The Duluth School Board on Thursday unanimously approved issuing general obligation bonds for $31.5 million that will be used to build a new administrative building and transportation center.
The bonds will be paid for by taxpayers. The district did not need voter approval to issue the bonds and levy the money because the Minnesota Legislature approved special legislation in its bonding bill last year.
The description of the proposed construction project submitted to the Department of Education commissioner for review estimates the cost at $31.5 million for both buildings. The estimated costs are broken down:
Administrative offices, $8.1 million.
Transportation building, $5.59 million.
Facilities department renovations, $2.88 million.
Demolition of Central High School, $2 million.
Site improvements, $4.2 million.
Fees, permits and testing, $4.6 million.
Contingencies, $3 million.
The new administration building and transportation center will be built on the back one-third of the Central High School property, located at 800 E. Central Entrance. The front two-thirds of the property, which commercial real estate broker Greg Follmer has said is the most valuable part of the 76 acres, would continue to be marketed.
Negotiations with a developer have been ongoing for the front two-thirds of the property for nearly a year.
The commissioner concluded the plan would yield financial, student and staff efficiencies for the district, and provided a positive review and comment, allowing the district to move forward with issuing general obligation bonds.
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Though the district was given a positive review and comment, the document sent to the district by the Department of Education showed concern over enrollment projections through 2026, and suggested that more schools might need to be closed.
“If the district’s declining enrollment projections between FY2021 and FY2026 continue beyond FY2026 and they maintain their current net loss of students due to open enrollment, the school district will have more building space than needed and the School Board may need to consider the closure of one of the high schools and/or other school sites to address likely future district financial challenges,” the document said.
The school district will be required to submit a report on the outcomes and efficiencies achieved to the Department of Education commissioner on Feb. 15 of each even-numbered year.
District Chief Financial Officer Cathy Erickson said the district will need to publish the review and comment document in the district’s designated newspaper, the Duluth News Tribune, at least 20 days before going to market.
Once the bonds are sold, the School Board will need to approve the final sale of the bonds. Erickson said the market right now is very favorable for the district. The bond repayment schedule and cost to taxpayers will be determined after the sale of the bonds.
Board member Alanna Oswald was absent from the meeting due to medical issues.
