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$3.50 tax rate for additions worth $19.8M
by Gregory R. Norfleet · News · June 22, 2017
New figures show the West Branch school district could, if voters allow, raise more money with the same $3.50 tax rate proposed in February.
Voter approval of 60 percent or more on two referendum questions — regarding additions at two schools — would conservatively pull in for the work almost $19.8 million from property taxes over 20 years.
That amounts to about $675,000 more then the $19.1 million estimated from the February vote, which fell about 5 percent short to reach that supermajority threshold.
PiperJaffrey’s Matt Gillaspie told the Board of Education at last week’s meeting that he sees two reasons for the higher revenue figure:
1. On the whole, property values went up in West Branch and the rest of the land inside school district borders. This year, that figure comes to about $362 million; next year, he estimates it rising to $375 million, or by about $13 million.
2. Because of that increase, the tax rate the school district needs to pay off its current debt will drop from $1.07 to $1.03 or $1.04 and still bring in the same amount of money.
The school district’s current debt is a loan for a 2008 project that installed geothermal heating and cooling in Hoover Elementary, among other things. That 10-year loan will expire June 30, 2018. And, with that out of the way, all of the district’s borrowing power could shift to the addition project at the high school and Hoover Elementary, a project now estimated at about $22 million.
Because February’s vote fell short and the second-try vote will not come until Sept. 12, the addition project will have to wait at least until next year to break ground.
The school board tweaked architectural plans for the high school and, coupled with inflation, the overall project cost is up about $800,000.
So even with the higher property tax revenues, the proposed $3.50 tax rate is not enough to keep pace with project costs, falling about $125,000 short.
The school district in February planned to supplement the shortfall with Physical Plant and Equipment Levy (PPEL) and Secure an Advanced Vision for Education (SAVE, formerly the School Infrastructure Sales and Service tax or Local Option Sales Tax) funding, a separate pot of money built up through sales taxes.
Right now the school district is legally allowed to levy up to $2.70 per $1,000 in assessed valuation to pay off debt.
Gillaspie offered a second set of numbers to the school board with a supposition that voters approve a tax rate of $4.05. In this scenario, the school district would levy enough to raise almost $22.9 million, covering the entire project cost with property tax revenues.
Assuming contractor bids come within the architect estimates, this would all but eliminate the need for PPEL/SAVE money, which the district now uses largely for summer projects, like maintenance, repairs, upgrades and smaller construction.
Board president Mike Colbert asked if going with the $3.50 tax rate would “hamstring” future school board members, to which Gillaspie said “No.”
Board members agreed they preferred the $3.50 tax rate.
The 20-year estimate to pay off $19.8 million, with interest, comes to $26.2 million.
Superintendent Kevin Hatfield thanked Gillaspie for the two sets of figures. However, he and board members asked for additional estimates with a $3.60 or $3.65 tax rate.
Gillaspite noted that should voters on Sept. 12 still not quite provide 60 percent support, the school district “could ask again in April 2018 and could still get the project started in summer 2018.”
Further, he noted that property values in the West Branch school district rose at an average rate of 4.8 percent from 1995 to 2012 — a 17-year stretch — and that his estimates only figured growth at 2.5 percent. Should property values continue to rise closer to the 17-year average, the school district could lower the tax rate over the life of the loan.
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