Why Conroe ISD’s $677.3 Million bond package bears a HIGHER TAX RATE INCREASE than the rejected $807 Million bond package did

Why Conroe ISD’s $677.3 Million bond package bears a HIGHER TAX RATE INCREASE than the rejected $807 Million bond package did

Image: Conroe Independent School District Board and Superintendent: Left to right, Scott Moore, John Husbands, Skeeter Hubert, Scott Kidd, Datren Williams, and Superintendent Curtis Null.

The Golden Hammer Staff Reports

Conroe, November 5 – Voters will vote today on a $677.3 Million Conroe Independent School District (CISD) Bond package, which brings a 4 cent TAX RATE INCREASE, while they previously defeated an $807 Million Bond package, which only bore a proposed 3 cent tax rate increase. That begs the question: why does the smaller bond have the larger tax rate increase?

The answer lies in the reality of how CISD made the current bond package pending before the voters look smaller. That’s all it is: appearance, because, in truth, CISD is spending more money with the smaller bond proposal. Instead of borrowing all of the funds, however, CISD plans to spend approximately $10 million per year in accumulated cash (tax dollars accumulated by years of purposeful over-budgeting), which CISD could and should have used to pay down debt.

Kelli Cook, Director of Strategic Operations for Children’s Hope PAC, has explained the main reason the opposition to Conroe Independent School District’s (CISD) $677.3 Million Bond set for referendum on November 5 refers to the bond package as the “zombie” bond. “It’s really just the same bond package as the one voters defeated successfully on May 4, which was an $807 million bond with a 3 cent tax increase. CISD’s latest bond attempt is a $677.3 million bond with a 4 cent tax rate increase. It’s like the previous bond died and has come back to life like a zombie,” Cook said.

“It’s really just the same bond package as the one voters defeated successfully on May 4, which was an $807 million bond with a 3 cent tax increase. CISD’s latest bond attempt is a $677.3 million bond with a 4 cent tax rate increase. It’s like the previous bond died and has come back to life like a zombie,” Cook said.

Very few of the projects CISD included in the $807 million bond in May are excluded from the $677.3 Million bond in November, but there have been some changes:

  • CISD has moved money around to spend surplus cash on many of the items included in the $807 million bond without financing them. The problem with those actions is that they will tend to increase interest costs on previous bonds. Previously, CISD had spent some excess funds on reduction of principle and interest on outstanding debt.
  • The cost estimates in both the May bond and in the November bond are all fake numbers pulled out of the air. CISD just lowered several of the cost estimates willy-nilly by several million dollars for the $677.3 Million November bond package to reveal how inflated those costs estimates were from the beginning. CISD didn’t consult with a facilities planning committee or any professional construction expert. Rather, the school district just plucked new numbers out of the air.
  • CISD actually added some new projects and costs to the $677.3 Million November bond package.

In order to understand how wasteful the new bond package actually is, it’s helpful to review the May bond package to see where CISD has shifted the spending.

CISD’s May 4 $807 Million Bond package.

New Schools

The $677.3 Million “zombie” bond includes an additional $39,414,530.69 for another school in the Caney Creek High School Feeder zone in to four (4) other school projects. The additional school project, however, is completely wasteful.

The additional school will be the most expensive elementary school CISD has constructed in its history.

Las Vegas casino boss Dominic Frank Polizzotto has found a wonderful benefactor: CISD and its beleaguered taxpayers. CISD has agreed to build a $39,415,000 elementary school in Polizzotto’s subdivision, Artavia, on State Highway 242, even though the gambling magnate’s speculative venture doesn’t have one resident there and only has two homes the construction of which is partially complete.

CISD added the Artavia subdivision school as an additional component in its $677.3 Million bond package which the school district had not included in its failed $807 million bond package which voters soundly rejected.

During a May 8, 2019, Monthly Luncheon speaker panel of CREAM, the Commercial Real Estate Association of Montgomery County, Polizzotto’s development manager Travis Stone, who works for the Polizzotto family’s holding company, Airia Development Company, told the lunch guests, “Airia is a family-owned company which does not borrow money for our real estate projects. We use cash for all of our developments, including Artavia.”

Airia Development Company incorporated on December 22, 2016, and lists its headquarters address as 3605 South Town Center Drive, Suite A, Las Vegas, Nevada.

The marketing materials of Polizzotto’s Artavia subdivision greatly emphasize Conroe ISD’s schools as the major amenity for the subdivision and the site plan for the subdivision already shows CISD’s “PROPOSED CISD SCHOOL SITE.” On the site plan below, the large gray diagonal square at the south tip of the Artavia subdivision is the school site.

 

Site map of Artavia subdivision. Source: Airia Development.

