Council Continues Debate on High School Cost AsAdministration Lays Out Payment Plan

By Adam Swift

The mayor and his administration have come up with the outline of a plan that shows how the city will be able to pay for its share of a new high school without a debt exclusion or override vote.

Monday night, the City Council held its latest in a series of ways and means subcommittee meetings on the funding and status of the high school project. City and school administration officials are asking the council to approve a schematic design plan to submit to the Massachusetts School Building Authority at its Feb. 27 meeting.

In addition to information on how the city could fund the debt service for the proposal, consultants also presented a final schematic design cost estimate for the project of just over $470 million. That number is still above the estimates from a year ago, but continues to fall from the nearly $500 million number that was presented to the council at the end of last year. That presentation set off the chain of events that led to the most recent round of council subcommittee meetings on the project.

The estimated city share of the building costs has also continued to dip since December. According to Brian Dakin, the owner’s project manager from LeftField who has been the main point person on the design, schedule, and costs, the estimate of the city’s share of the cost after the expected MSBA grant now stands at just over $290 million.

Several times during Monday’s meeting, Dakin noted that time is money, and if the council does not approve the MSBA submission at the Feb. 27 meeting, it would mean additional costs and delays to the project.

While several councillors, chief among them Marc Silvestri and John Powers, spoke about the need to act quickly to make a decision on the project, several other councillors, including Dan Rizzo and Anthony Zambuto, continued to question the financial impact to the city of building on the Wonderland site.

Arrigo outlined how the city could handle the debt payments, which he said will start to reach about $17 million per year in 2028, through a program of setting aside free cash and building permit fees among other monies into a high school building stabilization fund. The mayor said Richard Viscay, the city’s Chief Financial Officer, will have more detailed information about the specific numbers at the next meeting on Feb. 27.

The mayor also noted that by about 2034, when city pension payment obligations are met and more new growth is realized through the massive Suffolk Downs development, the city will be able to more easily meet the debt payments for the high school project.

“We had a number of options that we placed on the table, and we certainly heard loud and clear that the council was not enthusiastic about some of the options that were presented at the time,” said Arrigo. “As we’ve been going through this process, as we’ve updated the cost and tried to manage that as much as we could, we started the process of starting to put together this financial plan.”

Arrigo said the plan would utilize the high school building stabilization fund that the City Council approved.

“What we are proposing is that we would generate revenue into that stabilization fund,” said Arrigo.

Among the revenue earmarked for the stabilization fund would be 30 percent of annual free cash, which Arrigo said typically averages about $4 to $5 million per year, and 50 percent of all building permit fees that are generated by Suffolk Downs. In addition, 50 percent of tax foreclosure funds that come into the city and 50 percent of all Community Investment Trust (CIT) Fund revenue would be put into the specialized stabilization account.

“The CIT funding, as many know and as many ward councillors know, when new development is happening in the city, on top of permit fees and other fees that developers are required to make, there is this community development trust fund that was created,” said Arrigo.

The mayor noted that there are also several other potential funding sources that may end up in city coffers, including a potential cannabis excise revenue and gaming revenue, but those sources were not used in the school financing plan.

In addition, Arrigo said he wants to create a long-range financial planning committee to make sure all the pieces of the plan are working as they should and the projections are actually happening.

“This plan works if we are able to commit to capping spending in certain areas of general government, public safety, schools, public works, health and human services and cultural and recreation spending,” said Arrigo.

Arrigo noted that the spending caps do not mean that there will be cuts and layoffs.

“These spending limits, I will say, will not be popular, but they are things that we have control over,” said Arrigo. “I think what we have here is something that is minimally impactful to the taxpayer and something that is a plan that I hope everyone can get behind.”

Rizzo said he was glad to hear that things like layoffs, trash fees, and other increased fees and permits appeared to be off the table.

However, he said he still cannot get behind the city building the new school at Wonderland.

“There are huge ramifications for this city building at Wonderland,” said Rizzo.

While proponents of the Wonderland site have stated that there has been little interest in development on the site for decades, Rizzo said it doesn’t mean there will never be private development on the approximately 33-acre parcel.

“I truly believe that we can generate enough revenue from that site long term that we can fund this new high school so that whatever we make from Suffolk Downs can go back to the general public,” said Rizzo.

Zambuto also raised his long-held concerns that building on Wonderland would be a financial disaster for the city.

“The property is still valuable and can contribute to paying this enormous bond,” said Zambuto, who said the city should build on the current high school site.

However, Dakin said increased construction costs and the delay in building at the current site would create an estimated cost of $535 million. He added that there is also the danger that the MSBA would decide to either not fund the grants, or make Revere get back in line for the application process.

“I’ve been telling people for years that Suffolk Downs was going to lower the tax rate, like we were all telling people when it was up for a proposal,” said Zambuto. “How much of Suffolk Downs revenue are we going to have to use to pay for the high school?”

Arrigo said the proposal before the council only uses building permit fees from Suffolk Downs, not the $40 million or more annually the project is expected to provide in property taxes to the city at full buildout.

“When we get into Fiscal Year 35 and 40 and 45, the city is at a generous surplus because we will have that revenue coming in,” said Arrigo.

Silvestri said it is time for the council to make a decision on the high school building project one way or the other.

“I’m not saying that is going to be an easy process, I’m not saying just build out and (then) worry about how we pay for it,” he said. “But as a body, we need to make a decision; we are going backwards in this process. This process has been going on for almost three years, and we have been sitting up here for almost two years talking about how we are going to do this and talking about going back to the other site.

“We’ve got to make a decision on this and if it’s no, it’s no, but we have to come up with one,” Silvestri continued. “With further delays, it’s only going to get more expensive.”