementary schools to accommodate pre-k and increasing enrollment, library renovations in all schools, new playgrounds, athletic field improvements, new sound and lighting systems for the Columbia Auditorium, upgrades to sidewalks and parking lots, and infrastructure improvements at all schools.
Q: What is the cost of the proposed capital project?
A: The estimated cost for the proposed project will not exceed $116 million, but due to state building aid and expiring debt, there would be no additional impact to local taxpayers.
- State Aid:
- NYS Building Aid will fund 72% of eligible project costs
- The district anticipates 84% of project costs will be eligible for building aid
- Capital Reserve:
- Voter-approved savings from previous years
- $2 million currently in a voter-approved capital reserve which will be used to offset project costs, saving local taxpayers money
- Debt Payoff:
- District nearing final payoff of debt from prior capital projects
- Older debt payments will drop off and comparable new debt payments will be added
- Result: Local taxpayer share is projected to be tax neutral
Q: What is the structure of the project financing?
A: The district will be funding the cost of the project from two sources: (1) $2,000,000 from a previously voter-approved capital project reserve fund which are savings that were set aside for the purpose of a capital project; and (2) $114,092,000 through borrowing. If the project is approved by the voters, then the district will have authority to issue bonds up to $114,092,000.
The district will not issue a bond for the entire project all at once. The project is anticipated to be constructed over a 5 to 7 year period. Borrowing for the project will also occur in phases to align with the costs incurred as the project progresses. For example: The district anticipates the first phase of the project will begin in the summer of 2025. Based on the scope of the work to be completed in that 1st year, the district will issue a bond anticipation note (short-term financing) for that phase of the project. Issuance of new financing through a bond anticipation note will occur at least annually as the project progresses. Upon project completion and/or no later than 5 years after the initial issuance of any bond anticipation notes that remain outstanding, the district will need to go to long term financing to issue bonds. Generally the bond repayment schedule will be over a 15-year period. From the initial borrowing at the start of the project through the final debt payment, the total length of the repayment period would range from 15 to 20 years.
The project is tax neutral because the district will create a debt repayment schedule with consideration of the amount of building aid that will be received, which will provide the same net amount of local share that the taxpayers would be responsible for as what is contained in the 2024-25 budget.
The district has a very favorable bond rating (credit rating) through Moody’s investor’s service of Aa3, which indicates to investors that the district is rated as high quality and very low credit risk. This will provide the district for favorable interest rates as compared to other municipal entities with lower bond ratings.
Q: Why can’t capital project improvements be made out of the regular school budget?
A: The regular school budget does not include funding for larger capital improvements, only ongoing maintenance. New York State building aid is available for eligible project costs through voter and NYS Education Department approved capital projects.
Through a voter approved capital project, the school district secures state building aid covering approximately 72% of eligible project costs. Financing these improvements through the annual school budget would be unaffordable and yield no building aid reimbursement.
Additionally, without a voter approved capital project, the district could be faced with addressing significant infrastructure failures, such as roofs and boilers, that would result in reallocating a portion of the regular school budget away from educational programming. As a result, it is impractical for the district to execute essential capital improvements while upholding our current academic programs and services.
The most efficient approach to accomplishing necessary renovations is through a capital project approved by both voters and the NYS Education Department.
Q: If the capital project is rejected, can those funds be used to hire teachers or enhance academic programs?
A: No. Salaries are paid out of the general fund budget, which is completely separate from the capital project. We cannot hire staff or raise salaries with these funds.
The 2024-25 general fund budget includes principal and interest payments along with NYS building aid revenues from prior capital projects. There are no funds related to the new capital project in the 2024-25 general fund budget.
The new $116 million capital project would be funded by $2 million from the voter approved capital reserve and $114 million in phased borrowing. Most of the costs, approximately 84%, are eligible to be reimbursed by the state at the projected building aid rate of 72%. The borrowing will be paid back over a 15 to 20 year period. The local share will remain at the same level beginning in 2025-26 as it is in 2024-25. The funding from the borrowing is restricted and can only be used to pay for costs related to the scope of the new capital project.
Q: Why is now a good time for this project?
A: The timing is right for this capital project because debt from previous projects will be paid off as payments for the new project would be starting, thereby ensuring zero additional impact on the local taxpayer.
Over the last several years, through careful debt service planning, the district has been monitoring the portion of the regular school budget that funds the borrowing for capital improvements. This approach is necessary to determine the proper timing to start a new capital project, which maximizes the district’s ability to make capital improvements to the district’s facilities, while minimizing the impact on local taxpayers.
Beginning in the 2025-26 fiscal year, there are certain prior year capital projects that will be paid off. As a result, the local share will be negative as more building aid revenue will be received than principal and interest payments going out. The local share is what the district’s taxpayers are responsible for and is calculated by taking the district’s operating budget for debt service (principal and interest) payments on borrowing less NYS Building Aid revenues (Local share = Debt Service – State Building Aid).
Maintaining the local share that is already built into the budget is important because a significant drop off could cause significant tax increases in the future. In addition, deferring capital improvements further into the future would be more expensive as costs continue to increase. There would also be a heightened risk of infrastructure failures that would need to be addressed through the general fund budget which could force reductions in educational programming.
Q: Do residents vote on the capital project?
A: Yes. A capital project must be approved by the Board of Education and then by voters of the school district through a public vote. The proposed capital project is a proposition on the School Budget Vote and Board Election ballot which is scheduled for Tuesday, May 21, 2024.
Q: If the project is approved, when will the work be started and completed?
A: Commencement of the project, if approved by voters, is estimated to begin in the summer of 2025 and would include multiple phases.
Q: Will community members be able to use the facilities included in this project?
A: Yes. The proposed capital project includes replacement of elementary school playgrounds, the Columbia tennis courts and basketball courts, as well as adding a new multipurpose turf field and 6-lane track, and a new basketball, tennis and pickleball court at Howard L. Goff Middle School. All of these facilities will be available for community use.
Q: How can I learn more about the proposed capital project?
A: The East Greenbush CSD hosted a Capital Project Community Presentation on Thursday, May 2 at 6:30 p.m. in the Columbia High School auditorium. The recording of that presentation is available here so residents can learn more about the proposed project and its impact on students, staff, families and the community.
You can also visit www.egcsd.org/capitalproject.