KansasCity,KansasPublicSchools2016-2021BondReferendum

ChallengesandRecommendations

ShallUnifiedSchoolDistrictNo.500,WyandotteCounty,Kansas(KansasCity),issuegeneralobligationbondsinanamountnottoexceed$235,000,000,topaythecoststopurchaseandimprovesites,todemolishcertainexistingfacilities,andtoacquire,construct,equip,furnish,repair,remodelandmakeadditionstobuildingsusedforschooldistrictpurposes,andallothernecessaryimprovementsrelatedthereto,andtopayfeesandexpensesrelatedthereto;allpursuanttotheprovisionsofK.S.A.10-101etseq.;K.S.A.25-2018(f);K.S.A.72-6761;andK.S.A.75-2315etseq.?

February,2018

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HistoryoftheNovember,2016BondReferendumIn2015,withschoolbuildingsthataveraged57yearsofage,theKansasCity,KansasPublicSchoolsdecidedthatitwasimportanttotakestockofthefacilitiesneedsofthedistrict,andthecapacityofexistingbuildingstomeetthoseneeds.Thedistrictengagedexpertsinthefieldsofengineering,architecture,andconstructiontoanalyzeschoolfacilitiesandproduceacomprehensivefacilitiesstudy.This18-monthstudyidentifiedover$500millioninfacilitiesneeds.Whatwasclearwasthatithadbecomeincreasinglydifficultforsomeofthedistrict’sfacilitiestomeetthelearningneedsofdistrictstudents.Subsequentpollingofthecommunityindicatedthatthecommunitywassupportiveofaplantoaddressthesefacilitiesneeds,butthatthecommunitywouldonlysupportsuchaplanifitdidnotincreasetaxes.Inordertodevelopaplantoimprovedistrictfacilitieswithoutraisingtaxes,thedistrictbroughttogetheradiverse,talentedandengagedgroupofcommunityvolunteers,includingparents,communitymembers,currentandretirededucators,businesspeople,non-profitleadersandrepresentativesoftheUnifiedGovernmentofWyandotteCounty,toformaCommunityVisioningCommittee.Thecommitteeexaminedinformationprovidedbyateamofexperts(includingarchitects,engineersandschoolplanners),andassistedthedistrictindevelopingalong-rangefacilitiesplan.ThecommitteeultimatelyrecommendedthattheBoardofEducationaskthevoterstoapprovea$235million,no-tax-increasebondreferendum.Thisreferendumwasapprovedby79%ofvotersinNovember,2016.What’sintheplan:

• Safetyandsecurityenhancementsatallschools,includingnewsecuredentrances• Twonewelementaryschoolsandtwonewmiddleschools,replacingexisting

buildingso NorthwestMiddleSchoolo CombinedCoronado/WestMiddleSchoolo CombinedBethel/WhiteChurchMiddleSchoolo WelbornElementarySchool

• HighschoolCollegeandCareerAcademyspacesandtwonewmodernsciencelabsineachhighschool

• Middleschoolcareerexplorationspacestoenhancestudentopportunitiestodiscovercareeroptions

• Kitchenconstructionandupgradesatonemiddleandsixelementaryschools• Nineelementaryschoolswillreceiveplaygroundimprovementsspecifictotheneeds

ofeachschool• Buildingremodelsandrenovations

Additionalconsideration:BondproceedsmustbeexpendedaccordingtoaschedulesetforthbytheIRS,ortheylosetheirtax-exemptstatus,whichwouldleadtolitigationwiththebondholders.Spendableproceedsmustbeexpendedaccordingtothefollowingschedule:Year1–10%spent;Year2–30%spent;Year3–60%spent;Year5–85%spent.

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NewConstruction–NorthwestMiddleandWhiteChurch/BethelElementary:ChallengesandSolutions

DesignChallenges–TheoriginalplanforthebondapprovedbyvotersinKansasCity,KansasinNovemberof2016includedanewNorthwestMiddleSchool(builtonthesiteoftheexistingNorthwestMiddleSchool)andanewcombinedWhiteChurch/BethelElementarySchool(builtoneithertheWhiteChurchorBethelsites.)However,afterathoroughexaminationofeachofthepotentialconstructionsites,theBoardofEducationwasadvisedofchallengesinvolvingpotentialconstructionforNorthwestMiddleSchoolandthecombinedWhiteChurch/Bethelschoolconstructionprojects,duringameetingonJuly10,2017.

