Real Estate, not Real Education : LUSENET : Ottawa School Closures : One Thread

Closing Schools School Boards Lose, Communities Lose...

School boards in Ontario must identify their so-called "excess space" by December 31, and take the steps imposed by the province to dispose of it by the end of January 1999. If they do not do that, they will not be eligible for ANY funds to build new schools where they are needed. The Board would lose... According to media reports, the province's formula-driven excess space calculation may force as many as 600 schools in Ontario to be closed. Huge problems have been encountered with the unrealistic calculation (e.g., 100% capacity, no allowance for computer labs and other shared space, etc.).

The "offering" process for the properties may look complicated. It is not. In the end, almost all of the closed school properties will be transferred to the Ontario Realty Corporation, at no cost. The majority of these properties are in cities, in downtown areas. The value of the school properties, as potential development sites, is at least a billion dollars.

Those assets will be removed from the education system, and sold. They will no longer be available for education, or for the many other community groups now using those properties.

Ottawa-Carleton The corresponding numbers for the Ottawa-Carleton area, according to published reports, are: closed schools: 40-60. Asset value as development sites: $50-$80 million. Local taxpayers paid for at least one-third of those assets.

Funding for New Schools/ School Expansions Boards and Communities Still Lose...

If a board is successful in choosing schools to close, if it makes the required offers for disposal, and if that yields an excess of enrollment over capacity (again, according to the province's unrealistic formula then a school board is eligible for a pupil accommodation grant).

But the Board, and the community still loses...

Let's take an example--our own Ottawa-Carleton District School Board. At the elementary level, it's excess space amounts to the equivalent of 17.5 elementary schools. Let's assume the Board identifies, and starts the disposal of 17.5 schools by January 30. At that rate, its enrollment and capacity would break even -- it would not be eligible for any accommodation grants. Too bad for the Board. -- no new schools---they lose. Let's assume then, that the Board closes 20 elementary schools. Success! The Board will achieve an "over-enrollment" of some 500 pupils, and be eligible for an accommodation grant. But they still lose...

In 1999, the grant in the example above would total $550,000 (500 pupils x 100 sq. ft. x $11.).

But the actual cost ("come on down") of a new elementary school to house 500 pupils is estimated to be at least $6.5 million. The provincial funding formula will not fund the purchase of a new school, but merely enable the Board to borrow the money, lease from a developer, or use some other kind of debt instrument to finance condtruction. That is, if the Board can secure funding---provincial loan guarantees are not part of the deal.

According to the province, the construction cost of an elementary school, per square foot, is $117. When that is costed over a 25 year repayment period, the cost of borrowing is $158 per square foot, for a total of $275 per square foot.

In other words, the cost of borrowing is more than the cost of construction--no surprise to anyone who has ever paid a mortgage. Our example--the new 500-pupil elementary school--will cost $13.75 million, not the $6.5 million--more than twice as much. there is no more expensive way to finance school construction than the province has proposed.

A Real Estate Deal With Nothing To Do With Education...

Province wide, the government will pick up at least a billion dollars in saleable real-estate. Its accommodation grant budget for 1999, province wide, is $80 million dollars. Count the zeroes...this deal is about real estate, not education.

Take just the example of the Ottawa-Carleton public board. It is expected to donate 17.5 elementary school properties--say $20 million dollars--to the province just to break even on enrollment (no wonder the "excess space" formula favours the province).

If the properties are sold for redevelopment, and homes are built on them, the Board will immediately have overcrwded schools. the province's solution? Just borrow more money. Money to replace the assets that will be transferred to the province, if this extortion can't be stopped.

Keeping it Simple...

A billion dollars in local education assets to be sold by the province. In return, a handful of new schools, and a bucketful of mortgage debt.

The loss of vital, well-used community assets.

No schools for the new kids. Only a debt load that will carry forward to their children.

Disposing of our community assets, and mortgaging the future.

-- Anonymous, October 29, 1998

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