Promises About How Little a $191.525 Million Dollar School Bond Referendum (With Interest)Will Cost–Don’t Count On Them

Below is what the Iowa City Press Citizen reported about Iowa City Community School District’s (ICCSD’s) proposed $39 million dollar bond referendum in February of 2003. That bond referendum subsequently passed under a former superintendent.

The district’s current tax levy rate is 11.53 percent. If passed, the referendum would rise to 11.84 percent.

As you can see from ICCSD’s reported tax rates below*, over time, ICCSD’s school tax levy rose above 11.84 and is now 13.98260 per thousand dollars of assessed property valuation. The better figure to pay attention to when examining what a school bond will cost property owners (and anyone to whom property owners pass their costs onto) is not the total school tax levy, which can be subject to some manipulation of its parts, but the debt service rate for general obligation bond debt.

Year

ICCSD School Tax Levy        (Total Rate)

ICCSD Debt Service Rate     (Debt Levy)

2010-11

14.68972

.72701

2011-12

14.59055

.74900

2012-13

14.07327

.69729

2013-14

13.68792

.63500

2014-15

13.69999

.59831

2015-16

13.86773

.58612

2016-17

13.98935

.55017

2017-2018

13.98260

.52868

A question was asked at ICCSD’s “Board of Education Work Session Discussion October 11, 2016” about what size bond could be had if property owners continued to pay a then projected $.54 debt service levy. The answer can be found on page 15 of “G.O. Bonds Funding for ICCSD Facility Master Plan”–a $46.705 million dollar bond–see below. The payoff would have been the year 2037, not the year 2042 as is now projected for the $191.525 million dollar bond referendum.

20170710_092713

Some ICCSD officials and many bond supporters now assert the existing debt service levy for debt related to the $39 million dollar bond should continue past 2018 to the year 2042– an additional 24 years on top of the original 15 years. Remember that payments related to the $39 million dollar bond referendum were only supposed to be paid for 15 years ending in the year 2018, not for 39 years total ending in the year 2042.

It is no coincidence that many proposed school bond referendums take place just as existing bond debt is scheduled to be paid off. Such scheduling helps school officials and bond supporters sell school bonds to the voters.

So what number has ICCSD (or its outside financial consultant PFM Financial Advisors LLC) currently forecast for the proposed $191.525 million dollar bond referendum (plus interest)–the answer is a debt service levy of $1.95033 per thousand of assessed property valuation for the year 2018-2019. This fiscal year is the first year payments would be made if the referendum passes. Payments are projected to be made for 24 years.

Can ICCSD truly confirm yet what the $191.525 million dollar bond referendum with interest will cost if approved by voters? No. There are lots of factors that impact the costs of bonds, including that budget decisions are board decisions as it is the school board that must certify the budget each and every year and set the tax rate. No one now can confirm now how future school board members will vote. However what property owners will pay for a $191.525 million dollar bond with interest is going to be more than the “the cost of a cup of coffee.” Consider,

1) the debt service rate for debt related to the $39 million dollar bond plus interest and spread over a fifteen year period has ranged from .52868 to .74900 per thousand of assessed property valuation in recent years, and

2) ICCSD reported a $46.705 million dollar bond referendum could be had for $ .54 per thousand of assessed property valuation.

So, imagine what taxes property owners will pay for a $191.525 million dollar bond referendum plus interest spread out with payments made each year to the year 2042.  For many people, this bond referendum will be expensive if it passes.

 

The source of the tax rate information is the chart at the top of page 28 in ICCSD’s own “Iowa City Community School District 2017-2018 Certified Budget prepared by Dr. Craig Hansel, CFO/Board Secretary.  Also see http://www.boarddocs.com/ia/iccsd/Board.nsf/goto?open&id=AKNHD347EE34.

 

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This entry was posted in Bond, Bond vote, Budget, Debt Levy, General Obligation Bond, ICCSD, School Taxes, Uncategorized. Bookmark the permalink.

One Response to Promises About How Little a $191.525 Million Dollar School Bond Referendum (With Interest)Will Cost–Don’t Count On Them

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