• WhiteChurch/BethelElementary–Originally,thecombinedschoolwasplannedfortheWhiteChurchsite.However,furtherexaminationofthesitedeterminedthatanewelementaryschoolwouldnotfitontheWhiteChurchsite,duetothecloseproximityoftheadjacentcemetery.(Thedistrictwasadvisedthattherewasastrongpossibilitythatunmarkedgravesexistedbeyondthecurrentfootprintofthecemetery.)ConsiderationwasgiventomovingtheconstructiontotheBethelsite.However,thatsiteonlyhasasinglepointofaccess,andconstructiononthatsitewouldcreateanunacceptableriskbymixingconstructiontrafficwithschooltrafficthroughthatsinglepointofaccess(includingschoolbuses,parentvehicles,andstudentwalkers.)Thedecisionwasmadetobeginlookingforotherpropertiestolocatethecombinedelementaryschool.

• NorthwestMiddle/WarehouseandCentralKitchen–TheoriginalplanwastobuildthenewNorthwestMiddleSchoolbuildingontheexistingNorthwestsite,whilecontinuingtousetheNorthwestsiteforschoolduringconstruction.However,itwasdeterminedthatitwasnotpossibletoorientandfitthenewschoolontheexistingpropertywhilemaintainingoperationoftheexistingschool.Itwasfurtherdeterminedthatthenewschoolwouldfitonlandcurrentlyownedbythedistrictatthebottomofthehill,wheretheexistingwarehouseandcentralkitchenarelocated,butthatwouldrequirerelocatingbothfacilitiesoftheexistingfacilities.

Challenges…Solutions

• TheBoardofEducationauthorizedtheadministrationtoengagearealtorandseekandrecommendpropertytopurchaseforanewwarehouseandcentralkitchenandanewelementaryschoolattheSeptember12meeting.

TheAdministrationhiredateamofprofessionalstobegintheprocessofsearchingforandacquiringproperty.Thisteamwasresponsibleforlocatingsuitableproperties,performingduediligenceonallproperties,andpresentingpotentialoptionstotheadministration,whichwouldthenputaproposalbeforetheBoardofEducation.

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ProfessionalTeam• RealEstateAgent–KCRegionalHomes,Inc.• DirectorofFacilities–KCKPublicSchools• CivilEngineer–MKECEngineering• ConstructionTeam–JEDunn• Architectural/DesignTeam-HTK

Thisteamwaschargedwithlocatingsuitableproperties,andperformingduediligence.TheBoardofEducationreceivedanupdateontheprogressofthepropertysearchonSeptember26,2017.AdditionalupdatesweregivenattheOctober19,November14andNovember28,2017BoardofEducationmeetings.PreliminarySearchforPropertiesforWarehouse/CentralKitchen

Themembersoftheteamreviewedmorethanadozenproperties,inordertodeterminetheirsuitabilityforrelocatingtheWarehouse/hutandCentralKitchen.ImportantconsiderationsfortheWarehouse/HutandCentralKitchenincluded:

• Warehouseo 15,000squarefeetofspaceo 3-4loadingdocksatappropriateheightforloadingandunloadingtruckso Accesstomainarterialstreets

• CentralKitcheno 10-15,000squarefeetofspaceo 2loadingdocksatappropriateheightforloadingandunloadingtruckso Centrallocationwithaccesstomainarterialstreetso Sufficientpowerforkitchenoperations

Thefollowingpropertieswerereviewed:

22N.6thStreet,-$550,000-Warehouse• 10,400SFofSpace

o Didnotmeetspaceneedsforthewarehouseo Onlyonedock,notraisedo Only400ampsofpower

33rdandParallelproperty–notlisted–CentralStatesConferenceCenterownership–Warehouse/Kitchen

