Soaring building costs and interest rates have thrown school planners a curve ball. According to updated projections, four school projects estimated at $215 million last spring could now cost $265 million.
The town’s new school building projects may change significantly before the first shovels break ground.
Architects are also trying to work around wetlands found on three sides of the proposed new elementary school site, which have been forcing them to shrink the overall building footprint and build vertically instead.
Johnston Mayor Joseph Polisena Jr. recently announced a more than $20 million overage in bond and interest fees, and Tuesday night revealed more than $30 million in estimated additional construction and materials costs.
“I don’t know if you read me saying before, the difference in interest on this bond, from where we started the project … $20 million,” Polisena told the 26-member Johnston School Building Committee during its meeting Tuesday evening. “So that is $20 million that we couldn’t really anticipate for. And, in all candor, there are overages in the projects themselves.”
Polisena threw out some numbers.
“The Elementary School, I believe, is $14 million over what we thought it would be,” Polisena told the committee. “I don’t know the numbers off the top of my head … the ECC (Early Childhood Center), that’s over by let’s say $4 million, the renovation for the High School, might be over $6-8 million, and it’s the same for the renovation here (Ferri Middle School).”
After the meeting, Holly Demers Sawyer, associate director of project management for Colliers, provided the known cost overruns.
The new elementary center is facing a $10,280,832 construction cost overrun; the ECC, $7,255,000; and the High School renovation, $11,411,200. Sawyer said numbers were not available for the Ferri Middle School renovation project.
That’s a total of $28,947,032 in additional, unexpected construction costs for just three of four building projects. Add $20 million in additional interest rates, and the $215 project is already nearly $50 million in the hole.
Polisena Jr. promised voters there would not be a property tax increase. He announced a plan last month to withdraw the interest rate overage from the town’s rainy day fund.
“No, there will be no tax increase,” Polisena said in February. “Instead of cutting $20 million in construction costs to cover this massive increase in interest rates, my team and I have decided to propose incrementally drawing down from the $41 million surplus to cover the difference. It doesn’t make sense to support a tax increase or massive cuts to the project when the town is sitting on this amount of money in reserve.”
Now, to cover the massive construction cost overruns, the number of projects on the table may change. The mayor told the committee that he would formulate a new plan before the start of the next school year.
“This is not a project that I want to rush,” Polisena said Tuesday. “These buildings are going to outlast all of us. This is not a project that needs to be rushed along.”
On Sept. 29, 2022, the Rhode Island Health and Educational Building Corporation (RIHEBC) closed on an $85 million bond issue for the town. Johnston will have $130 million remaining from the $215 million bond referendum overwhelmingly approved by voters last year.
On Tuesday, Polisena Jr. pitched his plan to formulate a plan.
“As far as a timetable … We will know by August what we’re going to do with the second half,” Polisena said. “We have different proposals that we’ve floated. We have not confirmed any of them yet. SLAM is working very hard to figure out the architectural work, and whether or not we can make the map work. I ask you just to be patient on the second half. It will be used. I’m not just going to do the original project and slash everything … that’s not going to work for anybody. I’d rather go in with a new plan that can better allocate that money. And I will have that plan for you by August. I will submit that to Council and to School Committee and you will all see it here.”
Last month, on the date of a planned, but canceled School Building Committee meeting, Polisena appointed unsuccessful gubernatorial candidate Helena Buonanno Foulkes to Johnston’s School Building Committee (JSBC).
On Tuesday, she joined the committee and sat at the main table next to Polisena Jr. She listened throughout the meeting but made no comments, nor asked any questions.
In a February press release announcing Foulkes addition to the committee, Polisena Jr. said that planners “began this process nearly two years ago, (when) interest rates were at less than 2.5%.”
“Now, we are facing interest rates approximately double that amount,” the mayor warned. “To make matters worse, shifting money away from construction costs to pay for historically high rates significantly affects our reimbursement from the state, which puts us at an even further financial loss to construction costs funded by the state.”
The JSBC has grown to 26 members — composed of School Committee, Town Council, faculty, school administrators and community leaders — and requires 14 members for a quorum. On Tuesday night, 20 committee members attended the meeting.
Polisena Jr. took the opportunity Tuesday to bring the large body up-to-speed on the massive project, which he helped conceive as vice-president of Town Council while his father, Joseph M. Polisena, was mayor.
