Hyperion would greatly increase demands on schools
By Bret Hayworth Journal staff writer | Posted: Thursday, May 01, 2008
Fourth-grade teacher Tama Zeller helps student Irene Williams during class April 22 at Elk Point-Jefferson School in Elk Point, S.D. (Staff photo by Jim Lee)
ELK POINT, S.D. -- Elk Point-Jefferson school Superintendent Brian Shanks mulled the question for several seconds.
If the $10 billion Hyperion Resources refinery is built, will the district bring in so much property tax money that it could pay cash to build more classrooms?
The reply: Possibly.
"It all depends on how big the project is. You could go anywhere from $500,000 to $10 million," he said, depending on whether it would be a wing of classrooms or a whole new building that would be needed to handle a surge of new students.
"I know that in a very short period of time and with a very low (property tax) levy, we could build whatever addition we needed," he added.
Building the proposed massive refinery on the school's district's north edge could bring millions of dollars but also dozens of new students -- the children of refinery employees -- to the school district. Dallas, Texas-based Hyperion Resources has said the refinery would need 1,826 full-time workers.
Union County voters will decide June 3 whether to approve a zoning change so Hyperion could build an oil refinery on 3,292 acres a few miles north of Elk Point. If the project advances, it will take an average of 4,500 workers, with as many as 10,000 at peak construction, to build the plant over about four years. About half of the 1,826 permanent employees likely would move in from elsewhere, and many of those could be expected to live in Union County.
But certainly workers would also choose to call other parts of southeast South Dakota home, as well as communities in Northwest Iowa and possibly northeast Nebraska. Siouxland school superintendents admit they've considered a future that includes an influx of dozens of new students.
The prime concern is providing classroom space for a growing student body, as well as having to hire more teachers and buy more supplies, Shanks said.
Joe Densberger of Elk Point has a grandson who attends Elk Point-Jefferson kindergarten. Densberger doubts that the arrival of more students from a slew of Hyperion employees would negatively affect his grandson's learning as long as the district keeps student-teacher ratios in check.
Ray LaFleur, 80, of Jefferson, who opposes the refinery, has concerns about possible growth in the district. He served on the Jefferson School Board in the 1970s, before that school combined with Elk Point.
"They don't have the capacity to take in any more," LaFleur said. "There is no room, as it is. The whole school system would have to be changed."
Shanks said the district would be able to handle whatever develops.
"The school board has determined that their role is just to educate whoever shows up, which is, I think, the correct thing to do. That's our role as a school, to just educate the kids that show."
"It's going to be a plus"
Paul Olson, superintendent for the West Sioux Community School District in Hawarden, Iowa, said Hyperion will help the entire Siouxland economy and that the project has the school administration's support.
"When you have people move into your community to live, they are going to spend money there. It is going to have a trickle-down effect. It helps the whole community, not just the schools, but everybody," he said.
West Sioux is roughly 25 miles from the proposed Hyperion site. That distance makes Hawarden a likely target for people who would want a relatively short commute to work at the refinery, Olson said. There isn't remotely enough current housing in the Elk Point vicinity, he added.
Olson said guessing how many students could move in to attend West Sioux is a "pie in the sky" projection but said the school district has enough space to easily accommodate growth. West Sioux, with about 800 students, is struggling to maintain enrollment at a time when two-thirds of Iowa schools have declining enrollment. Adding students would not cause a financial hardship, he said, since state aid-to-education revenues would follow to cover the added costs.
The refinery would also be close to Vermillion, a city of 10,000 across the Union County line in Clay County and home to the University of South Dakota.
"We just don't know what this means for us," said Vermillion school Superintendent Mark Froke. "We're trying to get our thoughts wrapped around the potential of what it could mean for the district. It's a big concern for the school board as to what the future holds and what Hyperion will bring. Since we are close, and since we feel Vermillion presents a great draw for the future, we obviously will draw families."
Shanks noted that the great majority of added property valuation would accrue to the Elk Point-Jefferson School District. "Vermillion, Dakota Valley, Beresford, Alcester-Hudson, they would perhaps reap benefits from having increased enrollment and then of course get the (state aid) money that follows the students."
In 2008-09, the state education funding formula will direct general fund payments to schools of $4,668 per student. But for those South Dakota districts with strong local property tax revenues, there's a cap on state aid, so Elk Point-Jefferson could stand to lose state aid to education altogether with the arrival of Hyperion.
