Sunday, June 30, 2024 | 2 a.m.
Cahlan Elementary School, built in 1963 and one of the oldest grade schools in North Las Vegas, was to be rebuilt from the ground up and rechristened in 2029.
Robison Middle School, opened in the east side of Las Vegas in 1973, was to be converted in 2027 to an “early college” for students who want to work toward an associate’s degree and high school diploma at the same time.
But inflation means those and several other aging schools will have to wait, Clark County School District officials say.
If the district doesn’t tap the brakes on its current construction campaign, it could run out of money before completing every project it has mapped out in its plan — a $7 billion-plus bond program launched in 2015 and plotted out through 2035.
As significant as it is to the local construction landscape with its steady flow of building projects, the massive CCSD still feels the pinch of inflation. The pressure is enough that district officials now want to put off the rebuilding of 18 schools because of ballooning costs.
Since the district started its current era of building less than a decade ago, “inflation rates have been out of control nationwide,” Jason Goudie, CCSD’s chief financial officer, told the district’s bond oversight committee earlier this month. “We’ve seen schools go from costing $29 million-$30 million, to $50 million.”
Schools that CCSD planned to replace between 2027 and 2034 will be delayed by a year, pending future school board approval, district officials now estimate. They are mostly located on the east side and in older neighborhoods in North Las Vegas and the west valley, and were built, on average, 56 years ago.
CCSD last revised its bond-funded capital improvement plan about two and a half years ago, adding and rearranging projects in a district where major construction is continuous to maintain the facilities needed to cover 8,000 square miles and educate about 300,000 students. But “economic realities” have accelerated, said Brandon McLaughlin, an assistant superintendent for the construction and development division.
The cost of construction materials has climbed, on average, 42% since 2020; competing large-scale projects around the valley have given builders an upper hand in the market; and CCSD’s enrollment is shrinking.
“Some projects may no longer be able to be funded if we don’t take action,” McLaughlin told the committee, which confers with administrative staff and advises the board on school development, on June 20. “Projects will naturally start to self-select if no action is taken.”
Tens of millions more
According to a summary of bond-funded construction, most projects in progress or planned to open within the next two years are going over the estimates. CCSD sets aside contingency funds, or financial cushions, as is industry standard. But often, costs now blow well past even what McLaughlin called the “uncomfortable percentages” of 15 to 20% over budget.
For example: Woodbury Middle School, which opened on the east side in 1972, is being completely rebuilt for $111.5 million. It was estimated to cost $80 million less than three years ago.
In semirural Laughlin, the 38-year-old elementary school building is being decommissioned. A new classroom wing and additional gym are being built at the junior/senior high school a few miles away to make it a K-12 campus. Costs for this conversion shot up from $25 million to $61.7 million.
Comprehensive modernizations — or major upgrades and refurbishing — are relatively smaller projects, but at the 33-year-old Green Valley High School in Henderson, costs went up from an estimated $46.8 million to $68.3 million. At the 23-year-old Darnell Elementary School in Centennial Hills, costs climbed from $5 million to $15.2 million.
These projects are going forward as planned. But they do so with cost increases of 39%, 147%, 46% and 204%, respectively.
Citing the U.S. Bureau of Labor Statistics’ Producer Price Index, McLaughlin said that over the last four years, the cost of plumbing fixtures and fittings has increased by 19%, lumber and wood by 26%, insulation by 43%, iron and steel by 50%, and crude petroleum by 75%, among other commodities.
Add to that market saturation, or the demand on the local construction workforce that has allowed craftspeople to be choosier on what they bid. In addition to CCSD, which says it plans to inject more than $60 million in construction dollars into the local market in July alone, other public agencies, Formula 1 and development on the Strip have affected labor costs in favor of contractors.
CCSD now can get only one or two bidders for its large projects, making pricing not competitive, McLaughlin said.
“There’s a lot of work out there and we’re starting to see some of that selectivity by some of our contractors,” he said. “So being able to ratchet down and be very strategic about it is maybe a goal that we want to have in this revision.”
Bonds will always be needed
In addition to the push-pull of supply and demand, Rick Baldwin, a director in the district’s demographics office, noted that CCSD’s enrollment has been trending down. Birth trends affect that. A baby boom around 2007 will make the senior class of 2025 CCSD’s largest ever, but the boom happened at the start of the Great Recession. Since that economic disruption, births have declined.
With kindergartners entering in smaller numbers than the large high school cohorts aging out, CCSD expects to lose about 5,000 students over the next three years, Baldwin said — lessening urgency to build or rebuild.
The deferrals also allow CCSD to rethink how it spends its dollars, perhaps refurbishing instead of rebuilding entirely.
“Pushing the project timelines a year allows us to not make $100 million, $200 million commitments that we might not want to be making,” McLaughlin said.
Rejecting bids and re-advertising projects is an option, which CCSD did when it needed to upgrade the electrical at Chaparral High School. Even after the rebid, the project is going ahead at a cost of $31.4 million. CCSD had been expecting to spend about $11.6 million.
Rodney Foutz, who heads up CCSD’s facilities and bond fund financial management, said rebidding can be a gamble, with second rounds bringing in bids at the same amount or even higher.
Bonds work similarly to loans. With bonds, a school district will ask local taxpayers to increase property taxes. The district then issues and sells bonds, using the proceeds from the increased taxes to repay its bond holders, or lenders. In 2021, the Nevada Legislature granted another extension to an allowance that gave school districts the authority to continue to issue bonds without going back to local voters for additional approvals.
Goudie said that even with more than $7 billion at its disposal for projects planned through 2035, CCSD has $12 billion to $13 billion in capital improvement needs.
“We will never in this district not have the need of continuing to bond to ensure that we can keep schools open, refurbish, remodel, rebuild, etc.,” he said.
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