CMS may not be able to meet promise of $2.5 billion bond, NC Treasurer Dale Folwell says
State Treasurer Dale Folwell says Charlotte-Mecklenburg Schools may under-deliver on its $2.5 billion bond referendum promise to build or start on 30 projects across the county.
That’s because rising construction costs lead to projects such as new schools “going through the roof,” Folwell told The Charlotte Observer. Voters last week approved by a nearly two-to-one margin a CMS bond referendum promising to complete or start on 30 projects with $2.5 billion in borrowed money — a record for a public school district in North Carolina. The projects range from building entirely new schools to creating construction plans for future projects.
Folwell, who is seeking the Republican nomination for governor in 2024, said it’s not a political argument.
“What I’m saying is mathematical,” he said.
Folwell said Charlotte is the highest-cost market in the state and that “if what we’re seeing across the state from Murphy to Manteo” rings true in Charlotte, “it’s going to be very difficult for them to deliver on their promises.”
“This is not specific to Charlotte,” Folwell said about construction cost increases.
He referenced Guilford County schools, where voters approved a total of $2 billion in debt through separate bond referendums in 2020 and 2022. There, elevated construction costs could lead to the money covering only a fraction of planned projects, the Greensboro News & Record reported. Guilford County Schools planned to renovate 12, rebuild 18 and build three new schools.
Charlotte-Mecklenburg Schools initially proposed an inflation-adjusted $2.997 billion bond package for 30 projects that Mecklenburg County commissioners lowered to $2.5 billion. The district declined to respond to Folwell’s comments and directed inquiries to Mecklenburg County government, which didn’t respond to a request for comment.
Folwell told the Observer in March CMS should “look realistically at capital needs” when it proposed the initial amount of nearly $3 billion.
First schools on CMS bond list
Chief Operations Officer Brian Schultz said during Tuesday’s CMS Board of Education meeting the first projects on the district’s 2023 bond priority list include:
▪ Combining Cotswold and Billingsville elementary schools in a new facility, demolishing Chantilly Montessori and repurposing Billingsville for the Montessori program.
▪ Renovating the Marie G. Davis school to take the Montessori program at J.T. Williams and completing renovations at J.T. Williams for use by alternative education programs.
▪ Building a new middle school in south Charlotte to help with overcrowding.
▪ Building a medical and technology magnet high school in uptown Charlotte’s Second Ward.
▪ Replacing buildings and athletic facilities at North Mecklenburg High School.
▪ Finishing work started with 2017 bond money at Northwest School of the Arts, including new specialty classrooms, and renovating First Ward Creative Arts Academy to be a magnet school for grades 6-8.
▪ Relocating Park Road Montessori’s pre-K-6 program to Dilworth Elementary School’s Sedgefield campus, which serves grades pre-K-2; replacing the current Park Road Middle School with new buildings to serve both campuses of Dilworth Elementary; and repurposing Dilworth for a middle school magnet.
When will CMS bond projects start
The project involving Park Road, Sedgefield and Dilworth could start construction as soon as this summer, with a public hearing and school board vote scheduled Dec. 4 and Dec. 12, respectively, Schultz said Tuesday.
It’s not clear when other projects at the top of CMS’ priority list will get construction dates. Schultz told school board members Tuesday that CMS is preparing to solicit proposals from firms interested in managing CMS’ list of bond projects, which would include hiring construction companies.
Folwell, who oversees the Local Government Commission in his state treasurer job, said he expects borrowing requests for the CMS bond referendum to come in different chunks. That’s when the Local Government Commission, which can approve or reject borrowing proposals, will analyze the financing requests.
Unlike in Guilford County, where voters in 2022 said “yes” to the bond amount and “no” to a sales tax increase to pay for the $1.7 billion in spending, CMS included the spending and taxes in one ballot question.
Ballots asked voters to say OK to additional taxes “in an amount sufficient to pay the principal and interest on the bonds.” CMS said in community meetings before the election that 1 cent per $100 in valuation increases could be necessary in 2025, 2028 and 2029.
CBRE Group, a real estate firm based in Dallas, said in its U.S. market analysis the current speed of construction cost increases is lower than 2022 but higher than the 10-year average. Finding qualified workers remains a challenge, the company said.
Local government accountability reporter Mary Ramsey contributed reporting.
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