Millions could go to EP-J
South Dakota's per-pupil state aid payment presumably would cover the additional costs of instruction in Vermillion, including more teachers and supplies, Froke said. But if the district had to pay for a new school, it would have to borrow money by issuing bonds. A bond issue would have to go before voters, who likely would see their property taxes rise to repay the bonds.
Shanks, who has been superintendent at Elk Point-Jefferson the past eight years, has heard the projections of millions of dollars headed for his district if the refinery is built, but he's somewhat skeptical.
He doubts the financial windfall to Elk Point-Jefferson would be as big as Hyperion projects -- Shanks figures state lawmakers might want to move the money around so that other South Dakota school districts could share in it.
Elk Point-Jefferson is the sole district that would receive property tax proceeds from the refinery, whose assessed valuation could be as high as $2 billion, because the plant would be within the school district boundaries. A study performed on behalf of Hyperion Resources determined that the school's property tax revenues, once Hyperion were operational, could increase by $20.4 million annually, less the $1.75 million in per-pupil state aid that would be lost. That would mean a net gain of $18.6 million a year.
"Theoretically, that is correct," Shanks said. "I'm just very leery of that, though, because of the fact that I have a hard time thinking that the state isn't going to take a look at this, and maybe the inequities that go with it, and say, 'Hey, should all this money go to one school?' "
"There's a lot of people hoping the state will step in and do something and spread the wealth, " Dakota Valley Superintendent Al Leber said.
The Dakota Valley School District serves 1,010 students in three schools in North Sioux City near McCook Lake, in southern Union County.
"Even though we are in the county, our school district doesn't extend that far up (north), so we wouldn't see any of that (property tax). Yes, we may see growth, but we're not going to receive any of the (property) tax benefits," Leber said.
"It doesn't bother me. It might if we were really struggling. ... If Elk Point gets it, more power to them," Leber said.
As for whether other nearby districts might be at a disadvantage in not sharing in the property tax wealth expected from Hyperion, Elk Point-Jefferson's Shanks said, "Whether it's fair or not, that's the way it is."
Shanks said there's a precedent for a South Dakota school district flourishing financially due to successful business.
"In the Lead-Deadwood School District, they have the same thing. They easily raise what they need because of their valuation because of the casinos," he said.
Lead-Deadwood school business manager Margie Rantapaa said due to the high property valuation in the casino-rich area, the district was able to lower its capital-outlay property tax levy this year from $3 per $1,000 of assessed valuation to $2 per $1,000. Deadwood has had legalized gambling since 1989.
Shanks said most of any increase in property taxes related to Hyperion would be accompanied by a reduction in the current school property tax rate (now a levy of from $7.68 to $14.08 per $1,000 of assessed valuation, depending upon property classification), which would reduce taxes for farmers and Elk Point residents.
"The tax savings to them would be tremendous, if indeed the formula stays the way it is," Shanks said.
Elk Point-Jefferson operates with a $4 million annual budget, and he figures the operating budget would remain in that vicinity, even with the added Hyperion assessment, he said.
Student surge could come earlier than Hyperion predicts
There are two Hyperion phases, construction and operation, Vermillion's Froke noted, and during the four-year construction phase, Hyperion officials don't expect much impact on school districts because many workers would be on site only temporarily.
"However," said Froke, "I have to believe that some families would locate in the area communities in that time."
Having met with Hyperion officials a few times, Shanks said he understands the company plans to have a dormitory-style "work camp" for construction crew members, many of whom would not bring families with them.
"That's the part (construction phase) that scared us the most, and they've told us there should be very little impact. Well, that remains to be seen. .. I'm not convinced there won't be some impact during the construction phase," Shanks said. "As far as when it is done, the 1,800 people working there, I guess we absorbed the Gateway (computer company) folks" when the North Sioux City business was flourishing in the 1990s.
Dakota Valley's Leber said Hyperion officials told area superintendents that half the permanent plant workers would come from the area and the others would move in from elsewhere. Leber said he figures Dakota Dunes, which is within his district, would be a popular place for Hyperion executives to live.
Leber said Dakota Valley later this spring will add rooms to the high school and elementary school. Whether the upcoming facilities expansion would be enough to handle an influx of students from Hyperion remains to be seen, he said.
