Everything voters need to know about the upcoming May 14 Bond Election has been published on the Heartland Community School website. They have also finalized the project’s scope if it passes or fails. Here are some of the highlights from this information.
The planned informational meetings before the May 14 bond election are listed below. They have compiled summary information about the history of why they are holding another bond election, projected tax increases if passed, levy comparisons, and voter information. All of this is available on the Heartland website.
The first informational meeting will be held in Bradshaw at the Community Building on Monday, March 18th.
The Heartland School Board has finalized the project scope if the bond passes or fails.
If The Bond Election Passes
The list below describes the scope of the project that will be completed.
- Add Fire Sprinkling To Existing Building & New Construction
- Replace & Upgrade Power Supply To Building
- Replace & Upgrade Electrical Switch Gear And Distribution System
- Replace, Upgrade, & Unify Fire Alarm System
- New Early Childhood / Day Care Facility
- New Pre-K Playground
- Main Entrance / Office Expansion & Renovation
- 4-Classroom Elementary Addition
- Connection Between Vo-Ag Building & Main Building
- Concessions Area In The Activities Hallway
- Rear-Stage Access To Theater Stage
- New First-Floor Weight Room
- New Boys & Girls Locker Rooms
- New Therapy & Treatment Room
- HVAC & AC In Main Gym
- Replace / Upgrade Bleachers In Main Gym
If The Bond Election Fails
The list below describes the scope of the project that will be completed.
- Add Fire Sprinkling To Existing Building & New Construction
- Replace & Upgrade Power Supply To Building
- Replace & Upgrade Electrical Switch Gear And Distribution System
- Replace, Upgrade, & Unify Fire Alarm System
- New Early Childhood / Day Care Facility
- New Pre-K Playground
- Main Entrance / Office Expansion & Renovation
Here are the drawings depicting all the renovations, new construction, and additions to the project.
Here is a summary of the project’s history and explanation of the shortfall in financing the original project from the Heartland website.
THE ISSUE
The Heartland Community Schools Board of Education will seek voter approval on a ballot initiative to sell general obligation bonds of the district for a total amount not to exceed $6,850,000. The initiative will be voted on at the upcoming statewide primary election to be held on Tuesday, May 14, 2024. Passage of this ballot initiative requires a simple majority of the votes that are cast to be FOR approval of the issuance of the bonds.
THE NEED
In May of 2022 the voters of the district approved the issuance of approximately $7,000,000 in general obligation bonds to finance a series of additions, expansions, and renovations to the current PK-12 building(s)/site. The vast majority of the cost of the project was to be funded by the 2022 bond proceeds with a small portion of cost to be funded through the building fund over a short period of time.
In December of 2022, an initial round of bids solicited for the comprehensive project were opened. At that time, the total project cost was shown to be approximately $5 million higher than what was originally anticipated during the 2022 bond campaign – well short of the funds provided by the 2022 bond issuance. Additionally, statutory changes enacted during the 2023 session of the Unicameral effectively eliminated the ability of our local board of education to invest in cost-effective facilities improvements, or even facilities upkeep, through managed use of the building fund.
After months of consideration and deliberation, the Board has decided that it is still desires to complete the comprehensive facilities project that it set out to complete on behalf of the district over 2 years ago. Consequently, the Board has made the decision to take the only available course of action that will allow for the ultimate completion of the comprehensive facilities project – that is to seek voter approval for a second bond issuance.
In preparation for taking this step, our team calculated forward-looking cost estimates based on bidding our comprehensive project in the middle of 2024 (to very quickly follow an election in May). Our calculated total project cost estimate for completing the entirety of the project at this time is approximately $13.6 million. Based on the approximate $7 million generated from the 2022 bond election, we can calculate an approximate funding gap of $6.6 million. If approved, the bond issuance would fill this funding gap.
