The more I think about the recent comments from the school district’s bond counsel about the $110 million in interest ‘scare tactic’, the more it just doesn’t add up.
On one hand they say you will pay $2 a month for $185K home valuation for the life of the loan (25 years at 4%) but on the other hand they say the $110 in interest isn’t fair because they will ‘pay it off early’.
You can’t have both!
If the loan goes the full 25 years, the $2 a month is true, and also is the $110 million in interest. If they pay it off early, they only have one way to do that, change the tax levee to bring in more money. This is the ONLY way they would pay the loan off early is if they increase taxes, which would change the $2 a month argument.
Let’s face it, this is a ‘bait and switch’. They know they will have to try to pay off these bonds ASAP so they can borrow more down the road, and the only way they will be able to do that is increasing our property taxes.
So please tell us, is it $2 a month for 25 years or early payoff for tax increases later? Still waiting for the school district to apply transparency to this process not just talk about it.
Per Jeff Kreiter, Director of Operations for the SFSD, Whittier Middle School has 10 years of life left in it.
This they have been upfront about.
The cost of constructing a NEW Whittier Middle School is not part of the 190m that will be on the ballot.
That means they will be back to ask for more from the taxpayers in approximately 6-8 years.
$110 million in interest?
It’s fortunate the School Board has so much power. It’s unfortunate that, unchecked, they abuse it.
BP, that is correct. If the loan goes the full 25 years it will be $110 million in interest on top of the $190 million in capital. That would keep us at the $2 a month tax increase. But if they pay it off early, they will have to increase that tax levee to do so. And if the School District is good at one thing, it is opt-outs and tax increases. That is why the $2 a month argument isn’t worth a hill of beans if they plan an early payoff.
Scott – Help me out here.
You’re complaining that the total cost of the bond is going to be $300 million ($190 principal + $110 interest) because of interest costs and not $190 million as advertised?
Let’s assuming the district makes no prepayments. That means instead of paying $2.00 per month, people will be paying an extra $3.15 per month.
What am I missing up here that’s causing you to get so up in arms? What are you really upset about?
The lack of transparency is troubling, especially when asking taxpayers to take on $300 million in debt.
The 40m in extras (in addition to the 3 new buildings) the school district is asking for needs to be examined closely.
Many projects on the list are ‘wants’, not ADA/security issues as the school district has portrayed.
They probably will pay it off early as long as the Board can continue to benefit from the inflation in median priced homes in this town or District. This reality increases the tax burden on residents without touching the mill levy or demanding a further opt-out in the future. So the real question is not whether the residents of the District can afford the opt-out, rather the question is whether they can afford the property taxes on their inflation priced homes.
I would still like to know what the Board is doing with the present property tax windfall from current surges in median priced homes in this District over the last two years. My home has gone up 25% in value over the last two years, so my taxes will go up substantially with or without an opt-out; and is this increase just gravy for pet projects for the District or is it being used to offset the costs of the current proposal, which still requires an opt-out, apparently.
Scott –
I think it’s common sense that whenever a government entity is going to take on a bond that they are going to pay some interest.
Loans come with interest payments. Anyone that’s completed a high school personal finance class would know this.
The district has explained what they want to take out in the loan as principal ($190m), what the terms are (25 years at 4%), and what possible interest they would make if they weren’t to make any prepayments ($110 million).
What more needs to be explained? This is pretty basic stuff.
What more needs to be explained? This is pretty basic stuff.
What needs to be explained? It is very misleading to suggest this is a $2 a month burden for anything more than just the first year. Ten years from now it will be much, much more. To suggest otherwise is just a flat out lie.
Matthew Paulson
If you had been watching the school district’s process through 4 TF meetings and all subsequent board meetings (regular and working sessions), you would know for weeks they were not forthcoming about the cost to taxpayers of financing 190m.
It was only after the AL and local bloggers were talking about a 300m burden to taxpayers that the district decided to be forthcoming.
Even Mike Huether and team were smart enough to be upfront with taxpayers about the true cost of the EC being 180m not the 115m that was on the ballot.
I’d have to say I agree with Paulson in this seems to be a bit of a manufactured crisis. Any home owner already knows that the debt is the amount of the mortgage which means the amount borrowed against your home. The interest paid on that mortgage is an an expense which is also tax deductible in many instances. The debt and the interest are not one in the same but both figure into the total cost of owning a home which also includes many other expenses that can be added like insurance costs, repairs and maintenance etc. Most people already know this stuff.
Most people already know this stuff.
~Ace
Ace…you are full of BS.