"We expect some growth, but we're not expecting so much that we have to prepare for the worst," Leber said.
Bret Hayworth may be reached at (712) 293.4203 or brethayworth@siouxcityjournal.com
If the $10 billion Hyperion Resources refinery is built, will the district bring in so much property tax money that it could pay cash to build more classrooms?
The reply: Possibly.
"It all depends on how big the project is. You could go anywhere from $500,000 to $10 million," he said, depending on whether it would be a wing of classrooms or a whole new building that would be needed to handle a surge of new students.
"I know that in a very short period of time and with a very low (property tax) levy, we could build whatever addition we needed," he added.
Building the proposed massive refinery on the school's district's north edge could bring millions of dollars but also dozens of new students -- the children of refinery employees -- to the school district. Dallas, Texas-based Hyperion Resources has said the refinery would need 1,826 full-time workers.
Union County voters will decide June 3 whether to approve a zoning change so Hyperion could build an oil refinery on 3,292 acres a few miles north of Elk Point. If the project advances, it will take an average of 4,500 workers, with as many as 10,000 at peak construction, to build the plant over about four years. About half of the 1,826 permanent employees likely would move in from elsewhere, and many of those could be expected to live in Union County.
But certainly workers would also choose to call other parts of southeast South Dakota home, as well as communities in Northwest Iowa and possibly northeast Nebraska. Siouxland school superintendents admit they've considered a future that includes an influx of dozens of new students.
The prime concern is providing classroom space for a growing student body, as well as having to hire more teachers and buy more supplies, Shanks said.
Joe Densberger of Elk Point has a grandson who attends Elk Point-Jefferson kindergarten. Densberger doubts that the arrival of more students from a slew of Hyperion employees would negatively affect his grandson's learning as long as the district keeps student-teacher ratios in check.
Ray LaFleur, 80, of Jefferson, who opposes the refinery, has concerns about possible growth in the district. He served on the Jefferson School Board in the 1970s, before that school combined with Elk Point.
"They don't have the capacity to take in any more," LaFleur said. "There is no room, as it is. The whole school system would have to be changed."
Shanks said the district would be able to handle whatever develops.
"The school board has determined that their role is just to educate whoever shows up, which is, I think, the correct thing to do. That's our role as a school, to just educate the kids that show."
"It's going to be a plus"
Paul Olson, superintendent for the West Sioux Community School District in Hawarden, Iowa, said Hyperion will help the entire Siouxland economy and that the project has the school administration's support.
"When you have people move into your community to live, they are going to spend money there. It is going to have a trickle-down effect. It helps the whole community, not just the schools, but everybody," he said.
West Sioux is roughly 25 miles from the proposed Hyperion site. That distance makes Hawarden a likely target for people who would want a relatively short commute to work at the refinery, Olson said. There isn't remotely enough current housing in the Elk Point vicinity, he added.
Olson said guessing how many students could move in to attend West Sioux is a "pie in the sky" projection but said the school district has enough space to easily accommodate growth. West Sioux, with about 800 students, is struggling to maintain enrollment at a time when two-thirds of Iowa schools have declining enrollment. Adding students would not cause a financial hardship, he said, since state aid-to-education revenues would follow to cover the added costs.
The refinery would also be close to Vermillion, a city of 10,000 across the Union County line in Clay County and home to the University of South Dakota.
"We just don't know what this means for us," said Vermillion school Superintendent Mark Froke. "We're trying to get our thoughts wrapped around the potential of what it could mean for the district. It's a big concern for the school board as to what the future holds and what Hyperion will bring. Since we are close, and since we feel Vermillion presents a great draw for the future, we obviously will draw families."
Shanks noted that the great majority of added property valuation would accrue to the Elk Point-Jefferson School District. "Vermillion, Dakota Valley, Beresford, Alcester-Hudson, they would perhaps reap benefits from having increased enrollment and then of course get the (state aid) money that follows the students."
In 2008-09, the state education funding formula will direct general fund payments to schools of $4,668 per student. But for those South Dakota districts with strong local property tax revenues, there's a cap on state aid, so Elk Point-Jefferson could stand to lose state aid to education altogether with the arrival of Hyperion.
