Improving the City and School District Partnership
by Jeff Gudman
The City and Lake Oswego School District (LOSD) leaders agreed by at least 2020, if not sooner, to evenly split the capital construction costs of an aquatic and recreation center that is now planned for a chunk of the property at the municipal golf course on Stafford Road. But that it not the way it appears to be working out, with the City on the hook for an increasingly larger share of a rapidly growing price tag.
Initially, the project was projected to cost $30 million, not including transportation improvements to surrounding roadways, etc., with capital costs to be shared equally between the City ($15 million) and the LOSD ($15 million). According to the most recent report to the City Council, however, the projected capital cost of the aquatic/recreation center now is $36 million and change (still not including transportation improvements). Yet the School District’s contribution remains at $15 million. Meanwhile, the City’s share has ballooned to $21 million and change – a $6 million increase that will be paid by deferring or eliminating other Parks & Recreation projects and using Parks reserve funds.
That is certainly a worrisome trend, especially when you consider that the project is still in the planning stages and is not even scheduled to break ground until summer 2022. Will the City’s share continue to increase exponentially? And is that fair, given that School District teams will likely have priority access to the pool and other facilities?
To be fair, shared-use arrangements between the City and the LOSD are still being worked out. Also being discussed is the appropriate sharing of the net (revenue less expense) operating costs of the aquatic/recreation facility, which audited School District reports put at about $100,000 a year for the smaller existing pool prior to the Covid pandemic.
Nevertheless, the School District’s capital contribution remains at $15 million because all of the capital dollars from its upcoming $180 million bond measure on the November ballot are committed to rebuilding Lake Oswego Middle School and River Grove Elementary School; modernizing science, technology and engineering labs at the high schools for expanded STEM and career technical education; addressing capital priority repairs like replacing roofs, HVAC upgrades, seismic upgrades, etc.; improving accessibility; and making safety and security upgrades in facilities district wide.
Those projects’ capital costs include contingency funds, as they should, but no money has been allocated to possible increases in the cost of the planned aquatic center. Indeed, there has been no assignment whatsoever of possible bond premium monies from the proposed $180 million measure or interest earned on the difference between the timing of the issuance of the bonds and the expenditures of dollars for projects.
The bond premium is the amount of money the School District will get because of issuing more debt than anticipated compared to projected cash flows or if it receives a lower interest rate when the bonds are issued than it had included in its budget projections. The LOSD also is likely to receive interest income for the period between when the bond money is received and when it is spent by the district.
For the sake of comparison, audited LOSD financial statements for 2017-18 show the last school bond measure approved by voters yielded a bond premium of approximately $17.8 million. Given the likelihood of a similar financial result, it becomes absolutely clear that equalization of capital contributions for the proposed aquatic/athletic/recreation project, including transportation improvements, between the City and the School District should be the goal.
The City should demand that any bond premium and interest earned be allocated to increasing the LOSD’s share to 50 percent of the final capital cost of the aquatics/recreation facility, including transportation improvements. If the projected cost of the aquatics/recreation center and needed transportation improvements rises above the $36 million plus projected today, the goal should still be equal contributions. There really is no other conclusion, especially when you realize that the School District has a bigger tax base than the City; that the LOSD will have priority access to the pool(s); and that the City is doing the School District a favor by letting the LOSD get out of the “pool business.”
The City in turn can use the money it will not have to spend on the aquatic/athletic/recreation facility and associated transportation improvements for other Parks & Recreation projects, including the purchase of land already for sale in the Stafford area. That will allow all of the residents of the city to cast our imaginations forward toward future needs, while at the same time understanding what is truly essential versus merely desirable.
Past Member – Lake Oswego City Council 2011 – 2018
4088 Orchard Way
503-697-7150
Please note the column is a reflection of my views and not necessarily those of the City Council
