Inflation in the construction sector leads to a deficit in bond funds 2021

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At the September 29 RISD board meeting, directors discussed initial opportunities to address a projected Bond 2021 fund shortfall due to unprecedented cost increases in the construction industry. The district realized an approximate 36% increase in construction costs over a two-year period from budgeting to bidding for major Bond 2021 construction projects at Pearce HS and Lake Colleges Highlands and Forest Meadow. Recent construction cost increases achieved by RISD are consistent with construction costs shared by other school districts and consultants in the Dallas-Fort Worth area during the same period.

“Soaring prices for steel and building materials, coupled with the shortage of skilled labor, continue to drive cost increases on all major construction projects,” said the general manager of the RISD operations, James Watson. “This is a national issue, and certainly not unique to RISD.”

The projects, which include construction and renovation to turn Forest Meadow and Lake Highlands high schools into colleges, and increased classrooms and space at Pearce High School, created a projected $77 million shortfall dollars in the Bond 2021 package – around 10% of the overall proposal. In the spring, the trustees asked RISD staff to explore possible solutions, which were presented and discussed as a starting point at this meeting.

“It’s a first effort, and it’s all on the table,” Superintendent Branum said. “One option is to identify projects and expenditures among those remaining from Bond 2021 to reduce scope or defer to a future obligation. If this happens, it would be the first time in RISD history that the district would not be unable to complete planned bond projects due to construction cost inflation.

RISD staff shared areas where projects could be postponed or the scope reduced, deferring items such as roof and HVAC replacement to future obligations. Facility staff have noted that deferring these infrastructure items beyond their useful life poses a higher risk of failure which can result in more costly repairs and impact on teaching and learning. Additionally, postponing needed replacement while costs continue to rise will increase the likelihood that the same replacement needs will cost the district more money in the future.

“Our goal and plan is always to maintain our building systems to extend their useful life for as long as possible,” said the RISD Deputy Superintendent. Sandra Hayes operations. “But with continued use, all equipment and infrastructure will eventually break down.”

General renovations for a refreshed environment at three other RISD elementary schools are included in Bond 2021 and were selected during bond planning based on age and condition.

Several trustees expressed a desire to protect bond funding for these campuses if possible, citing the importance to these school communities of retaining faculty and staff and commitments made during the bond planning process.

Another possibility is to consider placing a set of additional bonds in front of voters to make up the shortfall. Speaking about the college transformations underway in Lake Highlands to get sixth graders out of elementary schools, Branum shared that the district has heard consistent feedback from the other three learning communities (Berkner, Pearce and Richardson) asking RISD to explore ways to accelerate mid-school transformations in RISD’s six remaining high schools so that these communities do not have to wait until the end of the decade. The Lake Highlands region is expected to transition to a college education model from August 2024.

RISD traditionally plans facility and capital expenditures based on five-year bond cycles, with the next scheduled bond occurring in 2026.

“Does it make sense to assess different scenarios for the next bond? said Branum. “We could reconvene our steering committee on civic obligations to explore the possibilities and help us determine the next steps. As construction costs continue to rise and the district has committed to a district-wide college model, is it fiscally wiser for our constituents to consider doing so before 2026? ? »

With the discussion in the initial stages, no action was taken. RISD staff have been asked to return at an upcoming Board meeting with more information on the various future bond scenarios and potential Bond 2021 draft cuts.

Learn more

See the presentation and potential discount areas
Watch the discussion
Context of college transformations
Background of Bond 2021

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