• Theownerwasnotwillingtoselltheproperty

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927S.7thStreet-$805,000-Warehouse• 23,688SFofSpace(partofitleasedout)

o Alldockslowtoground,concernaboutaccesswithtruckso Notenoughpowero Concernedaboutdrainageonsite,waterinfiltrationo Roofoverentrywasinverypoorconditiono Suitableofficespace

1510S.42ndStreet-$1,395,000-Warehouse

• 40,000SFofSpaceo Toolarge,morethanhalfofspacenotuseable,demo15,000SF($62,000)o Concernedaboutofficespace,appearedtohavewaterinfiltration,have

totearoutandredoallofspace–obviousmoldthroughouto Askingpricetoohigh

3850Fairbanks-$2,200,000-Warehouse

• 12,724SFofSpaceo Endedupbeingsoldo Askingprice–prohibitive

7849Splitlog-$495,000–Warehouse/Kitchen

• 2.74acres–lando Notinterestedinlocationforwarehouse/kitchen–havetobuildboth

3627MinnesotaAve-$120,000

• 6.48acres–lando Concernedaboutusabilityofallofland–slopesdownonbackside–50’

dropo Concernedaboutwhatisbeingdumpedonthebackhalfofproperty–

havetoconfirmo Ownersoldpropertypriortousbeingabletocompletepreliminarydue

diligence

1112Cheyenne-$750,000-Warehouse• 15,000SFofspace

o Interiorclean,openo Availabledocksfortruckdeliverieso Goodlocationforwarehouseonly(notbigenoughforkitchentoo)o Officespaceneedstoberedoneo Electricalandroofingupgrades,nowaterinfiltrationthatwasnoticeable

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1929N.9thStreet-$249,000–Warehouse/Hut• 8,415SFofSpace

o Notlargeenoughforwarehouse

5938StateAvenue-$495,000–Warehouse/Hut• 7500SFofSpace

o Soldbeforewecouldlookatit

3138LeavenworthRoad-$50,000–Warehouse/Hut• Approximately7acresofland

o PublicsharedaccessthroughWestgateshoppingareao Pipelinethatrunsthroughtheproperty,limitinguseofsomeofthe

propertyo Accessonbackside–59thstreet–difficultfortruckstoaccesso Havetobuildwithlimitedspace

5604StateAvenue-$225,000(originalasking)–Kitchenlocation• 5.68acresofProperty

o ExistingBowlingalley–demo(estimatedat$50,000)o Negotiatedsalepriceto$195,000(requestedownertoconsiderdonation

ofproperty,declined)o Sewersrunthroughmiddleofproperty,mayhavetorelocatewithnew

building?o Enoughpropertytobuildkitchenandlocationiscentrallylocated

Warehouse/KitchenComparables/Viewed

Location SquareFootage Cost Av.Cost/SFAv.

Cost/Acre22N.6thStreet 10,400 $550,000 $52.8833rd&Parallel(Land) 12acres notlisted927S.7thSt 23,688 $805,000 $33.981510S.42ndSt 40,000 $1,395,000 $34.883850Fairbanks 12,724 $2,200,000 $172.907849Splitlog 2.74 $495,000 180,657$3627Minnesota 6.48 $120,000 18,519$1112Cheyenne 15,000 $750,000 $50.001929N.9thSt 8,415 $249,000 $29.595938StateAve 7,500 $495,000 $66.003138LeavenworthRd 7.00 $50,000 7,143$5604StateAve 5.68 $195,000 34,331$

Average $62.89 $60,162

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PreliminaryDueDiligence(Seebelow)• Administrationreviewedpropertieswithrealtorandcompletedpreliminarydue

diligencetodetermineusability.Twopropertieswerelocated:o DistrictcompletedpreliminaryduediligenceandmadeanofferfortheState

AvenuepropertyonSeptember29,2017forCentralKitcheno Districtcompletedpreliminaryduediligenceandmadeanofferforthe

CheyennepropertyonOctober4,2017forWarehouse

RecommendationsmadebyAdministration• BoardApprovedPropertyAcquisition:

o 1112Cheyenne–Warehouse–November14,2017o 5640StateAvenue–CentralKitchen–November14,2017

PreliminaryDueDiligenceProcess–Warehouse/CentralKitchenPriortoContractfinalization,theAdministrationperformedduediligence,inordertoensurethatthepropertiesweresuitableforpurchaseandconstruction.