Millions could go to EP-J
South Dakota's per-pupil state aid payment presumably would cover the additional costs of instruction in Vermillion, including more teachers and supplies, Froke said. But if the district had to pay for a new school, it would have to borrow money by issuing bonds. A bond issue would have to go before voters, who likely would see their property taxes rise to repay the bonds.
Shanks, who has been superintendent at Elk Point-Jefferson the past eight years, has heard the projections of millions of dollars headed for his district if the refinery is built, but he's somewhat skeptical.
He doubts the financial windfall to Elk Point-Jefferson would be as big as Hyperion projects -- Shanks figures state lawmakers might want to move the money around so that other South Dakota school districts could share in it.
Elk Point-Jefferson is the sole district that would receive property tax proceeds from the refinery, whose assessed valuation could be as high as $2 billion, because the plant would be within the school district boundaries. A study performed on behalf of Hyperion Resources determined that the school's property tax revenues, once Hyperion were operational, could increase by $20.4 million annually, less the $1.75 million in per-pupil state aid that would be lost. That would mean a net gain of $18.6 million a year.
"Theoretically, that is correct," Shanks said. "I'm just very leery of that, though, because of the fact that I have a hard time thinking that the state isn't going to take a look at this, and maybe the inequities that go with it, and say, 'Hey, should all this money go to one school?' "
"There's a lot of people hoping the state will step in and do something and spread the wealth, " Dakota Valley Superintendent Al Leber said.
The Dakota Valley School District serves 1,010 students in three schools in North Sioux City near McCook Lake, in southern Union County.
"Even though we are in the county, our school district doesn't extend that far up (north), so we wouldn't see any of that (property tax). Yes, we may see growth, but we're not going to receive any of the (property) tax benefits," Leber said.
"It doesn't bother me. It might if we were really struggling. ... If Elk Point gets it, more power to them," Leber said.
As for whether other nearby districts might be at a disadvantage in not sharing in the property tax wealth expected from Hyperion, Elk Point-Jefferson's Shanks said, "Whether it's fair or not, that's the way it is."
Shanks said there's a precedent for a South Dakota school district flourishing financially due to successful business.
"In the Lead-Deadwood School District, they have the same thing. They easily raise what they need because of their valuation because of the casinos," he said.
Lead-Deadwood school business manager Margie Rantapaa said due to the high property valuation in the casino-rich area, the district was able to lower its capital-outlay property tax levy this year from $3 per $1,000 of assessed valuation to $2 per $1,000. Deadwood has had legalized gambling since 1989.
Shanks said most of any increase in property taxes related to Hyperion would be accompanied by a reduction in the current school property tax rate (now a levy of from $7.68 to $14.08 per $1,000 of assessed valuation, depending upon property classification), which would reduce taxes for farmers and Elk Point residents.
"The tax savings to them would be tremendous, if indeed the formula stays the way it is," Shanks said.
Elk Point-Jefferson operates with a $4 million annual budget, and he figures the operating budget would remain in that vicinity, even with the added Hyperion assessment, he said.
Student surge could come earlier than Hyperion predicts
There are two Hyperion phases, construction and operation, Vermillion's Froke noted, and during the four-year construction phase, Hyperion officials don't expect much impact on school districts because many workers would be on site only temporarily.
"However," said Froke, "I have to believe that some families would locate in the area communities in that time."
Having met with Hyperion officials a few times, Shanks said he understands the company plans to have a dormitory-style "work camp" for construction crew members, many of whom would not bring families with them.
"That's the part (construction phase) that scared us the most, and they've told us there should be very little impact. Well, that remains to be seen. .. I'm not convinced there won't be some impact during the construction phase," Shanks said. "As far as when it is done, the 1,800 people working there, I guess we absorbed the Gateway (computer company) folks" when the North Sioux City business was flourishing in the 1990s.
Dakota Valley's Leber said Hyperion officials told area superintendents that half the permanent plant workers would come from the area and the others would move in from elsewhere. Leber said he figures Dakota Dunes, which is within his district, would be a popular place for Hyperion executives to live.
Leber said Dakota Valley later this spring will add rooms to the high school and elementary school. Whether the upcoming facilities expansion would be enough to handle an influx of students from Hyperion remains to be seen, he said.
"We expect some growth, but we're not expecting so much that we have to prepare for the worst," Leber said.
Bret Hayworth may be reached at (712) 293.4203 or brethayworth@siouxcityjournal.com
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