04/18/14 — West: Wood should check math

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West: Wood should check math

By Steve Herring
Published in News on April 18, 2014 1:46 PM

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School board member Chris West, left, confers with John Grantham during Thursday's meeting. West accused the county commissioners of using poor math in their determination of the profits that would be seen by school architect Robbie Ferris.

The Wayne County Board of Education Thursday night acknowledged, but declined to follow, a recommendation from Wayne County commissioners that it approve the use of the design/bid/build method to construct two new schools.

Not only did the school board unanimously decide to stay the course on plans to use the capital lease method, Chairman John Grantham and other board members challenged how commissioners arrived at figures they called misleading. Member Dr. Dwight Cannon was unable to attend the meeting.

School board members said that both they and commissioners are committed to building new schools -- the only difference is the delivery method.

Commissioners would have to approve the lease.

Grantham said he has not spoken with any commissioner since their Tuesday decision, but that he felt certain the two boards would be able to reach agreement.

"I think that once the commissioners see what the real numbers are, they will come on board," he said. "It is all there in black and white. There is nothing hidden on that spreadsheet. It is all there.

"The only things that have risks in them now are the ones in the (spreadsheet) column for design/bid/build. The risks are not in ours anymore. We should come in under the (budget) numbers in our column. All of the fees for the contractor are fixed. The only variable in there now is construction costs."

The board's action comes just two days after a unanimous vote by commissioners that the county utilize the design/bid/build method to construct new high-performance (energy efficient) middle schools in the Grantham and Spring Creek communities.

During the commissioner's Tuesday session Interim County Manager George Wood called school board architect Robbie Ferris' original proposal "absolutely ludicrous." Wood said the capital lease method is the worst possible option to use and that would cost $3.4 million more than the traditional design/bid/build to construct the exact same schools.

Also, he said, the contract would allow the developer's profit to account for up to 26 percent, or $10.1 million of the estimated cost of $38.7 million to build the two schools.

"A lot of numbers have been thrown around in the last few months," school board member Chris West said. "But when we get down to it, we need to ensure that we are dealing with actual numbers, and numbers that are real. In his (Wood's) report, he makes mention of the fact that Mr. Ferris stands to make almost $10 million on the projects.

"This is just totally not true. He (Ferris) has presented the numbers, and we have gone through this report. I want to point out that we have legitimate numbers to back this up that this $10 million figure is just not so. I don't know if it is a mistake on his (Wood's) part, or an oversight, or maybe he didn't understand the numbers we are dealing with in here to determine what his (Ferris') profit will be. There is almost a $5 million error there in my opinion. He does not stand to make $10 million."

Grantham said he also didn't understand Wood's comments that other options would have had been available had the school board told commissioners upfront that it was ready to seriously look at school design.

"For one thing, we have had this building plan out for 12 years," he said. "If that is not enough upfront notice you would be hard pressed to find out what would be."

The lease option has been discussed by the school board for months, Grantham said.

Last night's meeting lasted about an hour as the school board and attorney Jack Edwards crafted a rough draft of a resolution to be sent to commissioners. Board members also went over a spreadsheet comparing the numbers from both methods.

In the resolution the school board cites the "substantial" overcrowding at Spring Creek Elementary and Spring Creek High schools as well as the rundown conditions of older buildings on the Grantham campus to support the need for building the two new schools as quickly as possible.

The capital lease lends itself to that while, design/bid/build will delay it, Grantham said.

School board member Arnold Flowers said that the Spring Creek schools are over capacity by about 300 students each.

The new Spring Creek Middle School will be built for 750 students. Pulling 300 students each from the elementary and middle school will mean the new school will be just 150 students shy of its capacity when it opens, Flowers said.

Also, the resolution will point out that a school Ferris built in Hoke County was recently selected the top new school in the nation out of more than 700 that had been nominated. The Wayne County schools would be modeled after that school.

The school board also addressed commissioners' concerns that the capital lease would jeopardize the county being reimbursed for an estimated $1.2 million in sales tax associated with the project.

Grantham said that Ferris and his attorney had been assured by state officials the county would be reimbursed. That assurance has not been put in writing yet, he said.

"They (Ferris) are certain enough that we will be refunded on the sales tax that they are willing to put the equivalent amount of sales tax into a trust fund at the front part of the job so that there will be no risk that the school board won't be able to get it," Grantham said.

If the sales tax is refunded, the trust fund would go back to Ferris. If it isn't, the trust fund would go to the county, he said.

"If the scenario presented to commissioners was and accurate presentation, then we would agree it was ludicrous," Grantham said after the meeting. "But it was not an accurate presentation of what we are doing here."

Wood's comments that Ferris' compensation could reach 26 percent is "not even in the ballpark," Grantham said.

"He (Wood) uses sort of a conglomeration of several iterations of the process," he said. "It really doesn't make sense to us how he came up with it."

Grantham said he thought Wood had come up with his numbers by "cherry picking" different items from different stages of the negotiations and lumping them all together.

Some of those items "went away" from one stage to another, but Wood kept them in the breakdown, he said.

The percentage for the architectural fee is around 8 percent, and all of the fees for financing are the same in either scenario, Grantham said.

The 8 percent is somewhat higher than normal, but then the project is more complicated, and there is more development, he said.

Also, junking the capital lease method in favor of design/bid/build would delay the project by months -- a delay that inflation in construction costs could mean an increase in project costs of hundreds of thousands of dollars, Grantham said.

The impact of that inflation was not taken into account in the commissioners' figures, he said.

"As George (Wood) said, that is 'ludicrous,'" Grantham said. "The big factor to us, other than being able to make the schedule happen, if we go with this scenario that we have now they will have bids in here on the work by April 30.

"No way you can do it the other way. You are going to have to go out to advertise for a CM (construction manager), interview the CM and get his documents together and rebid it. The delay would be inevitable."

Ferris' proposal already has a construction manager figured in, he said.