1) EngageRealtor–toseekpropertiesforreviewwithestablishedcriteria

2) DirectorofPhysicalPropertiesdidpreliminaryreviewprocess• LocationandSquarefootage

o Accessiblelocationwithaccesstomainarterialstreetso Sufficientsquarefootageforwarehouse/centralkitchen

• AvailabilityofUtilitieso Sewers,water,electricityandgas

• Encumbranceso Easements–gas,highpowervoltagelines,etc.

• Topography/OtherPossibleDevelopmentIssueso Cut/Fill

• Accesso Conditionandtypeofstreetaccess

• OtherObstacleso Floodplain

3) CivilEngineer,Construction/DesignTeamworkedtogethertoreview

preliminaryduediligenceasrequested.

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PropertyReview–NewWhiteChurch/BethelElementaryThefollowingpropertieswerereviewedtodeterminesuitabilityforthenewWhiteChurch/Bethelelementaryschool:

8840LeavenworthRoad-$110,000Acres–14.32

• Thepropertyhadasteeptopography,withacreekrunningthroughit.Itwouldrequireapumpstationforsewer

3008N.91stSt-NotListedwouldsellAcres–8.7

• Thepropertyisinafloodplain• Topographyonthesiteincludesaverysteepbackhalfofproperty,along

withastreamrunningthroughproperty

9240Parallel-$250,000Acres–10.15

• Notenoughacreagetobuildduetotopographyissues;Rearlotaccess

1501N.90thSt-NotListedAcres–50

• Discussed–ownerdecidedwantedtoselltoadeveloper

8741Parallel-$2,404,799Acres–18.4

• CostProhibitive–Morethantwiceasexpensiveasnexthighestproperty

8846StateAve-$950,000Acres–9.4

• Thepropertywasextremelynarrow(330’wide)andnotsuitableforaschool

3308N.75th-$255,000Acres–16.68

• TopographyofthepropertyallslopestotheNorthwest• Theterrainwasrugged,withpossibly6acresuseable.Inaddition,sewerson

LeavenworthRd,mayneedpumpsystem

1841N.94thSt.-$520,354Acres–9.6

• ThepropertyislocatedoutsidecurrentboundariesofWhiteChurc/Bethelattendanceareas.Inaddition,acreekrunsthroughtheproperty,andtheterrainissteep

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8919LeavenworthRoad-$250,000Acres–.939

• Havetocouplewithtwootheradjacentproperties

8927LeavenworthRoad–(MakeOffer)Acres–.987

• Sameowner-• Havetocouplewithtwootheradjacentproperties

3033and2913N.89thTerr–(Makeoffer)Acres–4.661

• Bankowned–didnotmakeoffer–afterreviewingproperty

2906N.89thTerr-WyCoLandBankAcres–1.66

• Didnotpursueafterlookingatproperty

8833Waverly-$750,000Acres–14.7

• PropertytopographydoesslopefromcenterofpropertytotheNorthandWest,thereareaccessissuesoffof91stStreetthatcanandneedtobeaddressedtoensuresafeentryintotheproposedschoolproperty

• Flattensoutatcrest

PreliminaryDueDiligenceProcessPriortoContractfinalization,theAdministrationperformedduediligence,inordertoensurethatthepropertiesweresuitableforpurchaseandconstruction.

1. EngageRealtor–toseekpropertiesforreviewwithestablishedcriteria

2. DirectorofPhysicalPropertiesdidpreliminaryreviewprocess• LocationandAcreage

o Withinattendanceboundarieso 10+acresforconstruction

• AvailabilityofUtilitieso Sewers,water,electricityandgas

• Encumbranceso Easements–gas,highpowervoltagelines,etc.

• Topography/OtherPossibleDevelopmentIssueso Cut/Fill

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• Accesso Conditionandtypeofstreetaccess

• OtherObstacleso Floodplain

3. CivilEngineer,Construction/DesignTeamworkedtogethertoreviewpreliminary

duediligenceasrequested.

