Recently, Colorado Community Media, including Jeffco Transcript and Arvada Free Press printed an article by writer Bob Wooley about Jeffco’s Capital Improvement Program.
For
the most part, Wooley did a good job of attempting to explain a
financially complex program. However, there were some comments and
statements made by Jefferson Public Schools’ officials that were
misleading or downright false.
I’ve
outlined several of those areas below:
1.
The article states:
After
the Bond passed, the project’s estimated costs were increased by
nearly $32 million for a revised total of just under $737 million for
the program.
TRUE
– $32M
in hidden
costs were added to the program
After
the bond passed, $32M in costs were added to the flipbook for
the same list of projects.
The
use of $32M in contingency to
cover these costs was
essentially hidden.
2.
The article states:
District
officials say the increase was a result of changes in scope, market
conditions, incorrect estimates or various other factors like
asbestos removal, which were determined once the District was able to
perform more in-depth evaluations of each individual project.
PARTIALLY
TRUE – 81
schools’ cost estimates increased by EXACTLY 5%
While I agree that factors such
as scope changes, market conditions and incorrect estimates can
result in changed estimates, that doesn’t fully explain the extent
of the cost estimate changes between the first and second flipbooks.
The project costs for 81 schools, or nearly 60% of the total,
increased by EXACTLY 5%. This is not indicative of changes in
scope or incorrect estimates. That’s indicative of using Excel to
pad costs.
3.
The article states:
“We
told voters we would accumulate six
years of approximately $20 million
at the back-end to fill up the program,” Reed says.
FALSE
– Voters were told $23M
Voters
were told that exactly
$23M
annually in Capital Transfer would be accumulated. In reality only
$20.9M
annually is currently being transferred. That means
there is a
$12.6M shortfall in
stated revenue, again made up with Contingency.
4.
The article states:
“and
over $3.5 million was spent on hazmat expenses (which technically, do
not count as overages).”
FALSE
– Hazmat
costs ARE overages
-
Why
aren’t $3.5M in hazmat expenses considered overages? Any
decent construction project manager with 50 year old buildings
knows there is asbestos in those
buildings that will have to be mitigated. Mitigation costs should
have been factored into the original estimates.
-
Where
is the money coming from to pay for the hazmat expenses? It’s
coming from the District’s program contingency. Therefore,
technically, and for all intents and purposes, hazmat expenses are
program costs that reduce available contingency This is merely an
attempt by Reed to put lipstick on a pig to make $3.5M in overages
not seem like the $3.5M in overages hazmat costs really are.
5.
The
article states:
In
a document Reed says is now posted to the Capital Asset Advisory
Committee (CAAC) website, all budget variances are listed with
specific overage amounts and the reason for the cost variance.
FALSE
– This
document
lists variances against revised cost estimates, not original
estimates
This
document hides $32M in cost increases. That’s deception.
6.
The article states:
Therefore,
the precise amount of contingency that’s been spent on actual
projects thus far is $65,815,424.
FALSE
– The amount of contingency allocated is currently over $110M
$65M
from what Reed wants people to believe is the contingency spent, plus
$3.5M in hazmat, plus $32M in increased estimates plus $9M from
recent fields project = $110M in contingency allocated.
7.
The article states:
“I’m
not a construction guy,” Bell said. “But we have a construction
guy and I was speaking to him this morning and he said “you know, a
year ago the cost of steel was $53 a ton — today it’s $79.” A
year ago did anybody know it was going to go from $53 to $79? No.”
MISLEADING
– Cost of steel is only one small component of cost increases
Both Tim and Steve have told the Board on several occasions that they have been getting good pricing due to the pandemic. And, this report shows that non-residential construction costs have been relatively flat in Denver for the last 2 years, increasing by only 2.1% total over that time. In addition, there are numerous projects that had no steel involved that are significantly over budget. This is a misleading and deceptive statement.
8.
The
article states:
“According
to Tim Reed, Jeffco’s Executive Director Facilities &
Construction, the amount of contingency that had been spent as of
Feb. 22, was just over $81 million, of which nearly $12 million went
to charter schools…”
MISLEADING
to FALSE – $12M to Charters came from Bond Premium
The
agreement with District Charters was that Jeffco would share
approximately 10% of all bond proceeds with Charter schools. The $12M
Tim Reed is referring to is based on Charters’ share of accrued
interest and bond premium. This has nothing to do with District
contingency.
The
bottom line is that the Capital Improvement Program has already
spent
or allocated $24M over its original $86M contingency budget ($110M
total) only
2.5 years into the program. In addition, Jeffco has hidden
a $12M revenue shortfall from
Capital Transfer.
The
amount
of deception and lack of accountability for large cost increases is
truly unbelievable.
