With the exception of the Gardner Edgerton School District, every taxing entity the intermodal touches will see a net benefit from the project, according to a cost-benefit analysis the city of Edgerton provided to The Gardner News.
The analysis is one factor Edgerton’s city council will consider prior to acquiring loans on behalf of BNSF and the Allen Group for the intermodal and logistics hub project. Council members will host a public hearing on the possibility of letting $500 million in industrial revenue bonds related to the project on Thursday night.
School officials anticipate being on hand at the Thursday night hearing to voice their concerns about the potential costs of the project.
“I think we’re the little bit disappointed in the way these numbers are shaking out,” school business director Eric Hansen said. “When you sit down and start dissecting the numbers it becomes very aggravating to think this is the path we’re headed down.”
Edgerton officials have approved a 75 percent tax abatement for the 1,100-plus acre project.
A consulting firm, Municipal Consulting, provided two cost-benefit projection analyses on the intermodal project. One assumed the entire project would be built out within the first year. A second analysis assumed the project would happen in phases over the course of 10 years. The projected costs and benefits are similar in both scenarios.
According to the analysis that assumes the entire project comes to fruition within the first year, the state of Kansas will earn $148.57 of revenue for every dollar it spends on the project. Edgerton will earn $4.01 for every dollar it spends. Johnson County Community College, the county and Johnson Count Fire District No. 1 also stand to benefit from the project – earning between $1.22 and $3.43 for every dollar spent on the project’s behalf.
It’s a different story for the school district. The school district will lose approximately 46 cents for every dollar it must spend educating additional students generated from the project.
Both analyses assume that 5,674 new jobs will be created and that the school district will grow by 2,183 residents due to the project. According to the cost-benefit reports, that will translate into 182 new students in the GE district.
Hansen believes that estimate is questionable.
“The ratio they used to calculate number of students is grossly inaccurate,” he said.
The district did a few calculations to estimate new students based on the number of new residents provided in the cost-benefit analysis. In 2008, the district had roughly 4,500 students and there were roughly 21,000 residents within the district.
“That tells us that approximately 20 to 21 percent attend K through 12 schools,” Hansen said.
When applied to the 2,183 new residents projected by the analysis, that translates into approximately 236 new students – much higher than the analysis projections. And Hansen said it’s likely that number could be as high as 450 new students.
David Dillner, Edgerton City Administrator, said there’s no perfect way to predict with 100 percent certainty the number of new residents or students that may result from the intermodal. The cost benefit analysis simply provides an estimate.
“There’s no way anyone can actually know how many people will move in or move out of a jurisdiction based on the project,” he said.
The consultant used a variety of figures from multiple sources including information from the county, the schools, and The Allen Group to determine the estimates, Dillner said.
“That all got put into the model the consultant ran and these are the numbers that popped out,” Dillner said.
Steve Robb, consultant with Municipal Consulting, used cost benefit analysis software developed by the League of Kansas Municipalities and approved by the Kansas Court of Tax Appeals for projects that are to receive tax abatements. However, a cover letter from the consulting firm admits that the project’s size exceeds the limits for which the software was designed to analyze. The letter also stipulates that all of the information used to create the numbers was provided by the city’s bond consultants.
“And we have made no attempt to verify its accuracy or whether the projections are reasonable,” the letter reads.
The analysis also assumes that the school district will need to spend an additional $2.7 million over the course of 10 years to educate new kids – or approximately $1,483 per year per new student.
“There is no way it costs us that little to educate our kids. The cost to educate kids is also grossly understated,” Hansen said. “Something else that wasn’t included in this study was the possibility of needing to build new schools.”
Dillner understands that the school district has concerns about the way the project is back loaded.
“The cost-benefit analysis did not show that they’re losing money,” Dillner said. “They’re just not gaining as much as the other taxing entities. The way these projects are typically implemented all the infrastructure is up front. Unfortunately, that means the taxing entities are back-end loaded.”
The analysis suggests the district will earn approximately $99 million in taxes and additional school funding as a result of the project, but will have to spend more than that on the new students generated by the facility.
“For those kids that are starting school today or this fall, they may see very little benefit and yet, think of all the things we’ll have to take on in that time,” Hansen said. “We will have to build new schools. There will be new programs without the resources to compliment them from the project and no way to control the costs of living in our community.”
The Edgerton City Council meets tomorrow, July 8, at 7 p.m. at Edgerton City Hall.
Full cost-benefit analysis reports are available for viewing below.
PDF Cost-Benefit Report-Phased
PDF Cost-Benefit Report-Allen Group-Single Expansion
Updated: Analysis shows intermodal project net loss for GE District