Properties–Comparables

NewElementarySchoolSite–PendingApprovedContract

DueDiligence–8833Waverly(14.7Acres)

1. PropertyAppraisal(101pages)• CompletedbyValbridgePropertyAdvisors• ValueConclusion(Appraisal)$670,000• Selleragreedtoreduceaskingpricetoappraisedvalue

Properties-Comparables8833Waverly

Acres ListPrice AvCost/Ac8833 Waverly 15 750,000$ 50,000$9800 ParallelPky 2.77 959,271$ $346,3078500 StateAve 11 2,395,800$ $217,80013755 ParallelPky 14.89 1,005,722$ $67,5438542 StateAve 1.42 309,276$ $217,8009746 ParallelPky 2.88 996,072$ $345,85810108 ParallelPky 0.94 163,785$ $174,2392300 N.99thSt 4.81 838,094$ $174,2403124 N.103rdTerr 7.38 849,000$ $115,0418846 StateAve 9.4 950,000$ $101,0648932 StateAve 1.23 135,000$ $109,756

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o CredentialsfortheAppraiser§ RecommendedbyRealEstateBroker(KCRegionalHomes,Inc.)§ ComprehensiveappraisalshouldbedonebyafirmthatholdstheMAI

certificationDescriptionofMAIDesignationbyAppraisalInstitute:

2. SoilBorings(37pages)• CompletedbyKansasCityTestingandEngineering(KCTE)• SoilBoringsfreeofrockandtypicalofareasoils.

3. MeetingwiththeUGStaff–UrbanPlanningandLandUse

• Mr.ClementsandBrianHill,EngineermetwiththeUnifiedGovernmentPlanningstafftoreviewproperty.

• Noconcernsidentified

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4. PhaseIEnvironmental(256pages)CompletedbyKansasCityTestingandEngineering(KCTE)

5. TitleCommitment(4pages)• CompletedbyStewartTitleCompany• Noconcerns–1930’slease–senttoattorney

6. Survey• CompletedbyMKEC–EngineeringSuccess• Utilitiesavailablealong91stStreet• Offsiteconnectiontosanitarysewer–havetoaccesstemporaryeasementfrom

adjacentpropertyowner

7. Access• SiteAccessevaluatedfrom91stStreet• Estimatedcostsforsiteaccessforsafety-$350,000-$500,000

RecommendationmadebyAdministration• BoardApprovedPropertyAcquisition:

o 8833Waverly–ElementarySchool–pendingduediligence/contractcontingencies–December12,2017

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BudgetSincetheapprovalofthebondinNovember,2017,thedistricthasupdatedfiguresforthebond,andanticipatesusingsavingsfromtheWelbornprojecttocovertheadditionalcostsofWhiteChurch/Bethelproject.

1.BudgetedCostsforNewElementary• $18,453,580• SavingsfrombidsonWelbornproject-$1,689,188• EstimatedtotalWelbornprojectcostsavings-$1,795,607

2.EstimatedAdditionalCosts

• $670,000–PropertyAcquisition• $450,000–Access• $125,000–Clearing• $1,245,000–TOTAL

3.TotalSavingsinBondProjectstodate:

• $18,574,820RecommendationtoBoardandSubsequentBoardAction–January23,2017TheadministrationrecommendedthattheBoardofEducationacquirethepropertyon8833Waverlyforthelocationofthenewelementaryschool(WhiteChurch/Bethel)pertheamendedcostof$670,000.TheBoardofEducationvotedtotablethatrecommendation,andtoengagetheservicesofanewappraiser,whowouldconductanewappraisaloftheWaverlyproperty.AdministrationpresentedtotheBoardalistofqualifiedappraisers,recommendedbyfourdifferentfinancialfirms,allofwhomholdthecovetedMAIdesignation.TheBoardchosenottoselectanappraiserfromthatlist,andinsteadselectedanappraiserfromKansasCity,Missouri,whoagreedtoperformtheappraisal.Inasubsequente-mailcommunicationwiththeChiefofOperationsthatappraiseracknowledgedthathewasnotqualifiedtoperformthenecessaryservices,andaskedtowithdrawfromthecontract.