Image: Conroe Independent School District Superintendent Curtis Null had a look of dismay after City of Oak Ridge North City Councilmen Alex Jones and Clint McLaren asked him some very tough questions about the lack of real estimate numbers to support the $807 million bond package the school district has placed before voters for the May 4, 2019, election.
Oak Ridge North, March 28 – Conroe Independent School District (CISD) Superintendent Curtis Null had a rough night before the City of Oak Ridge North City Council meeting on Monday, March 26, 2019, when two City Councilmen, Alex Jones and Clint McLaren, asked Null some tough questions after Null finished his canned pro-spending presentation.
Jones primarily asked Null some very tough questions and make some plain, non-euphemistic comments about the failure of CISD to back up the $807 million bond package with any real cost estimates other than “spitball estimates.”
Jones asked Null, “There’s a lot of discussion that certain numbers show up repetitively throughout the 50-page document of estimated costs. And my concern is that, even if you take out the 45% soft costs that get added to everything, it still seems like there’s an inordinate number of items on the list, over 400 of them, that are just using a repetitive number that was spitballed; can you assure us that every single one of those numbers was researched and estimated legitimately? Not just here’s a number I’m going to throw at the page 117 times?”
“…even if you take out the 45% soft costs that get added to everything, it still seems like there’s an inordinate number of items on the list, over 400 of them, that are just using a repetitive number that was spitballed; can you assure us that every single one of those numbers was researched and estimated legitimately? Not just here’s a number I’m going to throw at the page 117 times?” – – Oak Ridge North City Councilman Alex Jones, speaking to CISD Superintendent Curtis Null, March 26, 2019.
Null tried to avoid a direct answer and said, “Well, I can tell you that I didn’t throw the numbers at the page. I can’t tell you anything other than we have a great planning and construction department, and great architects and engineers that help form the document. Could there be a mistake in there? There could be. I don’t know. I can tell you that the numbers that you speak to that one, that I was asked about at the Woodlands, the $21,562.50, that’s a $15,000 cost of work estimate with the cost added to it.”
CISD Superintendent Null’s response: “Well, I can tell you that I didn’t throw the numbers at the page. I can’t tell you anything other than we have a great planning and construction department, and great architects and engineers that help form the document. Could there be a mistake in there? There could be. I don’t know. I can tell you that the numbers that you speak to that one, that I was asked about at the Woodlands, the $21,562.50, that’s a $15,000 cost of work estimate with the cost added to it.”
[Publisher’s Note: Null lied to the Oak Ridge North City Council in his statement that “great architects and engineers help form the document.” No architects or engineers were involved in the formation of the document, as the CISD has admitted several times now. Additionally, if an engineer were involved in the cost estimates, then, by Texas law, the engineer would have to put his or her seal on the estimate document. Of course, the 50-page estimate document has no such seal.]
Councilman Jones then said, “But the point being that one local paper has reported that the estimates given are the number we’re given, which is the $15,000 plus the number for soft costs added to it. But the idea being, if you looked at the 117 times that soft cost, and they’re completely disconnected projects, so it’s not like you’re doing something 117 times, so one estimate doesn’t cover all of them. But rather the $15,000 plus soft costs was just thrown out there. ‘It’s roughly that much. Let’s just put that number.’ So there’s concern that I’ve heard in the community that a lot of these estimates aren’t really estimates. They’re just spitball numbers thrown at a piece of paper to say ‘here’s how we get to $807 million.’…Then you shift the decimal left or right. You’ve got 29 more occurrences here and 19 more occurrences there. The concern then is there’s over 400 things on there that were just literally spitballed. Here’s a number just stick it on the piece of paper…I just want to know that these numbers were legitimately estimated and not just spitballed by the people who said here’s a good number let’s stick it 117 times on the document.”
Null responded just as diffusely as he had previously: “We have a group of experts who look at it and they make their estimates. To your point, a lot of the items are repeated. We have 19 schools where they estimate work. When they estimate cost, there are multiple items where they estimate the cost. There was no target number. There was no one sitting around trying to get to $807 million.”
Councilman Jones added, “The concern I’m getting from residents, taxpayers like myself, is that, if we’re just sort of randomly estimating the number, and no project is going to cost exactly $15,000, and there’s no way we can know exact amounts, because we’re not at the point where you can bid it yet to find out the best prices, the concern then being that you’re always looking for ways to come in under budget, and that leaves us a whole lot of free money to leave for other stuff, and people are concerned that, instead of asking for $807 million, you could do more specific estimates, more exacting estimates, and come back and only ask for $750 instead of $800 million.”
Null finally gave up and admitted Jones and the citizens are right: “Sure. Yea.”
CISD’s bizarre cost escalation
Null then tried to change the subject by arguing that cost estimating is very difficult, because “…this is a scope of work to span over five years. So to get an estimate today of what a fence will cost at an elementary school four years from now is virtually impossible to do.” The problem with that statement by Null is that CISD has relied upon precisely that “virtually impossible” method to price the $807 million bond. Specifically, CISD and Null have placed a 6% cost escalator for each year in the future of the bond package when the construction actually will occur.
Null’s and CISD’s use of a 6% cost escalator per year seems excessive, although construction inflation was actually in the 6% range between 2013 and 2017, according to the United States Bureau of Labor Statistics. The critical point, however, is that Null and CISD have very happily applied a 6% annual cost escalator to base costs estimates which have no factual basis whatsoever. They’ve thrown “spitballs” and then added a 6% annual cost escalator to them.
There’s another interesting fact, however, to CISD’s and Null’s point about the 6% cost escalator. The numbers just don’t add very well.
Null commented to the Oak Ridge City Council, “Bonnie Wilkinson Elementary cost $14 million to build 10 years ago; we’re now building the same basic school…and in this package we’re estimating that the final school that we build would be over $40 million, with the same basic school. The cost of construction has really gone up. Those are not changes we’ve made, but the market that drives construction costs.”
A ten year period, however, with a school costing $14 million ten years ago and $40 million today, actually involves an annual cost escalator of approximately 11.5%! In other words, CISD’s has allowed costs to skyrocket at a rate almost twice the national average of cost increases for construction.
Obviously, that’s a sign of terribly poor management on the part of the school district.
Taxes and turf
Null admitted the school district has no idea whatsoever how much, if anything, CISD will save with the $23 million installation of turf in place of grass. “We don’t know the cost savings from installation of the $23 million of turf,” Null told the Oak Ridge North City Council.
Null also admitted that appraisal values “do help on the bond and indebtedness side of the tax rate.” What Null meant was that CISD taxpayers will not only suffer a 3 cent tax rate increase but also they’ll suffer tax appraisal increases in the range of 5.5% per year. CISD has projected a 64% increase in tax bills after the first eight years after passage of the gargantuan $807 million school bond.