Property Values and Taxes: You be the Judge
The high school bond is not only about building a school for our students. For many voters, the decision comes down to two issues: property values and property taxes. We all know property values are dependent on many factors, including; proximity to employment, reliable city services, a reasonable tax structure, the perception of a community and, of course, the reputation of the local school district.
Never before has our community been presented with a high school solution that actually lowers our school taxes by 20%, as the proposed new tax is less than expiring taxes. Consider the attached chart so you can see how your taxes will go down. Or, for more information, visit http://www.onebloomfieldunited.com/millage_details and use the tax calculator to determine your own personal property tax reduction.
Never before was there a plan that had so much detail and clearly defined the savings for the school district. The BHS will save $2.4 million per year with the bond passing and only $1 million per year if the bond fails. This savings preserves programs, which in turn preserves our school districts reputation and our property values. Ed Bretzlaff (head of student curriculum) said “he wanted the committee to know that K-12 programming would face cuts if the bond fails, not just high school programming.”
So, as a tax paying community member, ask yourself what impact voting yes will have on your property values vs. voting no. Will a home buyer say, I want to move to Bloomfield because they turned down a bond that lowered their taxes? Will a home buyer say, I want to move to Bloomfield because now they have larger class sizes and fewer programs? Or will a home buyer say, I want to move to Bloomfield because after 8 years of working to find a reasonable solution, the voters got it right. They approved a financially conservative, comprehensive, and value oriented plan?
"I have been a realtor in the Birmingham/Bloomfield district for over 25 years. I can very firmly support the fact that strong schools build a strong community. For that reason, we have enjoyed property values above many areas around our state.
Keep our property values strong. I urge you to vote yes on May 8th"
--Gwen Schultz
This voter looks forward to voting YES on May 8th so I can preserve my property value and lower my taxes.
Elizabeth
10:06 am on Saturday, March 31, 2012
Excellent blog!
Vote YES on May 8th!
Chris
9:03 am on Sunday, April 1, 2012
When you vote for a tax increase, your taxes go up. It's that simple. When the district pledges they won't ask for more in the future, then your argument begins to hold water. I don't believe the district can make this pledge because they cannot survive without sinking funds forever. Even the brand new high school will require sinking funds shortly after it is built.
You and the district are misleading voters by not telling the rest of the story.
Joe Judge
2:34 pm on Sunday, April 1, 2012
Chris: It’s a fair comment on your part to say that we’ll always need to support our facilities, and yes we do that through sinking fund money, but how does voting “no” help this situation?
Here’s the “rest of the story” about your side’s proposal. Your side also now proposes a new $30M bond for the high schools … and, of course, that’s more in the way of a taxes. So if we follow your proposal, we end up with 1 high school and way too much building space (capacity for something north of 2,400 students, with projected enrollment of 1,650)… but I do concede that all that space would be renovated to at least a basic usable condition.
Here’s the problem with your plan, however, you’ve diverted all the facilities money (and taxed and raised even more) for the high school buildings. There’s nothing left for K-8!. Under your plan, wouldn’t you have to come back to the voters (pretty quickly I would imagine) and ask for even more sinking fund money (i.e., more taxes) to support the K-8 schools? Of course you would…and you would have to come back sooner ... and that’s the rest of the story.
I’m off to coach basketball. I will try to reply to any further posts this evening. I’ll say this, as I do with most of my posts, I really do respect your opinion. I just think we have a right-sized plan, at the right price and it’s time to vote “Yes.”
Chris
3:10 pm on Sunday, April 1, 2012
Joe: I can't speak for "our side". Speaking for myself, however, I propose spending $35-$50 million on hand to fix and improve the two schools. These funds are available without a bond. Also, they are funds that do not come out of the sinking funds that have already been approved. Therefore, my proposal does not require a new bond and does not prevent maintaining K-8 through 2018.
My beef is that the Yes campaign fails to admit that they will be coming back for more sinking funds so this is not a win-win where you get a new school and lower taxes.
Further, considering the vast deficits forecast in the foreseeable future, I think this plan to commit $79M for a $1.4M / year return is simply not aggressive enough for the financial challenges ahead and severely limits future alternatives.
My real issue is that I believe that we can and should maintain both facilities, for two high schools or for 10-12 and 9th grade academy. I believe this is best for the community.
While we may have to agree to disagree, I appreciate your respectful comments and questions.
Regards,
Chris
Elizabeth
8:27 am on Monday, April 2, 2012
Chris,
I am trying to understand your logic of being willing to spend $35 to $50 million (your figures) of existing funds for renovating two buildings, especially in light of the "vast deficits" you mentioned.