Even though CISD intends to put taxpayers on the hook for $39.4 million of bonds for the elementary school in the Artavia subdivision with the November 5, 2019, bond referendum package, there are literally no residents of Artavia. Most of the subdivision roads are rough dirt which would easily puncture one’s tires.

Rough entrance to Artavia subdivision, August 22, 2019.

At present, there are only two homes under construction, which appear as though they will be model homes. The main selling amenity Polizzotto’s subdivision offers is the CISD school included within the $677.3 million bond package.

“Growth & Sustainability”

Rather than paying down debt, CISD wants to enhance the profits for its favored contractor, PBK Architects, the same company which is managing the taxpayer-funded political campaign for the $677.3 Million bond. Some of the funds for these projects will come out of a new Capital Maintenance Fund the school district has created by transferring accumulated tax dollars into capital projects to make the November bond appear smaller than the May bond voters rejected.

In actuality, CISD intends to spend more money now than it did during the May bond election. That’s one of the primary reasons CISD’s $807 million bond only had a 3 cent tax rate increase, which voters rejected, while the $677.3 Million bond has a 4 cent tax rate increase, which CISD’s Board already implemented on August 20, 2019, so CISD could like to the voters by saying there is “no tax rate increase” from the bond.

The expenditures under “Growth and Sustainability” are essentially the same as they were under the $807 Million bond, except CISD has lopped off $22.4 Million of cost estimates.

Safety & Security

CISD has actually increased by $19.9 Million the amount of money it wants to spend on so-called “safety and security” projects from the rejected $807 Million bond to the pending $677.3 Million Bond.

What’s particularly worrisome about the estimated $44.472 Million under so-called “safety and security” is that $30 million of it has no detail whatsoever. It’s just a claim that the school district will spend $6 Million on “safety and security” without any specific projects in mind.

Life Cycle

CISD removed $88.1 million of maintenance projects from the latest bond proposal, although approximately $49 million of maintenance projects remain in the package.

CISD had assured voters over the summer that the school district would remove all of the maintenance items from the package. CISD didn’t keep that promise. At least $49 million of maintenance items remain in the bond package.

CISD has indicated it will pay for maintenance items from its new Capital Maintenance Fund. Since the first bond package at $88.1 million of maintenance projects that this new bond package doesn’t have, CISD obviously has decided to wait a long time to take care of business, which suggests that these projects are all unnecessary anyway.

Nevertheless, CISD seems to have no plan whatsoever for address those maintenance items, because it spent the money which should have gone to maintenance on a massive pay increase for administrators.

Campus Improvements and Renovations (and Career & Technical Education Facilities)

The new bond has $50.4 Million for campus improvements and renovations, which will not add any seats to the school district.

CISD has added $11 million to the cost of the improvements and renovations from the first bond. What that actually appears to be, however, is hiding the “addition of robotics, automotive technology, and engineering design programs,” costing $10.5 million under a single line entitled “Campus Renovations” and costing $50.4 Million.

District-wide Facility & Transportation Needs

CISD removed the $10.1 million maintenance and custodial facility from the bond but will pay for it with cash, which, instead should have gone to reduce debt payments and keep the tax rate down as low as possible. Many of the employees within the custodial department oppose this construction project, because, they have said, it is completely unnecessary.

Similarly, CISD will finance the Hauke Building renovation from accumulated cash of $3.5 million.

CISD will not “decommission” the Jett Center, which wasn’t necessary in the first bond. That will save $1.9 million. CISD will not construct a Teacher Training Facility which will save $17.7 Million.

Miscellaneous ways to force more spending

CISD has reduced the amount of money it has included in the bond package for “technology” by $16 million. CISD reduced land purchases by $10 million but is spending $10 million from accumulated cash on hand, so there are no savings there at all. CISD has reduced so-called “contingency,” which is pure fluff from $39 million to $19 million. There should be no “contingency” in a bond package.

Conclusion

Bill O’Sullivan, the “Sage” and Treasurer of the Texas Patriots PAC said on social media on October 7: “You will note there is a growing contraction in The Woodlands. CISD has to address this as well as the Maintenance backlog with a real plan before I would ever back another Bond.”

O’Sullivan’s comments sum up the problem with the $677.3 Million bond quite well. The school district has based the entire bond package on a demographic study which shows that new schools are unnecessary for nine (9) years. Instead, CISD has chosen to help favored real estate developers build schools in empty subdivisions in order to market the sale of lots.

At the same time, CISD is actually spending more under this bond package along with the so-called “Capital Maintenance Fund” comprised of funds which the school district would otherwise use to pay down debt and keep the debt service tax rate lower.

CISD taxpayers will suffer a 4 cent tax increase, as a result of the proposed $677.3 Million bond, an 18.9% tax increase.

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