LETTERS: The New High School Project: A Study in Financial Mismanagement (2006-2010)

Published Tuesday, February 19, 2013 at 1:11 pm

Dear Editor,

If a referendum on building a new high school had been held, I would have voted YES. As a taxpayer, I conclude that there has been poor financial stewardship of the new high school project–as high as $32,000,000 in extra cost due to decisions made through 2010. The details follow.

THE NEW HIGH SCHOOL PROJECT: A STUDY IN FINANCIAL MISMANAGEMENT (2006—2010) 

OVERPAYMENT  FOR LAND FOR NEW HIGH SCHOOL 

TOTAL COUNTY PURCHASE PRICE *                                                                                  $5,742,000
TOTAL COUNTY TAX VALUE                (2006)                                                                    $2,455,050
OVERPAYMENT                                                                                                                       $3,286,950 

*Based in part on appraisals by Tennille & Associates.  NC Appraisal Board issued a  Probable Cause Summary citing Tennille 3/20/08.

SOURCE:  Research by Deborah Greene (County Tax Office)

CONSTRUCTION COST OVERRUNS 
AMOUNT SPENT AND COMMITTED TO NEW HIGH SCHOOL
THROUGH 6/30/11 (SOURCE: County Financial Statements)
$79,835,447
CONTRACT AMOUNT* (Estimated from news articles)                                                       $66,400,000
OVERRUN (INCLUDING LAND OVERPAYMENT)                                                               $13,435,447
SUBTRACT LAND OVERPAYMENT                                                                                            (3,286,950)
ESTIMATED OVERRUNS NET OF LAND                                                                       $10,148,497

*SOURCE: “New High School Building Has $47M Price Tag,” Scott Nicholson, The Watauga Democrat, 1/23/2008

FAILURE TO SELL THE OLD HIGH SCHOOL PROPERTY

CONCISE BACKGROUND INFO. (SOURCE: 2006 articles in the Watauga Democrat by Scott Nicholson: 5/26, 6/23, 6/26, 7/27, 10/6):

5/26:  $32,000,000 offer from Granite Development Corporation of Mt. Airy
            $30,000,000 offer from Rick Miller of Rick Miller Properties of Boone
6/23:  $32,000,000 plus from a Florida development corporation
6/26:  According to C/BOC Deal:  Boards received serious offers and could have acted on one at the meeting. (Presumably the three offers noted above.)
7/27:  According to C/BOC Deal:  At least five serious written offers were received. The highest is $33,000,000.
10/6:  According to C/BOC Deal:  BOC did not accept any of the five above; instead it set $36,000,000 as a minimum price. 
HIGHEST OFFER REPORTED BY DEAL (7/27/06)                                                            $33,000,000
CURRENT BOC-ACCEPTED OFFER: TEMPLETON                                                            $18,000,600
LOSS TO TAXPAYERS DUE TO FAILURE TO PURSUE
HIGHEST OFFER                                                                                                                       $14,999,400 

INCREASED INTEREST COST DUE PRIMARILY TO FAILURE TO ACCEPT ONE OF THE FIVE OFFERS

INTEREST ON DEBT 6/30/2011
(SOURCE:County Financial Statements for the Fiscal Year Ended 6/30/11)                $21,669,900
INTEREST ON DEBT 6/30/2010
(SOURCE: County Financial Statements for the Fiscal Year Ended 6/30/10)             $17,960,841

INCREASED INTEREST COST TO SERVICE  DEBT  DUE PRIMARILY TO FAILURE TO MAKE LUMP SUM PAYMENT (IF THE OLD HIGH SCHOOL HAD BEEN SOLD) IN JUNE 2011*                                               $3,709,059

*Interest cost jumped primarily because the County could not pay off a $25,000,000 loan in a lump sum in 6/11

SUMMARY:  TOTAL “BALL PARK” ESTIMATE OF EXTRA COST DUE TO MISMANAGEMENT OF THE NEW HIGH SCHOOL PROJECT: 

LAND: Purchase price over tax value                                                                                     $3,286,950
CONSTRUCTION: Amount spent over original
  Estimated cost (excluding land overpayment)
$10,148,497
MISSED OPPORTUNITY: To sell old high
  School at highest stated offer                                                                                                 $14,999,400
INCREASED INTEREST COST: Did not sell old
  High school by June 2011                                                                                                     $3,709,059

TOTAL                                                                                                                                         $32,143,906

 

PENDING:  IF TEMPLETON PROPERTIES WITHDRAWS OFFER DUE TO REGULATIONS ENACTED BY BOONE TOWN COUNCIL, ANOTHER OFFER MAY BE DELAYED FOR MONTHS WITH NO GUARANTEE THAT THE NEXT OFFER WOULD MATCH TEMPLETON PROPERTIES’ OFFER OF $18,000,600 ($18,948,000 LESS 5% COMMISSION). 

Jean Di Cola

Comments

comments

Privacy Policy | Rights & Permissions | Discussion Guidelines

Website Management by Outer Banks Media