March 2007

Members Present: Dick Jones, Gary Lane, John Matthews, Ginny Markell, Kristin Mitchell, Julie Volpel, Heather Noren, Yvonne McVey, Jeff Klein

Absent: Renee King, Todd Caldwell, Tom Feely

District Staff Present: Ron Naso, Jim Langstraat, Joe Krumm, Blair Loudat, Matt Utterback, Vicki Chambers, Garry Kryszak, Ron Stewart, Leslie Robinette

School Board Directors Present: Linda Moraga, Rein Vaga

Community Member Present: Jay Lillie

Project Update: Ron Stewart and Garry Kryszak

All summer projects on schedule to bid in April. CHS came in under the engineer’s estimate and will go to the board for approval in April. $8.5 million in projects will go out for bid in April.

We are still working on master planning for major projects at Bilquist, Putnam, and Rowe. Definitive plans will be presented to the architects in the next 3-4 weeks.

We continue to work on Linwood, looking at improvements including a gym, media
center, and office.

Planning for the major remodels of PHS, & Milwaukie, Rowe and Bilquist are moving along nicely. We are moving forward with Ardenwald’s plan, looking at education specifications, size, location, and building needs.

No work will begin on these projects until late fall at Linwood. All the rest will begin in the spring of 2008.

The Happy Valley Project:

The District continues to work with the City of Happy Valley on zoning. We are continuing work with the architects and general contractor Robinson construction.

We are planning an approximate 190,000 square foot structure with an elementary school and a middle school on the site.

Design documents are complete. We are now working details of the structure. 

Auto traffic will move along the east side. The two schools will have a staggered release time to alleviate parking and traffic issues.

We anticipate that the elementary school will be ready to open in the fall of 2008, and that the middle school will be ready in the fall of 2009.

A portion of Sunrise Middle School students could move into the middle school at that time, alleviating crowding at Sunrise.

Cost estimates:

The process is this: general contractors work directly with the architects to help with the design of the building. Both the architect and the contractor did preliminary estimates for the Happy Valley site. As of this afternoon we are about $2 to $2.5 million over budget.

Using this method, we can do value engineering on the front end of the project to save on costs.

An issue with the soil has driven costs up. The middle school is 3 stories and the elementary is 2 stories. Due to soil instability, a large number of pilings will have to be added to stabilize the site. This has resulted in a higher cost than anticipated.

Question: Do we get a rebate on portable fees if they are removed within a short time?
Answer: We pay $275 per student to put in portables as a systems development charge.

We will get credit for that as we make improvements on the property.

Question: Will the portables be sold when they are no longer needed?
Answer: some have been leased and can be returned. Some can be used on other sites during on-going construction. Afterward, they can be sold, though not for what we paid for them.

Question: In Happy Valley, when the new elementary opens, will both elementary schools be open?
Answer: A couple of options are being considered. One possibility is that those who will attend the Happy Valley Elementary School will move there.

In that case, those who will go to the other as-yet unbuilt new school would remain in the old happy valley school until their new school opens. The other option would be to move students in grades K-4 to the new Happy Valley Elementary building, and have grades 5 & 6 remain in the old school. This would allow additional time to determine the new school boundary lines and which staff would work at which school. A final decision on these
options has not been made.

Question: How much parking will be provided in Happy Valley at the two-school complex?
Answer: 193 parking spots and 21 buses will fit on site, though it’s unlikely that many buses would ever be there at one time.

Question: How will this impact traffic?
Answer: Schools slightly impact traffic at the start and end of the school day, but this is a short time each day. The total number of trips to the area will remain about the same or fewer than we have now. The school district will be part of the road improvement process. While the middle school students will be brought into the area, on the plus side, they will no longer cause as many traffic tie-ups in the Sunrise area.

Overall, less congestion is anticipated.

Question: For after school activities, what are the options for overflow parking after school for special events?
Answer: Because this is two schools on the same site, the parking lot is larger than the lot at Sunrise. Possibly people can park at the church next door.

