Monday, October 28, 2013

LETTER: Can Lake Washington School District taxpayers afford another $755,000,000 in bond debt for school construction?

By Susan Wilkins
 
In 2006, voters approved the sale of $436,000,000 in 20-year bonds to pay for school modernization.  The ballot measure that voters approved, Proposition 3 (see below*), specifically said that bonds would be sold to pay for the "modernization" of the schools. The school district tore down and rebuilt every school on the modernization list calling the teardowns "new-in lieu" construction. The district claimed that the remodels would cost 90% of what new construction would cost and thus justified tearing the buildings down rather fixing them. 

Ten schools were torn down and rebuilt including 6 elementary schools (Frost, Muir, Keller, Sandburg, Bell and Rush), 2 middle schools (Finn Hill and Rose Hill), Lake Washington High School and International Community School. Only one new school, Carson Elementary, was built as part of the 2006 bond measure.  Rebuilding these schools from the ground up was far more expensive than remodeling them.  The school district sold $417,000,000 in bonds between September 2006 and September 2010 to pay for all the construction.  Together with 1998 construction bonds sold for Phase 1 modernization and bonds sold in 2012 to pay for additions at Eastlake and Redmond High Schools, the Lake Washington School District now has $486,000,000 in outstanding bond debt.

In 2013-2014, the district will spend $51,500,000 on bond principle & interest payments for bonds issued in 1998, 2006 and 2012. And taxpayers will continue to pay $50,000,000 per year until 2020 and then $40,000,000 per year until 2025 in order to pay off these construction bonds. This will cost the median homeowner $57.00 per month through 2020 then $44.00 per month through 2025.

The district is proposing the 2014 bond measure to sell another $755,000,000 to pay for more "modernization" construction plus 3 new elementary schools, a middle school and more high school space.  They tell us it will only cost $30.00 per month for a median priced home assessed at $450,000.  In fact, the owner of a median priced home will pay about $60 per month - if the bonds are issued with 4% interest.  This is ON TOP OF THE COST for the 1998, 2006 & 2012 bonds and the EP&O and Capital Projects levies.  Read More >>
If the 2014 EP&O levy, the Capital Projects Levy and the Bond measure all pass, homeowners and business owners can expect to see their school taxes go up by 45% within 5 years. Taxpayers will be responsible for making $100,000,000 per year in bond payments on over 1.2 BILLION DOLLARS in construction debt.

October is tax collection month for King County. Take out your tax bill and look at the line that says "Local School Support".  Add 45% more onto that line to get the total that you will be paying in a few years after all the new bonds are issued.  All homeowners and business owners will see their school taxes go up significantly.

$450,000 Median priced house                 $1764 (2013 taxes)    $2549 (2018 taxes)
Gerk's Bikes (assessed at $728,000)      $2850 (2013 taxes)    $4125 (2018 taxes)
Half Price Books (assessed $1.2 m)        $3900 (2013 taxes)    $5775 (2018 taxes)
Redmond Sq Apts (assessed $16m)    $60000 (2013 taxes)    $88000 (2018 taxes)

The new schools that the district has built are fabulous, gorgeous, oversized and state-of-the art in every way.  But when the district has spent the next $755,000,000 to tear down and rebuild 6 existing schools and construct 5 more new schools, they will be coming back to taxpayers for more construction bond money in 8 years.  Can we afford this?

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*Actual wording on 2006 Bond Measure:
PROPOSITION NO. 3
LAKE WASHINGTON SCHOOL DISTRICT
GENERAL OBLIGATION BONDS - $436,000,000

The Board of Directors of Lake Washington School District No. 414 approved Resolution No. 1969 concerning this proposition for bonds. This proposition authorizes the District to modernize Lake Washington High, Finn Hill and Rose Hill Junior Highs, Bell, Frost, Keller, Muir, Rush, Sandburg and Community Elementary Schools and International Community School, construct and equip a new elementary school and make other capital improvements; to issue $436,000,000 of general obligation bonds maturing within a maximum term of 20 years; and to levy additional property taxes annually to repay the bonds, as described in Resolution #1969.  (Source: King County Elections)

8 comments:

Susan Wilkins said...

I have no idea where the school district got the $30.00 per month or $365 per year cost for the Bond Measure. It is completely inaccurate and totally misleading. Their official brochure has this $30/month number on it too.
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How to figure out the "Approximate levy rate/$1,000 Assessed Value" that appears on the ballot...

The 2014 EP&O levy includes the following table:

Collection Years Approximate Levy Rate/$1,000 Assessed Value Levy Amount
2015 $1.85 $63,000,000
2016 $1.88 $64,900,000
2017 $1.90 $66,800,000
2018 $1.92 $68,900,000

To figure out where the middle column with $1.85 comes from, we first need to get the total assessed value of all the property in the Lake Washington School District. The King County Assessor's Office provides this number to school districts. In 2012 the total assessed value of property in the school district was $33,678,896,894. (It will be higher for 2013 as home prices have gone up.)

