Although it’s rarely explained in news reports, the $11.4 million figure used when discussing Newton’s tax overrides, is an just estimate.
That’s because two of the theee ballot questions that will go before voters on March 12 are debt exclusion overrides. And by law (and due to the inexact science of estimating building projects) debt exclusion ballot questions don’t carry a dollar amount.
So while Question One asks for a specific $8.4 million increase in operating expenses, Mayor Setti Warren’s request of $1.3 million for Angier and $1.7 million for Cabot are estimates. Both ballot questions include no specific amounts or, for that matter, any specifics. Question Two and Question Three only ask voters permission to “renovate or replace” the schools.
In this city and in this state, skepticism over the price of building projects is well founded. It’s also the most convincing part of Moving Newton Forward‘s argument against Question Two and Three.
This is from an opinion column the “no-no-no” group wrote for today’s Globe…
Burlington recently built a new elementary school that resembled Cabot, Angier, and Zervas in terms of size and student enrollment. Yet the net cost for Burlington was between 35 and 50 percent less than the net proposed cost associated with any one of Newton’s three elementary schools slated for renovation or rebuilding.
If that’s not enough to make a taxpayer skeptical, the city has admitted that the estimated cost per school could rise. Given the skyrocketing costs of Newton North High School, this lack of a price guarantee makes Newton residents extremely nervous.
The “yes-yes-yes” group, Building Newton’s Future, counters in an on-line only piece on Boston.com, saying..
The Massachusetts School Building Authority implemented a strict oversight process for all projects in which it participates. This includes safeguards for design and spending, such as final state approval of the project architect; a committee made up primarily of state officials with a few municipal representatives to oversee and closely scrutinize the project from start to finish; and checks and balances throughout the process to ensure the project remains within scope and budget.
But Building Newton’s Future co-chair Marcia Tabenken adds…
If either project were to run over budget, the city would have to make adjustments and find savings. The city cannot raise more money through the debt exclusions without voter approval.
All that said, I’m surprised this election has come down to “yes-yes-yes” vs. ‘no-n0-no” when in fact there’s a reasonable case for split voting.
The advocacy groups may be organized on the basis of “yes, yes, yes” vs. “no, no, no,” but I’ve consistently predicted a spilt outcome, and still believe that’s what’s going to happen.
Mike and Greg, are you predicting or advocating for vote splitting? And if predicting, what do you predict passes and what fails, and why? Oh and while you’re at it, what is your pick tonight for Best Picture?
Back to the override, I am both advocating for and predicting yes-yes-yes.
Actually Steve I’m not advocating for a split vote or predicting it (I’m voting yes-yes-yes). But I think the lack of clarity surrounding the debt exclusions is a genuine concern. I’m surprised there aren’t more people talking about it. In fact, if the no side was smart, they’d focus their energy on getting people that are leaning towards yes to consider splitting their votes instead. I see that as the only viable strategy towards getting at least part of what they want on March 12. Otherwise look for a yes-yes-yes sweep on March 12 and the Oscars to end at 11:48.
@Steve– I’ve supported all three overrides from Day 1. I continue to encourage everyone to vote for all three. I believe the way these overrides were structured [three rather than one], made passage considerably more difficult than it should have been. And as a result of that structure, I believe at least one of the overrides will fail. I’m not going to predict which one is most likely to fail, [although I have in the past], because I don’t want to do or say anything at this point that might aid override opponents. I predict Argo will win Best Picture, so you can judge my soothsayer capabilities this evening.
I predict that Lincoln will win best movie.
I’m not voting in the override election since I will be leaving Newton before any measures would take effect, but I am really hoping that Silver Linings Playbook wins Best Picture. Best movie I have seen in decades, right up there with The Godfathers (1 & 2, no 3) and The Graduate.
@Gail– I really hope you’re wrong. I’m sick of the glorification of Lincoln. I know my opinion runs contrary to most, but I think he was the worst president in American history. 135 years later George W. Bush came along to give him a run for his money. But since Lincoln was responsible for the deaths of more than 800,000 Americans [most recent estimate], I’ll keep him as my all-time worst.
@Mike: My friend, the fact that you think Lincoln was the worst president in American history does put your other political views in perspective. Wish I’d asked you that 8 years ago!
Oh and @Steve: Nice job hijacking the debt exclusion thread into a discussion about the Oscars! You pro-override folks really have honed your “how to control those pesky bloggers” strategy. I admire that in a political campaign.
More importantly, I feel extremely confident that all three override questions will pass by comfortable margines. I predict that the Angier debt exclusion will have the largest margin of victory.
I predict that all three questions pass (despite the state making it more difficult) and “Argo” will win but “Beast of the Southern Wild” should!
Greg– Not to go too far afield… Oh, what the heck. If you view the role of a president as I do, with their first responsibility being the protection of American lives, it’s hard to draw any other conclusion, given that the Civil War killed more Americans than every other US war combined. Glad to elaborate the next time I see a Lincoln thread.
