School district seeks additional funds for new elementary school

Building Reserve Levy ballots mail on Feb. 18

By Maria Wyllie Explore Big Sky Associate Editor

BIG SKY – The Big Sky School District is asking area taxpayers to approve a building reserve levy of $840,000 to compensate for unexpected building costs of the new Ophir Elementary School. Ballots will be mailed out to Big Sky residents on Feb. 18 and will be due by March 10.

Costs for the new school were initially estimated at $10.2 million to acquire two parcels of land on Windy Pass Trail – contiguous to and north of the current school campus – as well as to design, build and equip a new complex to serve prekindergarten through fourth grade classes. Taxpayers approved the bond for that money on May 7, 2013.

“Because unforeseen circumstances prevented us from having a budget to complete what we wanted, we are asking for support,” said Big Sky School District Superintendent Jerry House.

The unforeseen costs came to light during the design phase, which began in summer 2013 – immediately following approval of the bond – and was completed in early spring of 2014. These expenditures resulted from poor soil conditions requiring geotechnical remediation and structural upgrades; radon mitigation; and more expansive site construction due to topography challenges, such as leveling the site with wet soil.

Costs for radon mitigation totaled approximately $35,000 and costs for site work were in excess of $200,000, according to House. At approximately $680,000, the biggest cost was the new geopier system – a ground improvement method used to strengthen soft and loose soil, in this case requiring 399 compacted rock columns drilled an average of 18 ft. into the ground to support the foundation.

House says funds for the geopiers were not incorporated into the original May 2013 budget because there was no previous indication that the soil makeup would be any different than the land on which the current school and Windy Pass homes sit. These structures all have a layer of bedrock beneath them for support, while the new site’s soil consists of a combination of unsuitable building materials, mostly clay and silt.

Soil explorations on the land first took place in the fall of 2013. “That’s when we discovered there were poor soils there, and that’s when we started coming up with ideas of how we could support the school [structure],” said Craig Madson, the principal engineer with Allied Engineering Services, which BSSD hired as the design team’s geotechnical engineer.

“It totally shocked everybody,” House said. “There’s rock here, there’s rock [under] the homes on Windy Pass Trail … the civil engineers were dumfounded as to why it’s this way.”

House also notes that the school district didn’t own the two parcels of land before the bond passed, so they couldn’t perform any soil tests in advance.

However, Gallatin Partners CEO Jerry Scott, who sold one of the lots to BSSD in August 2013 – the other lot was purchased through a negotiation with Montana State University – said the school could have performed soil tests on the land prior to purchasing it.

“There was no provision in our agreement that prevented the buyer from doing due diligence,” Scott said. “There was an approximately 120-day due diligence period where they could have done whatever study they wanted. You want your buyers to know everything they can about the property.”

The due diligence period took place between mid-January and mid-June of 2013, according to Scott. The purchase was finalized that August.

Prior to the sale, no soil explorations had been performed on the land where the school is being built.

“We did not do any specific testing on the lots adjoining the school [because] there was no reason to,” said Scott, who developed the 462-acre Porcupine Park residential area near the school in the early 2000s.

“When we do a major development we always ask the engineers to look at historical soil reports, and some are national geological surveys, and they just point out the areas that may present any challenges. I don’t recall there being any areas near the school that concerned us.”

Phil Rotherham, who owns Rotherham Construction in Bozeman and develops commercial properties, says due diligence is status quo in the field.

“The buyer will request a due diligence period during which time he or she would employ the services of a geotechnical engineer to perform the necessary excavations and investigations to supply the buyer with a complete report of the subsurface conditions,” Rotherham said. “This is standard and typical in our industry.”

Because the soil makeup of the land near the new school site has bedrock support and is suitable for building, House didn’t think performing soil tests during the due diligence period would be necessary.

“There was no reason to give it a second thought,” House said.

Since learning of the new costs, the district has worked to mitigate other building expenses to meet the budget and complete the building for the 2015-16 academic year, regardless of whether the levy passes or not. The building is currently 40 percent complete, according to site superintendent Mike O’Masters of Martel Construction.

“We had to readjust our budget, but we are still going to have that building ready for occupancy at the end of this July,” House said.

Bryan Tate, owner of Tate Management, was hired by BSSD to serve as the owner’s representative. He represents the interests of the school district and helps manage the design and construction phases of the project.

“We had a finite budget to work within, so our design had to react to the increased costs resulting from the geotech investigation,” Tate said.

According to both House and Tate, the issue is a matter of cause and effect – the cause being unforeseen site conditions. “Our reaction to the cause wasn’t just to ask for more money,” Tate said. “Our reaction was value engineering, bid alternates, reducing square footage, reusing furniture, reprogramming the design and eliminating four classrooms.”

The project team also made budget reductions by re-evaluating the building envelope and mechanical and electrical systems, as well as reprogramming space requirements for the library, corridors, classrooms and custodial spaces.

Despite these budget cuts, the BSSD is asking for financial support via the building reserve levy to pay for bid alternates which include furnishings and equipment; exterior landscaping; gymnasium furnishings and a laundry room; an outdoor playground classroom; and communication systems. Funds from the building levy would allow these items to be in place when the school opens.

The school board approved the building reserve levy at its Dec. 18 meeting.

A building reserve levy is used to complete the needs of a specified project, and funds are issued via Montana’s INTERCAP Loan Program, which offers short-term, low-interest rate loans to the state’s local governments, state agencies and universities for various purposes.

The levy needs a 51 percent approval rate to pass and the Gallatin County Election office will count all ballots on the night of March 10.

Costs for taxpayers would take place over a five-year period and are based on taxable home value. Yearly cost for taxpayers would be $8.19 per every $100,000 market value of their home for tax purposes. If the levy does pass, the overall tax burden will still reduce due to the retirement of two bonds in 2016 and 2017. Funds from these two bonds were used to expand the current elementary school and build Lone Peak High School.

“I feel confident that this is a long-term investment with a short-term loan we’re looking at,” House said. “The idea isn’t necessarily that a building makes a kid smarter, but it gives us the opportunity to teach different programs that really challenge them and give them chances to perform in the real world.”

Reports from bi-monthly Owner-Architect-Contractor meetings are available to the public on the district website, and are submitted at monthly school board meetings. The public can access this information by attending meetings or reviewing minutes on the school website at bssd72.org.

EBS will follow up on this story as additional information becomes available.