$269 Million School Construction Tab, Delayed Reimbursement Leave Stamford in a Lasting Bind

Dolan Middle School will be replaced under Stamford’s ambitious school reconstruction plan (CT Examiner)


TwitterFacebookCopy LinkPrintEmail

The path is set for covering the cost of fixing Stamford school buildings, and taxpayers should prepare to dig ever deeper into their pockets for the next several years.

During that time, taxpayers should not expect major improvements to parks or other non-school city property.

That was the message that came with the final vote of the budget season, when members of the Board of Representatives Wednesday night approved a Board of Finance recommendation to increase taxes enough to raise $15 million for a school construction fund. 

Last year both boards approved a tax increase that raised $20 million, creating the original contribution to the fund.

Taxpayers can expect the same next year, Board of Finance Chair Richard Freedman said during a special Board of Representatives meeting to vote on the higher tax rate. 

An analysis by the state Office of School Construction found that if the city bonds $35 million for school projects for each of the next few years, “we will need a minimum of $15 million a year” in cash, Freedman told representatives. 

Beyond raising taxes to fund the school construction reserve, taxpayers will have to cover the cost of a significant increase in the amount of money the city borrows by issuing bonds.

In each of the last two fiscal years the city bonded $40 million, Freedman said, but in 2023-24 the amount will be $70 million, which comes with interest payments of several million dollars a year.

The borrowed $70 million will be split evenly between city and school projects, Freedman said.

“The city has its own significant capital needs – repave streets and sidewalks; the parks need a lot of work, city buildings need work. There are a lot of demands,” Freedman said. “We didn’t want to cut that, but we knew we had to fund the (schools) plan, so we had to go up to bonding $70 million, and we will for the coming years.”

A typical tax bill of $10,100

The average Stamford homeowner can expect to pay 4.3 percent more in property taxes on July 1, when the next fiscal year begins. But some taxpayers will have a smaller increase, and others will pay much more, because the latest state-mandated property revaluation was based on prices driven to new heights by a pandemic house-buying boom.

Under the new mill rates for Stamford’s four taxing districts, which got final approval Wednesday, a single-family house assessed at $400,000 – roughly the average assessment – will pay $10,100 in District A taxes in 2023-24.

Residents will find out exactly how their taxes changed when they get their bills at the end of next month.

The new property valuations were so high – 25 percent more for the average single-family home – that city representatives and finance board members voted to phase it in over two years. 

So 2024-25 tax bills will be boosted by that, and likely by a tax increase that will be added to contribute, again, to the school construction fund.

The work on school buildings will cost $624 million over the next six years, Freedman said during Wednesday’s meeting.

“There are 18 schools in the plan,” he said. “Every school will be renovated or replaced.”

The biggest project is reconstruction of Westhill High School on Roxbury Road, which opened in 1971. The cost of that project has been revised upward, from $260 million to $301 million, even before it begins.

The nearby Roxbury Elementary School also is slated for reconstruction, at a cost of $86 million.

The Board of Education wants to build a new $158 million school south of Interstate 95, using a building on Lockwood Avenue for grades K-4 and the campus of K.T. Murphy Elementary School on Horton Street for grades 5-8.

A series of smaller projects at multiple schools will cost $79 million, Freedman said. 

The rules of reimbursement

Of the total $624 million cost, Stamford taxpayers must cover $269 million, and the state will reimburse the city for the remaining $355 million, according to Freedman.

But it’s reimbursements, not up-front payments, and that makes things tricky, Freedman told city representatives.

It’s why the city needs to keep cash on hand – and why the elected boards have voted to add a tax increase and hold that money in a school construction fund, he said.

The state, for example, will reimburse the city for 80 percent of many of the Westhill costs, he said. But “when Westhill is under construction, we might get $10 million in bills a month. It would be nice to send the bills to the state and say, you pay $8 million and we’ll pay $2 million. But that’s not how it works. We have to pay the whole $10 million and then we have to wait about 120 days to get the money from the state.”

Beyond that, he said, “the state retains 5 percent of every invoice until the end of the project, so if we have a $300 million project like Westhill, the state will retain $15 million and we have to float that for four years, because that’s how long it will take to build Westhill.”

Over each of the six years of school construction, the city will need $47 million on hand, he said.

Another reason to have cash on hand is that bonding costs taxpayers money, Freedman said. If, instead of collecting $15 million in tax revenue, the city bonded that amount, it would have to pay back not only the $15 million but – at 4 percent over 20 years – another $6.2 million in interest.

“We would rather not pay that if we can avoid it,” Freedman said. “Over time that really adds up to a lot of money.”

Elected officials also should take a close look at aspects of the school projects that do not qualify for state reimbursement, such as replacing Westhill’s pool, Freedman said. 

“That’s about $10 million in non-reimbursable expenses right there,” he said. “I have made it clear to the director of operations and the mayor that I think the decision of whether to put a pool into Westhill is an issue of public policy and it needs to come back to both boards.” 

Big city projects on back burner

When the finance board chairman completed his presentation to city representatives, they had questions.

City Rep. Bradley Bewkes said his constituents in District 1 have waited for years for the city to make improvements at Cummings Park and beach.

“Just so we can set expectations for residents and taxpayers, will you explain what the sacrifices will be?” Bewkes said. “Is it safe to say that, until these school projects are finished in 2030, no other major projects will be manageable?”

“Depending on what you define as major, I think that’s a pretty accurate statement,” Freedman said. “On the city side, a $5 million project is considered pretty large. We will have a limited capacity to fund those, unless we decide at some point that we [can] raise more capital” by raising the tax rate.

City Rep. Megan Cottrell said she thinks the school construction reserve should be funded as necessary.

“In 2009 there was a report that showed the schools needed $174 million in repairs, and less than half that was funded,” Cottrell said. “What was a $174 million problem is turning into a $600 million problem because it was not dealt with promptly. … When we try to go cheap on school repairs, it hits us later.”

City Rep. Jeff Stella said that when school officials were talking about renovating buildings about four years ago, “we were told we had to sell the land to developers and let them manage the buildings because we couldn’t afford” it.

“We were told there was no way to do this. Now all of a sudden there’s a plan,” Stella said. “We’re asking the taxpayers for a lot of money. Are we sure this is the only way, and the best way, to pay for these ventures? I’m not really sold on this.” 

What changed is that, two years ago, the state revised its school funding formula, Freedman said.

“Stamford used to receive 20 percent state reimbursement for new construction. Now we’re receiving 80 percent for Westhill and 60 percent for everything else,” Freedman said. “That totally changes the financial calculations that we can make. A main reason Stamford never really addressed school construction problems for decades was that we never could afford it because reimbursement from the state was way, way too low.” 

Stella was one of two representatives on the 40-member board to vote against the extra tax to raise money for the school construction fund. The other “no” vote was city Rep. Anabel Figueroa.

Angela Carella

For 36 years prior to joining the Connecticut Examiner, Angela Carella was a beat reporter, investigative reporter, editor and columnist for the Stamford Advocate. Carella reports on Stamford and Fairfield County. T: 203 722 6811.