“I wanted to speak to you all, to give you kind of an update in regards to what is going on,” he began. “So I will tell you first what we do know. Second, what we don’t know.”
He delivered good news for the proposed new elementary center, which would replace the town’s four aging elementary school buildings and move all of the town’s elementary-aged students under one roof.
“So, what we do know, is that we’re full speed ahead on the elementary school,” Polisena said. “The date that shovels are going to be in the ground is December (2023). So that got pushed back a little bit, but we’re hoping for this December. And I believe we’re still on track for students to be in August of 2026.”
Polisena Jr. received an email Tuesday from the state’s Department of Environmental Management (DEM), informing him “that the permitting was filed.”
“They received it,” Polisena Jr. said. “That’s a big hurdle that we have to go through. It may take a few months. But after that, we’re really going to be full steam ahead.”
Planners estimate DEM permitting will take around 6 to 8 months.
Polisena Jr. has set the elementary school as the overall project’s top priority, “not only for its importance to the children, but also because it’s a facilities issue.”
“With our other elementary schools really deteriorating, anywhere between 80 and 102 years old … That’s a priority,” he explained. “The second part is what we don’t know … the other half of the bond and what we’re going to do with it. So as you all know, the original plan was to have a new Early Childhood Center, a new Elementary School, and then to refurbish Ferri and refurbish Johnston High School.”
The plan may change. No one mentioned dropping the Ferri Middle School renovation project, but the project manager had no estimates for cost overruns on that portion of the school overhauls.
“When we did this project, it was not in a post-COVID world, where the materials and interest rates … and the squeeze that you all feel each day, is the same squeeze that we feel,” Polisena Jr. told the committee. “We’re particularly affected borrowing money — especially in an amount as large as this.”
One option would be to shrink all the projects to reduce costs.
“So, the easy thing to do would be, OK, we’re going to do the same project; you just cut what you’re overages are and figure out what to do; you go back to your original amount,” Polisena Jr. said. “I don’t think that’s a good idea. I think that’s a lazy idea. So, what my administration is doing … we’re working in conjunction with (Superintendent Bernard DiLullo Jr.)… many meetings over the past few months. We’re trying to formulate a new plan for the second (portion) of the bond. I don’t want to just go in and cut what we’re over by. I don’t think that’s a very good plan.”
The mayor tried to find a silver lining.
“The good thing, on that second half (of the bond) we’re talking about, we don’t have the facilities issues with those schools like we do with our elementary schools,” he explained.
At the same time as the JSBC meeting, the Johnston Planning Board held its regular monthly meeting (the agenda included an update on the town-wide comprehensive plan and a public hearing on a large solar farm pitched for a residential neighborhood).
“Unfortunately I need to get some of the details that were discussed (at the building committee meeting),” Town Council member Robert J. Civetti said late Tuesday night. “(There were) conflicting meetings tonight … I know there are some other members that are on the school building committee that also sit on the planning board who are unable to attend the school building committee.”
The simultaneous scheduling presents a challenge both to members of the board and committee, but also forces residents to choose which meeting to attend.
“I think we need to look at each of the projects and make sure we are doing what we need to do to ensure the safety and enhance the educational environment for the students,” Civetti said Tuesday night. “Hopefully we can stay on track and fulfill the promises that we (made to) the taxpayers about touching every school and every child that attends a public school in the town of Johnston.”
Both Civetti and Polisena Jr. agree that planners will need to make project cuts with a scalpel; carefully considering many options.
“We also need to make sure that we are (not) cutting back so much on these projects that in another couple years we will have outgrown the facilities and need more additions,” Civetti said. “This is a time when we should be making the investment into the buildings and the students so that we can realize the significant state match that is being offered.”
Shortly after the interest rate increase was announced, Town Council President Robert V. Russo said he “wouldn’t use the term ‘bleak’” to describe the school project outlook; it’s “just a change in economy,” he argued.
“Obviously a project of this size gets affected exponentially by any increase in interest rates as well as labor and materials,” Russo explained. “The project is still going forward — there may be some alterations but the mayor is crafting a plan that I think will minimize the effects of the higher interest rates. Depending on the results of further meetings ... the project may actually increase in size.”
DiLullo also weighed in last month, assuring residents that the building process was progressing.
“There are no plans at this time to downsize,” DiLullo said. “I know Mayor Polisena and the school committee along with the Johnston school community continue to be committed to the school facility project.”
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