If approved by the voters in May, the sale of the bonds would provide the Board with approximately $6,762,600 in net proceeds for funding the completion of the comprehensive additions & renovations project that was originally initiated with the successful bond election in 2022. The net proceeds will provide the Board with $6,610,145 (the estimated funding gap) to complete the project, as well as an additional $152,455 (approximately 1% of the project cost) to insure against higher than expected costs across various aspects of the project.
FUNDING NEEDED FOR PROJECT COMPLETION
TOTAL PROJECT COST: $13,684,145
2022 BOND NET PROCEEDS: – $7,074,000
PROJECT FUNDING GAP: $6,610,145
BOND ELECTION AMOUNT
PROJECT FUNDING GAP: $6,610,145
CONTINGENCY FUNDS (1.1%): $152,455
BOND COSTS: + $87,400
MAXIMUM BOND PAR AMOUNT: $6,850,000
THE ORIGINAL 2022 PROJECT SCOPE (estimated cost $7,000,000)
In May of 2022 the voters of the district approved the sale of approximately $7,000,000 in general obligation bonds to finance a series of additions, expansions, and renovations to the current PK-12 building(s)/site.
Planned additions and improvements of the 2022 Project included:
- security improvements to, and an expansion of, the front entrance/office area;
- additional elementary classroom space;
- connection of the Vo-Ag Shop Bldg. to the main building;
- new weight room, training, and treatment facilities;
- new locker room facilities;
- HVAC upgrades (including AC) in the main gym;
- bleacher upgrade/replacement in the main gym;
- early childhood and/or daycare facilities.
SUMMARY OF COST INCREASES SINCE BEGINNING THE 2022 BOND CAMPAIGN ($6,600,000)
Increased Cost To The Original Project Scope: $3,900,000 – $4,400,000
Due to extraordinary inflationary pressures that were experienced throughout 2021, 2022, 2023 in the construction market, we anticipate the original scope of the project to have a cost that is approximately $4,400,000 higher than what was originally anticipated during the 2022 bond campaign.
Necessary Additions To The Original Project Scope: $1,200,000 – $1,700,000
Additions to the project that were later deemed to be necessary (described below), add an approximate $1,700,000 of cost to the project beyond what was originally anticipated during the 2022 bond campaign.
Additional Immediate Cost Due To The Elimination Of Funding Flexibilities: $500,000 – $1,000,000
Due to various statutory changes in school funding mechanisms since 2022, the ability to fund aspects of the comprehensive project outside of what we would assign to the general contractor in a flexible manner, over a period of time, have been eliminated. We anticipate these changes to have created an immediate increase to the necessary funding of approximately $500,000. Costs inside of this expense category would include room-to-room communications, security/video systems expansion & integration, network security consolidation, furniture, and equipment.
NECESSARY ADDITIONS TO THE SCOPE OF THE ORIGINAL 2022 PROJECT
The formal architectural and engineering phase of the original 2022 Project began immediately following the successful election that took place in May of 2022 – this phase of the process took approximately 6 months to complete. Engineered-evaluations of existing infrastructure and code compliance requirements caused the immediate scope of the project to expand. At the same time, a variety of recent statutory changes in school funding mechanisms had reduced the flexibility to complete and fund/finance the cost in alternative stages or timeframes.
Infrastructure deficiencies and code compliance measures that became necessary, immediate, and costly additions to the project include:
- Replacing & upgrading the entire electrical power supply and power distribution system (approximate age ranging from 40 years to 70 years);
- Replacing, upgrading, & unifying fire detection systems (approximate age ranging from 40 years to 70 years);
- Adding fire sprinkling (fire suppression) to both the existing building and to new construction (none currently exists).
HOW IS THE COMING MAY 14th ELECTION DIFFERENT THAN THE ELECTION THAT WAS MOST RECENTLY HELD IN AUGUST 2023?
The election that was recently held in August of 2023 was a Tax Request Authority Election. The election that is being held this coming May 14th is a simple Bond Election – similar to the election held in May of 2022.