Question: How much will the extra pilings and soil samples cost?
Answer: Roughly $1 million to $1.25 million.

This project will happen in starts and fits, with unexpected issues popping up from time to time.

The Bond Sale: Jim Langstraat

The school district’s bond rating is A-1 from Moody’s same as before Our Rating from Standard & Poors is an A, down from the last report.

This is because the district’s general fund balance is low and fluctuating. This has been low because reduced school funding over the past few years has caused us to spend down the general fund balance to accommodate basic needs.

However, this is a respectable rating. The better the rating, the better the rate we get on bonds.

Rating agencies are impressed at the health of the local economy and the increase in property values. There may be a resulting rating increase in the future.

The district purchased bond insurance which buys us a better rating, driving down the interest rate investors will charge. It made a quarter of one percent difference.

We spent $100,000 to get the bonds rated. Lowering the interest rate saves the district $575,000 per year in interest alone.

The bond sale went very well. The market is strong. The market is unusual right now: there is only a 1% difference between short term and long-term borrowing. The first good news is that we met our pledges to the community, not raising property taxes by more than $1.10 per thousand in the first four years, or by more than $1.25 on average over the 25-year life of the bond.

The district anticipates the tax increase per thousand dollars of a home’s taxable value will be:
$1.01 in year 1
$1.10 in year 4
$1.14 average over the life of the bond.

We estimate that the district’s property tax value will grow by 7.5% in next two years and by 4% in years thereafter. We think these projections are reasonable.

Depending on changes in assessed value, these figures could go up or down.

Because of the strong market, we were able to sell at a premium. Buyers paid more than the asking price because the interest is tax-exempt. This tax exemption turns 4.4% interest to a real return of 6% to investors.

Bonds are not callable for 10 years, which is very favorable to investors.

The net result is that investors paid over $13 million more than the face value of the bonds. Even after underwriting fees, this leaves us with $241,449,586.

This gives us a cushion for cost increases and unanticipated expenses like the soil conditions in Happy Valley. This gives us protection against contingencies to provide the public with the projects we planned for.

Right now we are re-investing the funds at 5 to 5.25% until they are needed. Projections show we may generate another $16 million in interest revenue over the construction cycle.

An estimated $258 million will be available for projects.

If all goes well, any funds not used for planned projects can be used to reduce the cost to taxpayers.

All the bond sale paperwork is in order. This bond meets the parameters we pledged to the public and meets with all state and federal laws.

Even with this bond sale, the district could legally issue up to $750 million in additional bonds should the voters approve them. This is not planned, but does demonstrate the economic health of the district.

According to property tax data, the assessed (taxable) value of property within school district boundaries is well under real market value—about 63% of the value of the property. This is due to limits posed by Measure 5.

There was a high demand for series B bonds.

Question: What is Urban Renewal excess?
Answer: Growth in new areas will fund urban renewal projects and will not add to the district property tax base yet. At some point in time, the Town Center area will come out of that base.

The district received the bond proceeds last Wednesday. The money was invested wth a local bank.

The district wrote an RFP for investment management services to help us line up good investments in the future.

Next board meeting we will choose an investment management service.
We have three goals in managing bond proceeds:

• Ensuring that the principal is 100% safe (invested in government securities or in local banks with collateral agreements that are insured)
• making sure the money is liquid (so we can get to it when we need it if the construction schedule changes due to good weather, etc.) This keeps the schedule fluid.
• ensuring a good rate of return so we benefit from interest income. Over the life of the bonds, we will make 2-3% interest under federal rules.

$16 million in interest is based on the lower 4.2% interest rate.

Reminder: Our commitment is to build no more than we promised, and hopefully no less. This unanticipated money gives us security that planned projects can be completed. If costs come up, the district may bring that decision to the Citizens Oversight Committee to consider whether extra money could be spent to complete the project.

