Whether you call it “accelerating bond sales” or “increasing the tax rate,” the Mt. Diablo school board’s decision to consider issuing $227 million in construction bonds as soon as June could mean property owners will see their taxes for district construction bonds rise this year, while also seeing faster progress on construction projects.
The board is reviewing options for raising the tax rate on the district’s combined $348 Measure C bond passed in 2010 and its $250 million Measure C bond approved by voters in 2002. Trustees told property owners they would extend the rate of $60 per $100,000 for both measures, meaning tax rates wouldn’t increase.
Now, they are considering breaking that promise and raising the combined tax rate as high as $110 per $100,000. This means taxes on property valued at $300,000 could jump from $180 to $330 per year.
One parent told Superintendent Steven Lawrence on Wednesday that people in the community are starting to chatter about this, with bits and pieces of information filtering out. Lawrence told the Parent Advisory Council the increased rate — a direct consequence of the district selling its remaining bonds sooner — would speed up construction so that projects could be completed in four or five years instead of eight to ten. Previously, the district had estimated projects would be completed in seven years.
The new proposal was first raised March 26 by a coalition of 18 parents who submitted the following information to Lawrence and the board:
“Who are we?
We the undersigned have come together as an unlikely coalition. We are from all areas of the district, having various district experiences, and from both sides of the Measure C issue. What we do have in common is our interest in doing what is best for our students, schools and community.
Why are we here?
We are urging the district to reconsider the proposed financing structure of the 2010 Measure C bond.
We understand that MDUSD has issued low interest CREBs (Clean Renewable Energy Bonds), QSCBs (Qualified School Construction Bonds), current interest bonds, and capital appreciation bonds as part of the Measure C 2010 issuance. Our concerns lie with the issuance of any additional capital appreciation bonds (CABs). Capital appreciation bonds have been banned in other states because of the exorbitant cost and undue financial burden they place on the next generation of families and property owners.
The funds from Measure C 2010 can provide our children with facilities that will enhance their educational experience. However, right now, due to the $60 cap, you are faced with waiting several years for Measure C 2002 bonds to mature before issuing additional 2010 bonds or issue expensive capital appreciation bonds, both of which will not best serve our children.
What is our proposal?
Rather than being faced with the decision to delay projects or issue costly bonds, we propose a third option that would take advantage of the current low interest rates, allow our school sites immediate access to upgraded facilities, and save our community hundreds of millions of dollars in compounded interest.
We request that you include on the next board agenda (April 23) an action item providing issuance of the remaining $228 million (actually $227 million) of bonds, as needed, with conventional bond financing, without deferment of principal and interest and with terms no greater than 25 years. In addition, the action item would call for, and be conditioned upon, the development of school site lists that reflect a current and comprehensive project list that is school site driven and Proposition 39 compliant.
How much money will the community save?
We estimate that selling the bonds today with conventional financing and a 25-year term will cost the community approximately $400 million over the life of the bond and will cause the tax rate to increase in the range of $20-$30 per $100,000 in assessed value. However, if the bonds are sold with a 25-year term and 25 years of deferred interest, similar to the CABS sold last year, we estimate it will cost the community over $800 million.
By exceeding the $60 cap and issuing the bonds with fiscally responsible conventional financing our community saves approximately $400 million.
We believe our proposed action will be met with community support and will ensure that our children’s educational experience is improved by meeting their most pressing facility needs today. We realize this will require courage on the part of the board. It is the right thing to do for our kids, our schools, and our community. This is a unique opportunity to come together with a common goal as evidenced by those who have signed below.
Linda Loza, Northgate parent, former CUES committee, Measure D site captain
John Ferrante, Concord resident, 2002/2010 Bond Oversight Committee, Measure A Advisory Committee, CUES committee
Alicia Minyen, Pleasant Hill parent, 2010 Bond Oversight Committee
Tammy Nelson, Ygnacio Valley parent, MDMEF board member
John Parker, Mt. Diablo parent, 2002/2010 Bond Oversight Committee, CUES committee
AJ Fardella, Bay Point parent, 2002 Bond Oversight Committee
Ralph Austin, Northgate parent, Northgate Pride President, 2010 Bond Oversight Committee
Jack Weir, Pleasant Hill Taxpayers Association, former 2010 Bond Oversight Committee
Monica Fitzgerald, Northgate parent, Northgate PFC President
Shel Perham, Walnut Creek parent, former CUES committee treasurer
Diana Corkran, Concord High parent, Concord High School PFC President
Carla Ludwig, Walnut Creek parent, former CUES committee, PACE Foundation co-founder, Measure D site captain
Kevin Hennessy, College Park parent, UMDAF vice president
Jim McClelland, Walnut Creek resident, Northgate Pride board member
Paul Kitchell, Ygnacio Valley parent, UMDAF board member
Don Wildes, College Park parent
Kent Caldwell, Northgate parent, UMDAF board member
Karen Barta, Pleasant Hill parent, former CUES committee.”
Do you support the proposed tax increase and accelerated bond sales?