The purpose of the election that was held last August was to seek voter approval for setting a tax request authority that was higher than the newly created, certified tax request authority established for our district by the passage of LB 243 during the 2023 session of the Unicameral. The ballot initiative proposed in the August election required a 60% majority for passage, and it failed to reach the 60% threshold by approximately 33 votes. The initiative proposed in the August election would have accomplished two things – 1) it would have allowed for funding the completion of the building project through short-term financing (7 years) to be paid back through the building fund, and 2) it would have helped to correct and to reconcile the formulary deficiencies of the LB 243 revenue cap with the long-term General Fund needs of the district. The issues at the heart of the August 2023 election were complex and difficult to understand because they impacted both the building project and the district’s General Fund, and at the time, our special election in August was the first of its kind.
The election that will be held this coming May 14th is far simpler to understand as it is intended to accomplish only one outcome – to fund the completion of the comprehensive facilities project. If a simple majority votes FOR the approval of the bond issuance on May 14th, the board will secure the financing necessary to complete the comprehensive facilities project. Like the bond issuance that was approved in May of 2022, the 2024 bonds would be a long-term borrowing (20 years) that will be paid back through the bond fund.
Here is the estimated tax increase information from the Heartland website.
Estimating the tax increase.
The precise tax increase can only be very closely estimated at this time. We do, however, believe that our estimates accurately indicate the tax increase that would accompany the passage of the proposed bond issuance at the upcoming election in May.
The reason that we can only estimate the tax increase at this time is fairly straightforward. The precise cost of paying back the bonds is dependent upon the rates of interest at the time that we sell the bonds. Because we already have a little more than half of the funds for the project in hand, we wouldn’t necessarily need to sell the bonds immediately after the election. We could wait until interest rates drop a little, or we could wait until we need the cash to make payments towards the project in an effort to defer the amount of interest that we’ll pay. We’d anticipate selling the bonds in June at the earliest and in December at the latest. Our goal would be to sell the bonds at the most advantageous time – i.e. locking in a lower interest rate, or waiting to liquidate the bonds for the purpose of saving on interest expense.
We do not anticipate a great deal of change in interest rates over the next 9 months, or at least we don’t anticipate a large amount of upward pressure on interest rates in that period of time. We are currently utilizing a range of interest rates (4% to 5%) with mixed maturity dates to calculate our costs of paying back the bonds that we’d sell to finance the project. Over the long-term, we also reasonably anticipate having the opportunity to refinance some, or all, of the bonds at least one time at a lower rate of interest for the purpose of saving on total, aggregate interest costs.
The following estimates are based off of current-year valuations & tax requests, as well as current bond market conditions.
Increase to the annual tax request for the Bond Fund: $495,000
Increase to the levy rate for the Bond Fund (based on current-year LB2 bond valuations): $0.06598
Note: LB2 changes taxable valuation applied to agricultural / horticultural lands from the standard 75% of actual value to 50% of actual value for repayment of bonds approved after January 1, 2022.
For residential or commercial properties, here are some examples of the annual Bond Fund tax increase:
- Residential / Commercial Property; regular taxable value assessed at $150,000 – annual gross property tax increase: $98.97 ($8.25 per month)
- Residential / Commercial Property; regular taxable value assessed at $300,000 – annual gross property tax increase: $197.94 ($16.50 per month)
- Residential / Commercial Property; regular taxable value assessed at $500,000 – annual gross property tax increase: $329.90 ($27.49 per month)
For agricultural or horticultural properties, here are some examples of the annual Bond Fund tax increase:
- 52 acres (irrigated); regular taxable value assessed at $356,200 – annual gross property tax increase: $156.68 ($3.01 per acre)
- 80 acres (irrigated); regular taxable value assessed at $548,000 – annual gross property tax increase: $241.05 ($3.01 per acre)
- 159 acres (irrigated); regular taxable value assessed at $1,089,150 – annual gross property tax increase: $479.08 ($3.01 per acre)
Note: all property tax increase amounts (listed above) are gross property tax increases and do not deduct any property tax credits that are applied on tax statements to calculate the taxes due.
Here is a chart of regional and area levy comparisons from the Heartland website. More detailed information about the levy can be found at the above link.