Question: If some money is left over after all projects are completed, could we invest it in another site for a future school?
Answer: We don’t have a lot of wiggle room to do that given the promises made to voters in the ballot explanatory statement.

Progress on Property Purchases: Ron Stewart and Garry Kryszak

We will purchase property for two new elementary schools, two new middle schools, and
two future schools.

Middle school #1 will be located in Happy Valley. We have already acquired 8 acres and need to acquire an additional 4 acres. We have been in negotiations with the land owners for more than a year. They want to sell, and we want to buy. We may need a third party to negotiate price.

Middle school #2. We are negotiating with a number of parcel owners, and evaluating wetlands. Construction begins in 2009, so we have more time. This is in the area of 162nd St. and south of Sunnyside Rd. We have sent letters to property owners offering the appraised value for their properties.

We hope to locate Oregon Trail area elementary school #2 between 172nd and 162nd St. south of Sunnyside Road. Property owners are talking with us, and we have sent letters to property owners offering the appraised value for their properties. We need to identify this property in the next two months.

Happy Valley region elementary school #2 will be located in the vicinity of 172nd, north of Sunnyside Road. These sites need to be at least identified in the next two months.

We are still looking for two future school sites. This has a later deadline because these schools will not be built now.

Question: Will the price of land be in our range?
Answer: The Board is confident that we will have to dip into reserves on property costs. We have done appraisals plus our best estimates of the off-site improvements needed to make the properties usable. $25.6 million is the estimated total cost of the properties we need based on appraised values. We doubt we can purchase many of these properties based on the appraisal. Many of these properties have homes on them, so that
may increase the cost.

Land purchase will be a challenge.

Some of the property we’re looking at is being proposed as being zoned Light Industrial.

This creates difficulties for the planners under requirements of Metro.

The tensions that are occurring are the result of master planning without consideration for where schools will be located.

We are not choosing prime property, but rather sites located more remotely.

Industrial areas bring jobs to the community. That’s part of the push/pull.

Question: Was the property by Rowe rezoned to acquire more space for parking?
Answer: That has not happened yet, but we will ensure that it does.

Question: Have we ever closed on property North of Courtney to improve access to Oak Grove school?
Answer: We believe that title has been transferred in a land swap.

Condemnation: What is it?

It is highly unlikely that the district will be able to purchase over 80 acres of land and come to agreement over such a large number of parcels with homes on them.

Not every property owner will agree.

Condemnation means using a third party such as a judge or legal process to come to a fair agreement about the value of the land. The owner will not receive less than the appraised value for the property.

In this circumstance, all our property owners are willing to discuss selling their properties. It’s just a question of negotiating price and timing.

There are legal timelines in place to use condemnation as a tool to obtain the King Road property. It takes approximately six weeks to get through the required waiting period.

Historically, this will not be the first time the district has condemned land. Oregon Trail Elementary was built on condemned property.

The district considered a wide range of ideas to encourage the family to sell, including naming the school after the family. However, it is unclear which approaches actually reached the bargaining table. In the end, the condemnation went through.

Condemnation is a tool to serve the interests of the public good.

The threat of condemnation provides tax advantages to the seller, giving them an extended period of time to reinvest the proceeds (two years) without declaring income.

One property owner on King Road asked us to threaten to condemn so he could take advantage of this.

Bond communications: Leslie Robinette

The school district communicates about bond project implementation in different ways to different audiences:

• internal audiences, such as employees and students
• external audiences, such as parents, business leaders, and other community members.

People rely on a variety of different information sources, so we use multiple approaches:

• news releases to local media
• letters
• newsletters, for both employees and community members
• cable access TV (Comcast channel 28, or channel 27 in Happy Valley)
• the school district web site
• a “key communicator” list serve
• signs and displays at each school
• the Citizens Oversight Committee (with meetings open to the public)
• presentations to community groups, school communities, local government, and neighborhood associations
• special events

In the case of special events, such as ground breakings or grand openings, we make a point of involving the community and students in the event, through ribbon cuttings, student music performances, and special invitations to dignitaries, neighbors, students,
parents, and involved citizens.