I for one believe that future school budgets will be tougher and tougher to balance without impacting students and the programs offered them. So given that, why on earth would you suggest spending the district's reserves to renovate two old high school buildings rather than keeping the reserves for future budgets? That is not sensible given future budget projections and the state's propensity to limit school funding without dealing with burdensome legacy costs which is a big cause of the budget crunch.
Joe Judge
8:11 am on Monday, April 2, 2012
(Part 1)
Chris: The District doesn't have $50 Million lying around, unfortunately, to spend as you suggest. Plan A calls for putting down as much $ as we can while still being good stewards of the District's finances. You can't simply drain the tank and spend every last dime you have to fix up these buildings. You'd risk the AAA credit rating of the District and even then, there's simply not enough $ to complete the $50M in renovations you propose. The Board determined we could put down, responsibly, $20 Million (without risking our credit rating ... I'm sure you don’t want to have played a role in that happening). Under your plan, you need to come up with $30M in the short term ($50M - $20M = $30M). So "Plan B" will result in having to come back to the taxpayers for more money...almost immediately. I have not heard your side admit this (although in fairness to Mr. Roach, he's admitted that he'd be looking for a $30M bond).
Let’s skip ahead under both scenarios, either we build the school under Plan A, or we drain the all the District's resources, risk the credit rating of the District and, I think in the end, we would end up having to borrow money anyway to renovate the two schools. Under either scenario, we still collect and allocate the same sinking funds through 2018, except under Plan A we start with a larger sinking fund balance because we didn't irresponsibly drain the fund to fix up the high schools.
(continued)
Joe Judge
8:15 am on Monday, April 2, 2012
(Part 2)
At that point, the relevant question - if we're trying to determine which plan requires one to come back to the taxpayers sooner- is this: Is it more likely that we'll be required to seek a bond to fix up a recently constructed new school or is it more likely, instead, that we'll be required to seek a bond to once again fix up 2 large, still aging high school buildings? It's the latter, of course.
Your argument is essentially this: It's never a fiscally responsible act to buy a new car. That is, if you were faced with a $15,000 repair job on a 20 year old car, or $25,000 to buy new, you would spend all your money to fix up the old car. If those are the numbers (and I've made the ratio essentially the same as $50M to $78M), I think that's irresponsible. You'll either learn that the cost to repair is more than $15,000 and you don't have the money to pay for it (risk of cost-overruns with major renovations are, without a doubt, greater than new construction, I think you would admit that) or you'll be back sooner than later having to put more money into the 20 year old car when it breaks down yet again.
So, to continue the analogy, if you're looking to buy a new care and are paying off another car, such that you can purchase a new car and still see your overall car payments go down, it's absolutely true to say that your overall car payments will go down AND it's less likely that you'll have to go in for major repairs in the short term.
(continued)
Joe Judge
8:19 am on Monday, April 2, 2012
(Part 3)
With respect to your comment about spending $78M to save $1.4M, it's actually $2.4M that would be saved and it's a better return than spending $50M to get $1M a year, not that this is cold financial analysis, the "retrun" for our kids, if we buy new, is much more than money (preserving AP classes, small class sizes, co-curriculars, extra-curriculars, etc., etc.). It also protects our property values.
Appreciate the respectful conversation.
Chris
3:26 pm on Monday, April 2, 2012
Property values related to the school correlate to academic results, not facilities.
allison parr
10:58 am on Monday, April 2, 2012
Thank you Joe and Brandon for being straight forward, sensible and honest about the issues. It is clear from your thoughtful comments that you care about our community, the students, public schools and our property values! I have reviewed the tax implications and it is fair to say that a YES vote will still result in my school taxes being lower in 2014 than they are today. Obviously, this Chris Fellen person is comfortable with distorting the facts and forsaking our schools and our children for his own personal agenda. Thank you to those of you who truly care about the rest of us!
Chris
3:22 pm on Monday, April 2, 2012
I believe we have the same goal: what's best for our students and community. We simply don't agree on the best way to get there. Respectfully, we should simply agree to disagree.
Chris
3:08 pm on Monday, April 2, 2012
Joe,
Budget deficits need to be solved by significant changes to spending habits, not by spending from excess taxes collected over the years. Spending these savings becomes a bandaid that masks the real spending issues.
Chris
3:30 pm on Monday, April 2, 2012
The AAA credit rating is a red herring. When you don't have a bond or are not seeking a bond, the rating is meaningless. Also, the AAA status has no bearing on sinking funds. Today if the district had a BBB rating there would be zero impact to the district's expenses. This information from the district finance director.
