EDMONTON—“Albertans should to very shocked to hear the price tag for building and maintaining 18 new schools in Edmonton and Calgary is now a whopping $634 million dollars when only a year ago the catholic and public school boards in those cities had predicted the total costs would be less than $240 million to build,” said Bill Moore-Kilgannon, Executive Director of Public Interest Alberta. (For Edmonton, the costs were reported to be $117.8 million according to the June 15, 2007 article by David Howell in the Edmonton Journal)
Citizens and tax payers have a right to get very clear answers on the following questions:
- While we all know that building costs have gone up over the past year, why should tax payers accept such a huge increase in projected building costs?How much of this cost increase is related to real building costs compared to the up front risk premiums that all companies include in long-term private financing?
- If the government had committed this much funding two years ago to the 2007 – 2011 capital plan presented by the school boards, how many more schools would be under construction right now?
- How much of the increased costs are attributed to higher costs of private financing? Alberta has the best credit rating in the world and so could certainly get a better financial rate than any private company. For example the difference between a 3% and a 4% rate over the 30 years of the deal is more than enough to build at least one if not two schools.
- What will happen if the company’s maintenance practices do not meet the standards and requirements of the school board?
- Is there an opt-out clause in the maintenance contract if the school boards are not satisfied with the work?What will happen to the contract if the company goes bankrupt at some point over the next 33 years of the contract?
“As anyone who has ever taken on a long-term rent-to-own contract knows, you end up paying a lot more than if you just paid for it up front, and you had better read the fine print,” says Moore-Kilgannon, “yet, we don’t even have the fine print to read!"
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