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R-P referendum forum hits at questions before big vote

By Kirsten Zoellner

Fri, Dec 14th, 2012
Posted in Rushford Features

There was a packed house with more than 100 local residents at the second R-P referendum open forum last Monday evening. Administration staff, school board members Angela Colbenson, Daniel Munson, John Nitecki, and Greg Smith, and representatives from both architectural firm ATS&R and consultants Ehlers & Associates were on hand to field questions from those in attendance following a slideshow presentation.

Four and a half years into thorough building evaluation, legislative lobbying, and several committees, task forces, and forums, the district is asking district residents to pony up for a new, $15 million early education through grade 5 facility north of the athletic fields.

With a projected interest rate of 3.9 percent over a bond length of 20 years, the facility, if approved, will cost the district $22,848,109 (principal and interest, less $126,904 in state aid), when it’s all said and done. Many argue that this is too steep a price to pay for local residents.

Should the R-P referendum pass, commercial properties with a taxable market value of $500,000 would see projected additional taxes of $2,113. The state average is $3,132. In contrast, a home at a $125,000 market value would have a projected $415 tax price tag. The state average is $462.

Agricultural homestead, which makes up a large portion of district residents, is the most difficult to calculate. They are taxed as the house, garage, and one acre. In this case, an agricultural homestead with a market value of $500,000 could see an additional $497 in annual taxes, while one valued at $1,000,000 could see an additional $711. Other acreage is taxed per acre and is dependent on land value.

Some argued that the district should instead set aside funds and work towards a new school without incurring debt. “Couldn’t we be putting aside money instead?” asked Linda Hovland. “Would that show the state a good faith effort or would that hurt us?”

Superintendent Chuck Ehler insisted that the district had done all it could to find funding assistance. “We’re still working with them. We haven’t given up on that avenue,” he stated. The district’s original plan was suggested with the plan of a 70/30 split on debt equalization. However, since the state has shifted its funding formula, and with declining values, state aid has eroded, according to Gary Benson. Should the referendum pass, the district’s debt level would then qualify them for more state aid. “We’re attempting to move things forward,” said Ehler.

But, getting to that second phase, by passing the referendum and raising taxes, worries some who contend that residents can’t afford the tax on the second phase of the project, which could happen in another 5-7 years. “What’s the reasonable tax rate when second phase of project kicks in?” they questioned. The answer was unclear. However, Benson did offer up that the tax rate on the $15 million is roughly 25 percent, while the initial $29 million, complete facility would have been closer to 48 percent. He also suggested that the district could structure the debt to allow bigger payments for the second phase near the completion of the debt service for the first phase to keep the rate steady.

“In the interest of full disclosure, we have never had any kids in the RP schools and we will never have any kids or grandkids in the R-P schools, so I have no emotional ties to the school or this issue.  That affords me the luxury of looking at this issue from a purely analytical perspective,” stated Mike Machutt, who owns 60 acres south of Rushford. “I believe in full and honest disclosure of all information surrounding this issue. It is clear to me from the discussions here this evening that we are looking at a $30 million price tag not $15 million and that means we are looking at least a doubling of current property taxes if not more.  Rushford will not be able to attract new, younger families in any numbers because there simply is not the business infrastructure that can attract these new young families.  Rushford is much more likely to attract people such as myself who are looking to move to the country after the kids are grown and moved away.  These people will look hard at property taxes in making their decision to move to an area.  If my property taxes were double or triple what they are now, I don’t know that we would have bought property here.”

Again, the question for why the district is building in phases was posed. “In the 2002 bonding proposal, you blew us out of the water. It was, at that time, $18.75 million to build the whole thing,” he stressed. “Look, we can’t afford to sit still. Interest rates are at an all-time low. It’s a competitive bid, but the estimated rate in referendum is conservative because of any shift that might occur between now and bidding.”

Still, constructing only a new elementary facility is concerning for some. “With the uncertainty of being able to complete Phase 2, my concern is that even with a new elementary, we’ll still have students in this building.”

The construction costs of the building, which were detailed on a budget breakdown, also worried some. In response to questioning about average construction costs for school projects, as well as the high cost of engineering and architectural fees associated with the project, ATS&R partner Dean Beeninga gave a relatively vague answer, but noted the down market and that every project is unique. This project, he acknowledged, is priced at a high level of quality.

So, why not just fix the building? “It would take a $10-12 million investment in this building and $1.5-2 million at the middle school. Our board looked at that and the cost to build new and thought this was our better option.”

“As the architect pointed out, buildings can last indefinitely but that parts of them need to be replaced, such as roofs, mechanical systems, and windows.  With a new school, what we will get is a block building, which is what we have now, with a roof that will need to be replaced in 20 years and mechanical components that will need to be replaced in as little as five years,” noted resident Jon Peterson following the forum. “Given the current board and administration’s track record, it will either be ignored or they will come to the taxpayers asking for an excess levy which may or may not be used for the necessary maintenance.  So then we would have a massive tax burden for a new building and additional tax levy for maintenance of that building. It appears as though if someone questions any part of the current referendum or questions the administration or board’s agenda, you are labeled as a ‘community divider’ or that you are against change, progress, or growth of the community.  The reality is that change would be taking a proactive approach to budgeting appropriately and timely for the repairs on our current facilities without excess levies.”

Indeed maintenance and repair costs, as well as heating and electric costs, have long been an issue for the district in its current facilities. For 2012, the maintenance and repair costs, including electric, plumbing, building repairs, boiler, flooring, heat and vent, roofing, health and safety total $307, 474.30. The five year total is $1,103,328.80, with an average annual cost, based on the last five years, of $220,665.76. Heating costs for 2011-2012 were $42,788.85 and electric costs were $50,654.02

Some claim the district hasn’t kept the building up as it should. “Ever since I’ve been here, I’ve budgeted for it,” Ehler asserted. “Aid has shifted and there are other costs we incur. I would love to just budget for it.”

“I’ve spent six years on board,” added Greg Smith. “We’ve done basic maintenance on building, as much as budget allows. But, we have to look at the big picture. These problems go back a long way.”

“We’re in a bind,” said Ehler. “We need to look down the road. This is an investment long term. It’s our school and we have to decide what we’re going to do.

Ehler officially closed the open forum at nearly three hours after it began. Many arms were still raised with question or comment and the public lingered around an additional half hour talking with Ehler, ATS&R or Ehlers & Associates. “We have a great school here, folks. I want you to leave with that. We have a veteran staff and test scores second to none. We’ve adopted the motto, ‘Always our best.’ That’s what we’re asking of you. Give us your best.”

Those still looking to find the projected tax impact for their property can call Ehlers & Associates at at 1-800-552-1171 or email mnschools@ehlers-inc.com. You will need to specify that you are seeking the impact for the R-P referendum and provide both your property ID numbers and the county in which it’s in. Only those property owners residing in the R-P school district may vote in the referendum.

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