Chris
3:17 pm on Monday, April 2, 2012
Joe,
The district says they will save $2.4m if the bond passes. They say they will save $1.0m. If the bond fails. Therefore the right number to be talking about is the difference --- $1.4m
Neal Charness
4:38 pm on Monday, April 2, 2012
Chris:
1. You're being civil but the "agree to disagree" phrase keeps coming up when people say your facts aren't accurate. At some point the facts are the facts.
2. This bond issue isn't about budget deficits, that's a red herring.
3. The AAA rating will disappear if we go so deeply into the sinking fund that there are not sufficient reserves. That's not a red herring.
4. The only number that doesn't work is the 1.4M. We either save 2.4 with the bond passage, or 1.0 if it doesn't.
I don't want to put you on the defensive but why 4 separate posts?
Chris
5:11 pm on Monday, April 2, 2012
1. When I think I have sufficiently explained the facts the way I understand them there comes a time when agreeing to disagree is appropriate. Further the recent poster says that I distort the facts and have my own agenda. Both accusations are completely false.
2. Budgets and debts must be managed together.
3. AAA bond rating is meaningless unless district is seeking debt (bond). Has zero impact on sinking funds currently on hand, sinking funds income through 2018, ans any future requests.
4. 2.4 or 1.4 ---- I don't care, both are too small.
I posted separately just because it was easier for me.
Neal Charness
6:19 pm on Monday, April 2, 2012
Chris: Unless I'm missing something one of the premises of the "no" position against the bond is that there is plenty of money available in the sinking fund accounts to renovate the 2 high schools. If we dissipate too much of that money so there's inadequate funds to maintain the elementary and middle schools that would affect our ability to take care of our buildings properly which would impact our finances and ratings. This is an area where we disagree but I haven't seen anything that shows how to do this without using most of our sinking funds. Other than loyalties to given high schools I don't see anything convincing that says it makes financial sense to run two schools with excess capacity. As we in Michigan well know, that just devastated the auto industry until they made better choices. Neal
Joe Judge
6:27 pm on Monday, April 2, 2012
Re: bond rating. Of course it matters. It's never a good time to lose your AAA bond rating. It's just unacceptable. It's a statement about good fiscal leadership and I wouldn't support any plan that jeopardized our bond rating. Nothing good can come of it.
$2.4m vs. $1.4m. Your missing the point that, if the bond fails, in order to save $1.0m, the District will STILL HAVE TO SPEND $35m ... so the return is $1.0m on $35m spent. I took you at your word that your Plan B spends up to $50M and so your return is $1.0m on $50m. If the Bond passes, the savings is $2.4m on $78m spent... a better return. That's the correct way to state it. How much do we spend in either scenario and how much do we save in either scenario. Again, like the tax issue, the key is to spell it out completely and accurately for people to see.
Chris
10:18 pm on Monday, April 2, 2012
Joe,
My point is whether the bond passes or fails, spending cuts of $2.4 million per year barely scratches the surface of what must be reduced from district spending. I have shared with the board sensible, reasonable ways to save $2.4 million without building a new high school. Building a new high school should not be about return on investment. It should be based on academic achievement and this has not been clearly demonstrated.
Elizabeth
8:19 am on Tuesday, April 3, 2012
Building a new school is about operating the district efficiently which in turn will preserve educational opportunities. It is about maintaining the excellent education this community is known for. The building will also enhance instruction by providing the flexible spaces for the different methods of teaching and learning. Will this boost academic achievement, I believe it will. We are already a high performing district with intelligent students and effective teachers. A new facility will enhance the learning within its walls and allow the district to maintain the curriculum.
Keeping the two existing high schools, in whatever configuration, will not be as efficient and so, more operational dollars will be needed away from the classroom. This will limit educational opportunities. The classrooms will be no different than they were in the 1960s. Will that boost academic achievement, probably not. Will our intelligent students continue to achieve a high levels, I believe they will because of our effective teachers. But it could be better.
For me, this vote is about gaining operational efficiencies in order to maintain the curriculum which is a key part of high achievement.
Chris
10:11 pm on Monday, April 2, 2012
Neal: I believe the district has sufficient funds to fix and improve Lahser and Andover. Why wouldn't they fill the excess capacity at Lahser with IA students and close that elementary facility?
From district documents you can see there is about $40 million on hand plus $16 million in the general fund plus $23 million in sinking funds on hand and approved through 2018.
So my position to keep Lahser and Andover has zero impact on maintaining K-8 facilities.
Neal Charness
10:24 pm on Monday, April 2, 2012
Operating two schools at 50-60% capacity is like running an automaker with plants at half capacity, doing minor repairs while the efficiency and quality of the product suffers. It only makes sense if there are other agendas. There were posts recently where people said it would be ill advised to mix the Lahser and Andover cultures. The other agendas are blinding some people to reality.