Harrisonburg City Public Schools Superintendent Michael Richards has proposed using funding from the newest federal COVID-19 aid to restart construction on HHS2 until conditions are met for the city to pay for the roughly $105 million project.
Richards spoke about the idea during Tuesday’s City-School Liaison Committee meeting before City Council met later in the evening. At the council meeting, City Manager Eric Campbell presented a proposed budget for fiscal year 2021-22 that did not include funding to resume construction of the project, which has been on hold for a year.
On Wednesday, Richards said Harrisonburg City Public Schools has been notified it will receive $11.8 million from the $1.9 trillion American Rescue Plan passed by Congress and signed by President Joe Biden in March.
Richards said 80% of the newest COVID-19 funds — $9.5 million — can be used on the HHS2 capital project. The remaining 20% must be spent on expenses for learning loss items, such as summer school or extra help for students, the superintendent said.
Richards said he has received notice the federal funding can be used for capital projects from a Virginia Department of Education document and a conversation with U.S. Sen. Mark Warner, D-Va, when the Senator visited the Valley last week.
Richards said he did not know how long the funding would be able to keep new construction going and will have conversations with Nielsen Builders about the idea.
Also at the Tuesday City-School Liaison Committee meeting, the benchmarks for resuming construction on HHS2 were announced.
The city will begin having conversations about restarting the project as Gov. Ralph Northam rescinds his COVID-19 emergency executive order, and the city sees six consecutive months of meals tax and lodging tax revenue exceeding 90% of pre-pandemic revenue levels and six months of employment exceeding 85% of pre-pandemic employment levels in the Harrisonburg-Rockingham metro area, according to city documents.
“In our minds, that doesn’t even get us back to even, but it does establish a trend of positive growth,” Campbell said on Wednesday.
City Council approved the roughly $105 million plan for the construction of a second high school, commonly called HHS2, in December 2019, a project for which the bonds were slated to be covered by a 13-cent increase in the real estate tax. Construction on the new school has been halted due to the pandemic.
“When approved by City Council in December 2019, it was understood that the project will precipitate the need for a multiyear real estate tax increase to fund the project,” Campbell said during the Tuesday City Council meeting. “Now, the economic impact of the pandemic on the community and the volatility in the bond market requires the project to be suspended. The city’s fragile economic environment still has not made it prudent to move forward on this project at this time.”
On Wednesday, Campbell said the idea to use federal funding to restart construction of HHS2 does not impact the city’s budget.
He said the nearly $12 million HCPS is slated to receive must flow through the city, but how it is spent is up to the School Board on the standards set by federal law.
“The positive side is it gets the project restarted. The negative side is when the money is done, there’s no avenue to continue” construction, Campbell said.
He said restarting the project and then having to pause it a second time could have additional costs.
The city’s level of funding from the newest federal COVID-19 support bill and how the money can be spent is still unclear, and staff are waiting for guidance, according to Campbell.
Harrisonburg is estimated to receive $13.32 million, according to March 8 projections from the House Committee on Oversight and Reform.
Jim DeLucas, chief development officer at Nielsen Builders, said Wednesday that the firm is still in a holding pattern about the project after the proposed budget was presented Tuesday without funding for continuing construction on HHS2.
He said the longer the delay, the higher the chance for impacts of economic inflation and subsequent increased costs for steel, petroleum and concrete.
“It will be our job to keep those impacts to a minimum,” DeLucas said.