A plan to build a career and technical training center on the Redwood Valley schools site is moving along at a much faster pace than had originally been discussed.
The Redwood Area Board of Education did its part to fast-track the process at its June 26 meeting by directing administration to move forward with development and planning based on a budget of $3.5 million.
The idea of a career and technical training center became more than just an idea when Orrin Estebo committed $1 million over a period of six years to build such a program. Believing the project should not be delayed any longer than is necessary, the board discussed moving ahead with a faster timeline at its May meeting and there learned about an option it has known as a lease levy.
Andrea Uhl of Ehlers Financial Services talked about the lease purchase and lease levy option with the board at its June meeting in an effort to help them better understand the concept. Under the lease purchase and lease levy financing options, the board would move ahead with the project by entering a lease purchase agreement with a lessor (i.e. a bank, financing company or trustee).
That lessor would own the building and then would lease it to the school district, and at the end of the term of the lease would then sell the asset to the district for a nominal amount.
State statute allows local units of government to use a lease purchase option for various things, such as land purchase, site improvements, purchase of existing buildings, additions to existing buildings, equipment, roof replacement or energy improvements.
The local unit of government does not need state approval to move forward with a lease purchase agreement, said Uhl.
However, she added, it does need to prove it has the money to cover the lease. That is where the lease levy option comes into play. Based on state statute, school districts have the ability to levy up to $212 per pupil unit for projects like the career and technical training center without having to get approval from the public.
The board directed the administration to work with Ehlers Financial Services and Wold Architects on a plan that would utilize $2 million of lease levy funds collected over a 15-year period. Based on information from Uhl, the district would levy $176,212 per year based on the overall $2 million levy.
The impact of the levy on the taxpayer would be an added $14 per year on a residential homestead with an estimated market value of $125,000. Uhl added a new law approved by the Minnesota legislature will provide an agricultural credit to landowners, which would mean those landowners would receive a portion of the taxes paid back in a credit from the state. Under the new law, ag homestead land valued at $7,000 per acre would initially pay $6.35 per acre, but after the credit the actual taxes paid would be $3.81 per acre.
Part of the reason why the school board was comfortable with moving forward was knowing that within the next few years current school levies, including those on the school and the community center are going to end. With those levies completed, the total amount of taxes would be reduced meaning those taxpayers in the district would not see significant tax impact in the long run. If the final plan for the lease purchase and lease levy is approved the new taxes would begin being collected in 2018.
The original building levy is scheduled to end in 2021, with the community center levy scheduled to end in 2022, said Scott LeSage, school finance director.
The $2 million levy would not utilize all of the potential tax capacity under the lease levy option providing the opportunity for the school district to levy funding for other projects if necessary.
According to John McNamara of Wold Architects, if everything falls into place as planned, the center could be available for use as early as the end of 2018.
That, said Rick Ellingworth, Redwood Area School District superintendent, could mean this coming year’s juniors could be utilizing the Estebo Career and Technical Training Center by the second semester of their senior year.
McNamara said the budget of a $3.5 million project could include 10,000 square feet of new space, as well as renovation of 6,000 square feet. The actual budget presented by McNamara based on that square footage and overall project costs would be $3.6 million, but he said with a few efficiencies and minor adjustments it could easily fit in the $3.5 million proposal.
Ellingworth said he has talked with Estebo who said he is willing to help fast-track the donation he has committed, and the district has also committed $500,000 of existing funds to help with costs.
He added there is always the potential for other donations to come in. The board talked about the option of having donations of equipment from local businesses as an option to help enhance the center.
While Ellingworth said the initial plan was to focus on manufacturing and agriculture in the center to start, this $3.5 million plan would allow for the addition of space for medical and business education programming as well.
“I think it would be a huge mistake to be short-sighted with a project like this,” said Jim Buckley, school board chair.“The last thing we want to do is make it too small from the start.”
With direction to proceed, the next step in the process would be to begin schematic design of the center and to further outline the process toward the lease purchase and lease levy options. The board could move ahead with approval to officially proceed as early as this summer.