Divide $33,678,896,894 by 1,000 to figure out much money will be collected if taxes are assessed at $1.00 per thousand.
($33,678,896,894 / 1000 = 33,678,896.84)
To figure out how much it will cost to collect $63,000,000 for the 2015 EP&O levy, divide 63,000,000 by 33,678,896.84.
It equals about $1.85 per thousand.
So a $450,000 median priced home (using the 2012 value) would be assessed $1.85 x 450 to get $837 annually or $69.75 per month. This is how much the EP&O levy will cost the average homeowner. Properties assessed at $200,000 would pay 200 x 1.85 = $370 per year. Properties assessed at $600,000 would pay 600 x 1.85 = $1,100 per year. (Remember: this is only for the EP&O levy.)

The $147 per month came from the total 2013-2014 levy and bond payments.
EPO Levy: $64.50 CP Levy: $25.12 Bonds: $57.38
$64.50 + $25.12 + $57.38 = $147.00 per month or $1746 per year.

On your 2013 tax bill, look for the line that says Taxable Value. Divide by 1000 then multiply by 3.92. That will tell you about how much you're paying in school taxes for 2013 based on 2012 assessments.

In 2013, the assessed values on homes went up, so the total assessed value of all property will go up in 2014. Additionally, all of the new homes and office buildings that were built in the district will cause the total assessed value in the district to go up. With more property in the district, the levy rate per $1000 in assessed value will go down so taxes per 1000 will go down a little, but only by a few pennies per thousand.

If you're confused, I can tell you that I have to step through this very slowly and carefully, too. But I checked and rechecked my numbers and calculations and I'm sure that they are correct.

Mommy said...

I haven't crunched all these numbers, but I do have one comment: LWSD schools are 'gorgeous' but they are definitely NOT 'oversized'. Rosa Parks was at double capacity within a few years of opening, because apparently those 4BR and 5BR homes were still assumed to have 1.7 kids (doesn't it make more sense that larger houses = disproportionately larger families)?! So above and beyond this bond measure, we need to be asking what math is going INTO that equation of predicting school populations? If we know we are repeatedly outgrowing our schools (which we are) and we are unwilling to redraw boundaries (which, for the most part, we are), we can't address overcrowding by piggybacking levies and bonds and patching solutions - we need to do the math right the first time and/or have a clear plan in place besides 'oops we need more money.'

Anonymous said...

There’s no question that these bond issues are designed and sold to pay for the systematic replacement of all our schools under the guise of modernization.

A big problem we face, tho, is that the district has a vigorous publicity department and a skilled and well organized bond and levy sales committee.

This bond issue was carefully timed to fall after this probably low turnout November general election so there would be no problem with validation. They should easily get enough voters to validate the february special election.

They only need a simple majority to pass the levies, but they still need a 60% majority to pass the bond issue. You can bet the levy committee will be pulling out all the stops to get every yes vote possible for the bond issue.

We need to figure out and pursue some way to get every person possible who opposes this bond issue to actually cast a no vote to prevent a majority of yes votes.

Anonymous said...

As a parent with students in the school system, my question is how can we NOT pass both the levy and the bond. If you disagree with how the district spends the money then write a letter to the district. But don't vote no just to spite the district. In the end, you are only hurting the students. The bond will pay for additional schools. Before you vote no, go visit some schools that are currently overcrowded and ask the principals what their estimates are for the next few years. Then tell me where those kids should sit for their classes and lunch. You may not like the way the modernization process is going forward but we need those additional schools.

Ryan Petty said...

Yes, anonymous. Let's give the school district carte blanche to spend 3/4 of a billion dollars--especially given their poor track record with past expenditures and their apparent poor math skills when it comes to estimating class loads for schools. The district, city and county depend on low information voters like you. Congratulations! You did it all "for the children".

Anonymous said...

REBUILD JUANITA HIGH SCHOOL.

Its in complete despair and shouldn't have to wait until 2025 to get one of these modernized, 3 story building with a large gym.

Dave Griffin said...

Lake Washington School District is low balling bond repayments when they say only 0.53 per $1,000, this only applies to early years.

Per documents provided by Bond from bond issuer D.A. Davidson in constant dollars:

2019 - $ 30,2 M or ($0.89)

2032 - $ 54.4 M or ($1.61)

2041 - $ 71.0 M or ($2.10)

Also we are still paying off $ 6627 Million in principal and interest on 1998, 2006, 2012 bonds.

What we need is a reasonable request from LWSD until then REJECT, LWSD needs to be a place where people can afford to raise a family with affordable housing and schools.

School Construction said...

Great post! Been reading a lot about different cases of school district construction. Thanks for sharing your thoughts!

 
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