PORTSMOUTH — The Town Council Monday unanimously approved the school district’s Stage II application to the state for a $65 million-plus renovation project on all four school buildings, but not without a dire warning about municipal spending going forward.

The vote came after more than 70 minutes of discussion, during which council members, school officials and residents wrangled over the impact the improvements — if approved by the R.I. Department of Education (RIDE) and then by voters through a November bond referendum — would have on taxes over the next three decades.

Town Administrator Richard Rainer, Jr. said a commitment to the project means that school and town officials must present future budgets with as little fat as possible.

“We’re limiting ourselves to 3-percent growth in expenditures year over year. There’s no leeway,” Mr. Rainer said. “We just need to go into this eyes wide open.”

The proposed renovations are extensive: Relocating the fifth grade to the elementary schools and adding classrooms to both Hathaway and Melville, moving classrooms to exterior walls at the middle school, making pickup and drop-off safer at Melville, improving the parking scheme and expanding the community space at Hathaway, linking the high school building to its field house and adding a student commons area to that building as well — and much more.

Rhode Island voters approved the Statewide School Construction Bond in November 2018, which activated six new temporary bonus incentives and access to $250 million in upfront funding to support the state share of foundation school housing aid. Most years, districts are eligible for a 30- to 35-percent reimbursement rate. But with the $250 million bond, there’s now an extra pot of money and incentives — including a reimbursement rate up to 50 percent — that Portsmouth could tap for the $65.87 million project.

“This is a once-in-a-generation opportunity,” School Superintendent Thomas Kenworthy told the council.

The council’s vote does not yet commit any taxpayers’ dollars to the project. The deadline to submit the Stage II application to RIDE is Friday, Feb. 14, and the state is expected to rule on the proposal in May. If voters approve a bond this November, the district could see shovels in the ground by spring 2022, with the project finished in summer 2025.

According to a presentation by PFM Financial Management of Boston, the bond would be for $60.96 million, with the state’s $4.91 million “pay-go” contribution — an incentive to jump-start construction projects — making up the remaining balance.

The actual contribution from taxpayers would depend on the state reimbursement. If it’s just 35 percent, the net debt service would be about $2.8 million annually. If the reimbursement is 50 percent, the project would cost $2.2 million in annual debt service.

Whatever the state decides, new spending will have to be kept to a bare minimum going forward, said council member Keith Hamilton, who expressed pessimism the town will receive a higher-end reimbursement from the state.

“This $3 million-a-year commitment really hamstrings us,” he said.

Risks involved

Larry Fitzmorris of the taxpayer group Portsmouth Concerned Citizens (PCC) pointed out that the $65 million project “is six times bigger than any bond we’ve ever passed, that I’m aware of.”

He said PCC opposes the project due to the “huge increase in taxation” it would cause, as well as the financial risk it presents. “We are betting the farm on this one. If anything goes wrong, we are in real trouble. We don’t have the reserves in the fund balance to start paying for cost overruns on a $65 million project,” he said.

Another resident, Tom Grieb, pointed to the cost overruns on the new police station, saying the same thing could happen with the school project. “The building costs have no contingencies for overruns,” he said.

The town will also have to contend with more major capital improvements going forward, which will further burden taxpayers, Mr. Grieb said. “We’re not going another 25 years without another bond. You know it, and I know it,” he said.

Pay now or pay later

“What if the voters say no? Where do we go?” Mr. Hamilton asked Mr. Kenworthy, who replied the district would have to incorporate the improvements in its mandated five-year capital plans. (The district is in the last year of its current five-year plan.)

Council member Len Katzman said approving the application is a “no-brainer” because without it, the school building renovations would still be needed. “But we won’t get any state (incentives) for it,” Mr. Katzman said.

His comments were echoed by Allen Shers of the School Committee. “If we were to do nothing — just our general bricks and mortar (improvements) to the schools — we’d probably be looking at $20 or $25 million dollars anyway,” he said, adding that the state reimbursement allows for a more comprehensive project. “We need to keep addressing it and stay one step ahead. If you’re not moving forward, you’re moving backward.”

Yes, the project will require a tax increase. “But it’s really good business having a good school system,” he said.