Overall, our communications effort has two goals: informing the public about bond projects while ensuring open, transparent communication, and giving community members a sense of pride and ownership in the school facilities we all use and help fund.

The Citizens Oversight Committee was formed to enable direct citizen participation as bond projects are implemented.

The district would like to offer this committee the opportunity to take a direct role in bond communications.

One option would be having this committee make a report to the community. This could happen in a couple of different ways depending which way the group decides to go.

One option is a one-page report in the annual report issue of the district newsletter, published each February.

Another option would be an annual presentation by a COC subcommittee to the school board at their June meeting.

The COC could also provide an e-mail update to the school district’s bond information list serve, which goes to 2200 key communicators.

The Citizens Oversight Committee at this point elected Dick Jones as Chair and Jeff Klein as Vice Chair. Ginny Markell has volunteered to help Dick and Jeff with COC communications, which she considers vital.

This group and any others interested in helping will meet to discuss a June report to the

Board. Joe Krumm and Leslie Robinette will assist the subcommittee as needed.

Question: Are building captains on the key communicator list?
Answer: We believe so, but will confirm this.

Questions and Discussion:

Jeff Klein looked at the MHS projects list and says based on his experience, the lights and poles will be an issue for the Historic Milwaukie Neighborhood Association. We need to involve them in the process.

The Ardenwald re-build will be an issue for the neighborhood association.

The district needs to connect with other city and county planning organizations to find out whom in the community to contact about their concerns.

Hot topic: “Cherry Stemming” Annexation

On the April 5 school board agenda, the school district is bringing the bid forward on the all weather field for Clackamas High School.

The board will discuss acceptance of the bid and how we will pay for the field.

The Happy Valley annexation may be a factor in this.

If we do not move forward with annexation, we need to find other funding for this project.

Ron Naso recommends that the school board accept the bid, which is low.

Sunnyside United Neighbors sent a letter indicating their opposition to the annexation.

Ron will be in Salem on Monday discussing annexation issues with the Legislature to alleviate the concerns of the neighbors.

Ron does not have high confidence that the annexation will proceed unless the legislature makes changes to alleviate people’s fears about island annexation.

Happy Valley City Council member Kristin Mitchell says her sense is that the City of Happy Valley does not want to annex anyone who does not want to be annexed. Dick Jones feels annexation is confusing and divisive. Would it be better to annex a clearly defined area rather than an island?

Jeff Klein thinks the county needs to do a better job of annexation. The public needs to understand that this is more about services than about taxes.

Ginny Markell is concerned that the all weather field and Happy Valley annexation is the first project out of the chute because annexation was never mentioned during the bond discussion.

We have to be careful about how the public perceives this. We need to demonstrate the cost savings to tax payers.

Ron says that if we don’t proceed with annexation, because of the Parks and Recreation agreement with Happy Valley, taxpayers will need to fund two all-weather fields on the east side, one at the high school and one inside the Happy Valley city limits.

We need to be clear with the community about why there’s a delay in providing all weather fields at Milwaukie High and Putnam High, because Clackamas High gets theirs a year sooner.

The only reason Putnam and Milwaukie High come later is the larger scope of their projects, involving stadium improvements, lighting, track restoration, the field, and storage buildings.

The positive news is that in the 5-year bond budget for Milwaukie and Rex Putnam, they have $250,000 for each school’s sports facility. We are asking the community to contribute $100,000 to $150,000 per school at these sites for sports facilities. This may be accomplished through fundraising, donations, and grant writing.

Ginny Markell’s address is now Damascus. Her new zip code is 97089. Please correct this on the COC contact list.

Please add Todd Caldwell’s phone number to your COC contact list: 503-721-2422.

The next meeting of the Citizens Oversight Committee is set for May 16 at 6:30 in the district board room.