Dear Editor;
In early June, we officially announced our plans to go back to the polls on September 10, presenting a $12.9 million general obligation (GO) bond for the Central Lee Community School District. If approved, the bond would allow the district to upgrade safety and security features and address key facility needs.
One of the interesting aspects of this bond is that it would have a net-zero impact on property taxes. Naturally, this comes as a surprise to many in our community. After all, the last time the district proposed a bond, in April 2018, it would have increased property taxes $1.81 for every $1,000 of assessed property value. As you likely know, the April 2018 bond carried the majority but not the 60% required to begin the project.
How is it possible that the district is now proposing a bond with a net-zero tax impact?
The answer largely comes down to what’s known as the district’s “taxable valuation,” a number that consists of all residential, commercial, agricultural land and utilities. This year, the district experienced a 24 percent increase in its taxable valuation. The vast majority of this increase was due to the pipeline finally being taxed by the State of Iowa. Normally, the district experiences only a 2 to 3 percent increase in valuation each year.
This year’s significant increase in taxable valuation led to two developments:
It allowed the district to generate $12.9 million in GO bonds. Back in April 2018, the district would have had a maximum capacity of $9.8 million.
It allowed the district property tax rate to absorb nearly $2.30 of the total $2.70 GO bond.
But where do the funds come from to cover the remaining 40 cents? Due to the district being able to fully fund its current slate of projects with a GO Bond, we can use sales tax revenue to reduce any remaining need to use property tax for the project and stabilize it in the future.
The district could have opted for a smaller GO bond and a sales tax bond. After reviewing interest rates of sales tax bonds, we discovered that we could reduce the total long-term cost of the project if we simply used a GO bond rather than a sales tax bond. This is because sales tax bonds typically come with a higher interest rate than GO bonds.
It is important to note that these numbers are all projections based on current levy rates. The district may experience some fluctuation as we always have, due to special education deficits, cash reserve needs or management fund needs. However, we do not anticipate significant fluctuations and we will leverage additional sales tax dollars to minimize the impact on local taxpayers as needed.
While the numbers can get complicated, the bottom line is that the district is in a unique position to address its facility needs without burdening local property taxpayers.
Sincerely,
Dr. Andy Crozier
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