Shelton: $315 million a myth

Editor’s Note: This is the fourth of a multi-part series of interviews conducted between Courier staff reporter Nicole Daughhetee and SDPC board trustee Jim Shelton, a former board chair.

There was nothing out there. No building plan existed. What existed was a Powerpoint presentation advocating the construction of four new high schools in Pickens County, a state of the art career and technology center, renovations of existing high schools into larger capacity middle schools, much needed renovations to other existing middle and elementary schools, and the elimination of portables… the cost of which conveniently equaled a clean $315 million dollars to the penny.
Again, while the plan was presented as a $315 million building plan, the fact is that the resolution that November evening in 2006 authorized the acting superintendent to incur up to $345 million in debt, according to Shelton. So now there’s a discrepancy between the Powerpoint presentation and what the actual resolution says.
Because there was no building plan, the basis of the cost estimate (something Jim Shelton learned after the fact) was current square footage of existing facilities. That didn’t include portable classrooms, of which there were about 120-130. The plan did not take into account the fact that each one of those needed to be replaced with a permanent structure — each of which is about 800-1,000 square feet — with hallways and everything else that goes along with creating a permanent structure.
“I don’t think anyone at the time fully considered site acquisition and preparation and development costs,” Shelton said. “In some cases we had to run sewer lines because they weren’t close to the locations we were putting the schools. There’s also the cost impact to highway improvements. All those factors come into it and they all cost, and I didn’t see any of that taken into consideration for the proposal that evening.”
Shelton’s attempt to table the motion that night failed, and the board voted to adopt the Greenville Plan to fund the SDPC Building Plan.
“There’s way too much doubt in my mind to say ‘yeah, this is a great thing,’ ‘go for it’ or ‘no, this is not the direction we want to go,’” Shelton said. “There were more negatives than positives, in my opinion.
“At that moment in time, whether you were for the plan or against the plan, at that moment the hands go up, the hands come down and it’s now the law,” said Shelton. “No matter your political persuasion. No matter your perspective. No matter what. Every person in that room. Every person who has moved into this county subsequent to that — who has lived in this county — is on the hook. We all share.”
As the saying goes, you can’t un-ring a bell. Now, said Shelton, comes the tough part.
“Again, the presentation that evening called for a $315 million dollar building plan. $315 million dollars, in my opinion, is a mythical number,” said Shelton. “I’ve already mentioned the fact that the resolution authorized the superintendent to incur up to $345 million in debt. On the day of the sale, the actual bond issue was $336 million dollars which is almost — a little over — halfway between $315 and $345 million.
However, there was an additional piece to it. Some sort of premium, the exact term for it Shelton can’t seem to remember as he speaks.
“But there was a premium realized on the date of the bond sale that allowed the school district to get $19 million extra dollars — which is still debt — which still falls within the range,” said Shelton. “So the actual starting point to the building plan, which has always been referred to as the $315 million dollar building plan, was never $315 million. It was $354 million. That was the starting point.”
With a grand total of $354 million dollars and no actual building plan, how did the plan come about?
According to Shelton, the SDPC began conversations with architects, construction companies, contractors, engineers — all the people who would be responsible for making these buildings what they are. Going forward, there had to be a formal bid process: Who’s going to do the architectural work? Who’s going to do the engineering work? Who’s going to actually build the buildings? Do the construction?
“Even though the funding was secured, at that point we didn’t know what we wanted,” said Shelton.
“We wanted four high schools, but you don’t take them off the shelf. You have to develop them. So there were community vision meetings that were set up where they went to all the four areas — Daniel, Liberty, Pickens and Easley, of what people wanted to see in these schools,” Shelton explained. “Also at the same time there were certain members of the district leadership team — there were board members (myself included) — who actually went and looked at schools to see what they had. Combined with the visioning meetings, the footprints, the basic designs of the schools were met and with an idea of what we wanted, architects submitted their renderings. Slowly but surely, this plan is emerging.”
Shelton estimates that this process took approximately one year to complete. During this time, what happened to the $354 million? What was it doing?
“It’s gaining interest over the life of the plan. From then until today, interest earned on the principal about exceeded $50 million,” estimated Shelton. “I think it settled in the $404-405 million range in terms of actual capital that was available, which is almost significantly higher by about a third, of what the original proposal was. I’ll say it again and I’ll state it for the record: $315 million is a myth.”
“I asked a lot of questions about the building plan and the financing. I asked about specific issues, but as far as looking at the budget, I probably only asked for and received the budget three or four times — and that budget was coming in at the $365 million range.”
Shelton continued.
“The significant part of that is this: even though we started off with $354 million and we earned in the neighborhood of $50 million in interest — bringing the rough total to about $400 million all together — since it was a lease purchase plan, the district was required to have on hand enough money I think to make the last payment,” he said. “I think that was about $35 million dollars, which is still on hand. It is still sitting in an account, it has never been spent and it can’t be touched until we get to the 25th year of the bond.
“When I would ask for the budget, I would be shown a budget, and there would be an itemized list of all the properties, all the projects and it would be in the range of $365 million. Sometimes I’d see one that would be a little bit less. Sometimes I’d see one that would be a little bit more. But some nagging little voice told me that what I was seeing was not an accurate portrayal of where this thing was.”
Shelton says he had nothing of substance upon which he could base his suspicions other than his gut instinct. At this point he had served two years on the SDPC board and felt that he had learned to develop and trust his instincts a bit more. Shelton felt strongly that he needed to listen to that nagging little voice.
In Shelton’s gut, he felt that “Something just ain’t right. But I couldn’t get to that point.”