I’m confused. The intro and the Tabenken quote seem contradictory. Does a debt exclusion passage approve whatever borrowing is needed for the project, or just the estimated $ amount, and overruns have to get voted on?
P.s. Sorry to have been absent from the blog. In between computers, and reduced to typing on my smartphone.
Tip of the hat to Greg for revealing my strategy. And to reinforce it, I think Amour deserves best picture but Lincoln will win it. My daughter the self-professed film geek got us to watch every best picture nominee this year. We’ve never done that before and it was great to do it together.
@Steve: Nice strategy on getting time with the kid–pretend to balk at watching every oscar nominee, when you & probably every other Newton parent would willingly spend time watching Sponge Bob if that was something you could do with your kids.
:)
Andreae, we shared in our selection of the best dark horse pick of the night, Christophe Waltz as the best supporting actor in Django. We based this on who created the most convincing and original character from the material, so it followed that Daniel Day Lewis and Ann Hathaway both deserved their awards too. Jennifer Lawrence was quite good, but we picked Riva or Wallis for best actress.
Greg, your point on the non-specificity of the debt exclusion ballot questions is technically true, and I agree that this is an area that can use additional explanation. Here goes:
The amounts appearing on the ballot are carefully calculated to tie to a $37 million price for Angier and a $45 million price for Cabot. Were we building these projects outside of a partnership with the Mass School Building Authority (MSBA) there would be no hard mechanism for cost containment. However these two will be MSBA projects, and by their rules Newton negotiates with them on the maximum cost of each project. If the project cost climbs above the negotiated amount the MSBA can halt it until the project can be brought back to budget. This just happened in Concord so we know that the MSBA is serious about not letting another NNHS happen.
The cost control is built into the relationship with the MSBA and not the ballot questions themselves.
I hope this post redeems me from my Oscars foray. :)
In case there’s any misunderstanding, the fact the debt exclusion overrides don’t have a formal price tag is standard practice, not something Newton decided to do on its own. As Steve points out, at some point that price does get “baked in” to the process.
@Steve– What, no acknowledgment? Turns out I’m pretty good at predictions. Best Picture:Argo. Nailed it!!! Let’s hope my precognitive ability is limited to award shows, because my other prediction [that at least one of the overrides will fail, due to ballot structure] would be rather problematic if it holds true.
I’d be very cautious about giving the MSBA any kind of pat on the back before the vote, because what they really deserve is a kick in the ass. This made-up rule of theirs, which requires a separate ballot initiative for each school, is going to screw the City of Newton. We may dodge the bullet in March, but what happens with the next round of school repairs? If communities are going to be handcuffed by prop 2-1/2, they should at least have the right to structure their override initiative any darn way they want.
Also, when you say the MSBA is “serious about not letting another NNHS happen,” that kind of bugs me. Not really your fault, but I’m sick of the negative connotations associated with that school building, which are so undeserved. Building the new North was one of the greatest accomplishments I’ve seen in all the years I’ve lived in Newton. It’s a testament to the value this community places on education. The only thing the MSBA did to contribute to that process, was give Newton taxpayers back some of their own money.
Good job on Argo Mike! I have a note in my calendar to contact you on March 13th, with the intent of having a post-mortem exchange on why all three questions passed. Stay tuned.
Just so you know, when I reference “another NNHS” I am referring to a building project that is begun a full year before the contract is signed, that is cost-plus without a budget cap, and that is completed with no financing plan.
And regarding the MSBA, five years ago they were just a bank. Now, for better and (by your way of thinking) perhaps worse, they are more than equal partners in the design and construction process. I’ve been engaged with them for a year as a member of the Angier Working Group and the Angier School Building Committee, and they bring a level of professional oversight to the process that is tremendously beneficial to Newton.
Would someone please explain the project costs of the 2 schools? What exactly will the overide pay for and how will the rest be paid for? What is the MSBA and what is Newton’s relation to it? Frankly I haven’t been paying that much attention.
Hi Barbara,
The Angier school work is expected to cost up to $37 million, for all design, demo, construction, and site costs. Cabot is expected to cost $45 million for the same scope items. Cabot is more costly than Angier as it is slightly bigger and construction will be a few years later so there is an inflation factor built into the pricing.
Both of these projects are expected to receive partial funding from the Massachusetts School Building Authority (MSBA). The percentage of project cost covered by the MSBA varies from city to city depending upon many factors, but Newton expects that the MSBA will cover approximately 30% of the project cost or about $25 million in total for both of these projects.
The balance of these costs are to be paid by Newton, which will float bonds (city-speak for taking out a mortgage) and then pay back the principal and interest on these bonds over 30 years. The two debt exclusions appearing on the ballot on March 12th will provide cash to make these annual payments. Should the override not pass the city could halt these projects, or we could proceed anyway by paying off the debt service with money diverted from other operating expenses. However the MSBA won’t provide funding assistance for a project that has not received the clear support of the community, so were Newton to self-fund we would likely be carrying the entire cost of the project(s) on our own.
I hope that this explanation helps!
