Warwick City Council faces big decision on borrowing for two new high schools

Warwick is just one of the Rhode Island municipalities weighing the impact of inflation, construction costs, and interest rates as they pursue new school projects

A rendering of the proposed new Pilgrim High School in Warwick, Rhode Island.Handout

WARWICK, R.I. — The Warwick City Council on Monday will weigh whether this is the right time to borrow up to $350 million to build two new high schools — a decision that will have a big impact on future generations of students and on taxpayers.

Warwick voters have already approved replacing Toll Gate and Pilgrim high schools: A 2022 ballot question passed 58.8 percent to 41.2 percent.

But like other cities and towns in Rhode Island, Warwick is trying to gauge the impact of inflation, rising construction costs, interest rates, and supply chain issues in deciding whether to launch multimillion-dollar school projects now.

The Warwick City Council hired Ellana Construction Consultants for about $85,000 to check the school department’s cost estimates and to see if the two new schools can still be built for the budgeted amount of up to $350 million.

“That report showed that while costs have increased, the school department’s plans can still be completed within the budget,” City Council President Steve McAllister wrote in a Sept. 10 message. “The council did extra due diligence to review the plan and ensure it is feasible.”

So he sponsored Monday’s agenda item to issue the bonds for the project, and he plans to vote to borrow the money now. He said he has six cosponsors for his agenda item, so he expects it to move forward with support from most of the nine council members.

“Warwick is continuing to grow and has always been a great place to raise a family,” McAllister said. “Having two state-of-the-art high schools will be a true asset for the community. More families will look to move to Warwick so their children can learn in first-class facilities with some of the top teachers in the state.”

But he acknowledged the project will increase Warwick taxes even if the state reimburses the city for up to 52.5 percent of the project costs.

“Even with this reimbursement plan, this project will have a major impact on the city budget for years to come,” McAllister said. “There is no question that taxes will be raised to cover the costs of borrowing these funds. Additionally, all the other city expenses will continue to rise, which will further increase costs for the taxpayers.”

For those reasons, City Council member Edgar Ladouceur said he plans to vote “no” on the borrowing. “Some want to say I’m anti-education, but I’m anti-maximum tax increase,” he said. “This is not Monopoly money. These are taxpayer dollars.”

Ladouceur said Warwick’s student population has plunged in recent decades, so he’s not sure the city still needs two high schools. He said construction costs have been rising rapidly, and he is not confident that two new schools can be built for less than $350 million.

While he might be the only vote against the borrowing, Ladouceur said, “I’ve been alone in a fox hole before, and I have no problem being alone in a fox hole again. My job is to protect the best interests of the taxpayers.”

Robert Cushman, a former Warwick City Council and School Committee member, argued that the city is in no position financially to undertake a project of this magnitude. He warned that Warwick will end up with about $1.4 billion in liabilities when the high school borrowing is combined with a previous bond for elementary and middle school work, plus unfunded liabilities for employee pensions and retiree health care costs.

“The taxes are going to be devastating to people in the city, particularly senior citizens and other people on fixed incomes,” said Cushman, administrator of a Facebook group called “The Taxpayers’ Spin.”

While the consultant’s report details the costs of building the two high schools, city officials are not providing details about how those expenses will affect city taxes, he said.

“You can hire a private consultant to give you political cover to vote ‘yes’ on this thing, yet you can’t tell us how much it’s going to affect taxes in the next five years?” Cushman said. “It’s done on purpose. Most people making this decision will be gone in five years. When the you-know-what hits the fan, they will be long gone.”

Cushman also questioned whether the high school projects amount to a “classic bait-and-switch” scheme. He noted the consultant’s report says the plans have undergone “extensive value engineering,” and he said it’s unclear exactly what has been cut out to lower costs.

“What you voted for and what you are getting are two different things,” he said. “If I buy a Porsche and you give me a Honda Accord, that’s a big difference.”

The consultant’s report says, “This estimate is utilizing non-union merit shop labor.” And Cushman questioned whether properly trained people will be doing the projects. “Are we sacrificing the quality of work, and will it haunt us in the future when things start breaking down in these buildings?” he asked.

Ernest A. Almonte, executive director of the Rhode Island League of Cities and Towns, said Warwick is one of the local communities facing decisions about whether to proceed with new school projects — along with Central Falls, Lincoln, and Pawtucket.

Almonte said municipalities might have to wait until two or three years before interest rates go down. “So now is the time to go out and borrow the money to build the school, because they are needed, absolutely,” he said. “This isn’t the time to play the market.”

The cost of building materials is continuing to go up, but the Federal Reserve has taken steps to try to curb inflation, Almonte said.

“Inflation seems to be stabilizing — I wouldn’t say stabilized but stabilizing,” he said. “So I do think now is the time to go forward and do it.”

Almonte said he would support the borrowing if he lived in Warwick. “That is a function of government — investing in the future of our children,” he said.

He noted the state reimburses cities and towns for a portion of new school project costs, saying, “You need to take advantage of those reimbursements because they may not exist three or four years from now.”

McAllister said Warwick officials lobbied the state to get six-month extensions on when it must start and complete the high school projects, and the city must meet those deadlines to ensure it receives state reimbursements.

“It’s buy one get one free, the way it’s set up,” he said. “And costs are only going to go up.”