SPPS Builds: Major Capital Improvement Projects
SPPS Builds is the District's commitment to provide students, staff and community members with high-quality, safe physical environments. SPPS owns 73 buildings, 7.7 million square feet, and over 500 acres of land. While all buildings and grounds undergo regular maintenance as part of daily operations, sites need to be modernized to keep pace with 21st century teaching and learning.
The importance of flexible, adaptable physical environments that support a variety of learning styles play a vital role in the academic success of students. To provide students and teachers with high-quality, responsive learning environments, each year, SPPS identifies which of its school buildings should undergo major capital improvements (defined as projects budgeted at $2 million or more).
Those priority projects are outlined in the District’s Five-Year Facilities Maintenance and Capital Implementation Plan (5 Year Plan) which schedules which sites are to undergo major capital improvements over the next five years. The 5 Year Plan is updated annually to account for unexpected circumstances both internal and external to the District which in turn may impact which projects are prioritized for improvements.
Provided below is information related to the current 5 Year Plan such as project budgets and other financial details.
Interactive Map of Major Capital Projects
An interactive map is available outlining which schools and other buildings are being prioritized for improvements based on the District's criteria for prioritization. The criteria is founded on the District’s Facilities Standards developed through the Facilities Master Plan. An overview of the District’s facilities with summary information is also available.
Financial information for current capital improvement and deferred maintenance projects are provided below. These financials are updated on a monthly basis. and available to the District to finance capital projects and facility improvements.
Project Budget Compliance Overview
The bar graph below outlines the total budget of all current capital improvement and deferred maintenance projects. That budget is compared to the Board of Education-approved project budgets and current forecasted total cost of completed projects with how much the project funds have been invoiced.
Project Financial Details
Detailed information on individual project budgets are available for viewing in the spreadsheet below. Financial updates are provided on a monthly basis.
Board of Education Approval Process
Gate Check 1: Five-Year Capital Improvement and Deferred Maintenance Implementation Plan
Work identified in the five-year plan has been prioritized over the represented five-year horizon. Specificity of scope, schedule and budget vary for projects contained in the plan.
Board action requested: Approval of prioritization of work as represented in the plan.
Gate Check 2: Project Charter
The project charter is a product of internal pre-design work for projects estimated to be over two million dollars. The project charter contains the defined scope based on the evaluation of building condition, programmatic need, and initial stakeholder engagement. The preliminary schedule and project estimate are included.
Board action requested: Approval of the project charter indicating acceptance of the identified scope and understanding of the project schedule and rough order of magnitude of cost. Approval indicates the Board’s direction to issue a request for proposal to secure design services.
Gate Check 3: Project Budget
Once a project has moved through schematic design, solutions have been identified and developed with sufficient detail to estimate a construction cost and set a final project budget. Finalization of the design and construction drawings will be informed by this budget.
Board action requested: Approval of final project budget. Approval indicates the Board’s direction to proceed with construction bidding so long as the project remains within the allotted budget.
Gate Check 4: Construction Award
Per public procurement practices, work will be advertised for bid and bids will be received by the Purchasing Office and vetted for response compliance. Project consultants will vet the value of bids against anticipated costs and provide the District with a formal recommendation to award based on the lowest responsible bid.
Board action requested: Approval of vetted and recommended vendors to award work and enter into contractual agreement for construction.
Gate Check 5: Project Closeout
This gate check will be presented at the beginning of the project closeout phase and again upon final fiscal closeout of the project. The project closeout period begins at substantial completion of construction. The Substantial Completion certificates indicate beneficial occupancy and shift of focus to completion and inspection of punchlist items and entry into warranty period. There are still outstanding financial obligations during the closeout phase of the project, but an initial evaluation of the overall use of budget can be conducted. The second presentation of this gate check will occur when all contractual obligations are complete and all final payments have been issued. This can occur twelve to eighteen months after completion of construction. Except in the rare circumstance in which Substantial Completion and final closeout occur simultaneously, the Board will see the following two reports during this gate check:
- Gate Check 5.1: Initial Project Closeout (Substantial Completion)
- Gate Check 5.2: Final Project Closeout
Board action requested: Acceptance of report(s).
Definitions of Project Financial Information
Budget: Final project budget approved by the Board of Education.
Committed Costs: Contractual obligation of funds for project work.
Invoiced to Date: Invoices are submitted and approved through Procore, the project management environment used by the District. The value represented indicates all invoices submitted and approved by the project team.
Construction Award: Total of all construction contracts.
Construction Cost Changes: Value of all change orders issued to construction contracts.
Percent Change: Calculation of construction change orders against total construction award.
Total Forecasted Cost: Anticipated cost of the fully delivered project at the time of the report including known committed, pending, and potential costs as identified by the project team.
Funding Structure and Options
When SPPS schools need building-system replacements, renovations, additions or a new building, construction projects are mainly funded through the property taxes (tax levy) of Saint Paul residents. Taxes are used to pay for construction projects in two ways:
- Pay-as-you-go/PAYGO: Paying for projects using today’s dollars, similar to paying for the purchase of a house with cash to avoid paying the interest on the principal of a loan. This payment method is referred to as “PAYGO.”
- Debt repayment over time: Paying a debt/loan plus the interest over a period of years, similar to paying off a mortgage of a house (principal plus interest). These loans are called “bonds” or “capital leases” depending on the funding source; in either case, investors provide the money at the front end while property taxes are used to pay investors back over time.
There are four ways to structure the funding of and paying off the debt on building improvements (also known as capital improvements). The state of Minnesota regulates each of these funding structures. Each year, the Board of Education approves the funding sources and related levied and bonded amounts. The graphic below shows how funds raised through the tax levy functions with these four funding/payment structures.
Tax Levy - Pay-as-you-Go/PAYGO:
The District determines how much will be needed for projects in the next fiscal year and then property taxes are collected (levied) that calendar year to cover the needed amounts. This funding streams is called the Long Term Facilities Maintenance* PAYGO (LTFM aid is also provided by the State with this funding source). Funds are available to pay for projects up front. PAYGO has the highest, immediate impact to taxpayers, but avoids long-term debt for a district. (Minnesota Statute 123B.595)
Tax Levy - Pay debt over time through the following means:
SPPS pays back payments over 20 years by using the annual tax levy to pay the principal (amount borrowed from the lender) plus interest. This method lowers the yearly tax impact on taxpayers but adds long-term debt to the district. This funding streams is called the Long Term Facilities Maintenance* Bond. A bond is essentially a loan agreement between an investor (lender) and the District. The bond is rated by rating agencies and sold to investors—think of a bond rating like a credit score which can be strong or weak depending on overall financial health. If a district has strong credit, the bond is worth more and is highly sought after, leading to potentially lower interest rates over the term of the bond.
Certificates Of Participation (COP): COPs are “leases” but treated similar to traditional bonds and are rated by rating agencies. An application to and approval from the Commissioner of Education is required for a COP lease to be issued. Note: COPs are tied to the District’s Desegregation Plan. (Minnesota Statute 126C.40)
Capital Bonds: Capital bonds are specifically used for building improvement projects. Bonds are used to borrow money with the promise to repay the money within a specified time and interest rate; this option has the lowest interest rate. SPPS has state authority to issue up to $15M worth of bonds annually. (Minnesota Session Law 2013 , Chapter 116, Article 6, Section 8)
(*Long Term Facilities Maintenance (LTFM): A ten-year capital plan (including health and safety projects) must be approved annually by the Board of Education and submitted to the Commissioner of the Minnesota Department of Education by July 31. Minnesota Statute 123B.595)