Regards, Steve
@Steve– You’ve become Newton’s own “Secretary of Explaining Stuff.” I always appreciate your accessibility on the blogs, and I have a great deal of respect for your opinion. I’m not setting you up for a sucker-punch here. Just letting you know how I honestly feel.
I do have a question, based on your response to Barbara. Why is the MSBA reimbursement rate for Angier and Cabot only 30%? If I recall correctly, it was 40% for NNHS.
And if you don’t mind, I have another, out-of-the-box question. Has the School Committee ever considered using CPA funds to repair any of our older schools that might be eligible under the “historic” component of that law? Frankly, I’ve never thought of doing that before, until I saw the 30% MSBA reimbursement rate. That’s the same rate as the State’s 2013 CPA contribution. It comes with a lot fewer rules, and perhaps more significantly, would not require any new tax increase.
No problem Mike, I don’t feel set up (yet) .
I am fairly certain that the formula is different now than when the value of the NNHS reimbursement was established. Currently the MSBA reimbursement formula starts with a base rate of 31%, and this can be adjusted up or down based upon a community’s income, property wealth, and poverty level. None of these factors help Newton.
Then there are incentives totaling up to 18%. These incentives include participating in the model school program, renovating vs. replace, energy efficiency, use of CM-at-Risk, and various maintenance practices. The final factor: The MSBA does not consider every component of a project to be eligible. For example, they cap their reimbursement for site work to 8% of project cost, and this site’s project costs are high relative to a flat, large, virgin site on uniform, hard-packed glacial til. Just “reclaiming” the slope down to the MSBA tracks so there can be adequate parking onsite will cost $1 million and none of this cost is eligible.
Regarding CPA funds, this is not the School Committee’s domain. We identify space issues and request certain solutions but the funding is typically a City matter.
Mike – you mentioned CPA funding as an alternative to MSBA an said “and perhaps more significantly, would not require any new tax increase.” If both CPA and MSBA reimburse at roughly 30% why would that change the tax situation?
I could be wrong but from my understanding, using CPA funding for school construction/rehab would require changing state rules/regs – i.e. not a simple thing
Dear Secretary oES (Good one, Mike!)
“The two debt exclusions appearing on the ballot on March 12th will provide cash to make these annual payments.”
For how long? Assuming the City’s part of the Cabot project is $25m, how many “mortgage payments” will $1.7m buy us, and what happens after the that money is gone?
And thank you Steve for taking the time to answer these very naïve questions.
@Barbara,
The debt exclusions are paid down after 30 years, at which point the interest being paid is no longer included in the tax rate.
@Steve– Thanks for the detailed explanation. It gave me a much clearer understanding of the MSBA process. Frankly, I thought the MSBA was screwing us before, with the requirement for separate votes for different schools. Now I think their screwing us even worse, with a reduced reimbursement formula [down from 40%] and variables in eligibility factors that appear to discriminate against wealthier communities. None of this effects my own 100% support for the overrides.
@Jerry– I know that CPA cannot be used for new school construction, because there are only three categories that are eligible for funds. Open space, affordable housing, and historic preservation. I seem to recall CPA funds being used for some historic preservation work on City Hall a few years back, [but I’m not completely certain of that].
So, my thought was, why not use CPA funds to repair some schools that may be eligible under the “historic” category? If possible, a project financed in that specific way would not require an override, because Newton is already collecting CPA funds as part of our property tax bills. After the money is collected, the city goes through an internal application process that determines how we spend it. So, if [for example] Ward School, which is one of Newton’s oldest, were eligible under the law, those existing CPA funds could be directed at repairing that school, with the State already committed to a 30% reimbursement. This does not effect my support for the overrides, but may be an additional tool we can use to repair some of the other, older schools, not included in this current override package.
Mike, interesting idea. I wish the city leaders would do more thinking like this. The flaw in your idea could be that the state 30% reimbursement is not guaranteed going forward. I think each city’s share of the overall amount is dependent on how many cities are participating in the CPA program and how much the state wants to put in the pot. Keep up the good thinking; we need more people looking for viable solutions.
Thanks, Patrick. Worth noting… The current 30% CPA reimbursement rate, [down from a previous 100% matching rate], is actually projected to increase in 2014 when the state adds $25M to the CPA trust.
@Barbara, my pleasure!
@Mike, the MSBA has a fixed pot of money, and their mission is to use it to leverage the creation of the maximum amount of quality school infrastructure across the state.
Do you consider progressive taxation to be screwing higher earners? Do you believe that providing more financial aid to college students with greater need is screwing more affluent families?
If so I’ll stop here. But if not, how is the variable rate of MSBA support any different? The MSBA is covering a higher percentage of building cost for those communities with fewer resources.
@Steve– No, I don’t consider progressive taxation wrong. And I don’t believe financial aid based on need is wrong either. What I believe, is that Newton is entitled to be treated equally among municipalities. We agree on a lot of things, Steve. But where you and I often part company is that I always put Newton’s interest first in any debate. So when you tell me that the MSBA reimbursement formula is based in part on a community’s income, and that you think the communities that pay the most taxes should get back the least benefit, I’m going to respectfully disagree with your opinion.