Measure G bonds tax rate could increase, adviser says
An increase in the average projected tax rate for Measure G bonds in the Mill Valley School District could be in the cards, a bond adviser said.
Greg Isom told the district's board of trustees that the tax rate for the $194 million school bond passed by voters last June could rise from the average of $26 per $100,000 of assessed value, which was most prominently mentioned in the bond measure language, to an average of $28 or $29.
The language included a note that the maximum tax rate for Measure G was $30 per $100,000 of assessed value. However, the $26 per $100,000 figure was what was listed on the ballot and in the campaign, Isom said.
“That's a $3 increase, or 14% more than what we told the voters was going to happen,” trustee Yunhee Yoo said at the board's meeting on March 9. “I'd like to communicate very clearly to everyone in the community that our parameters have changed. I want to be very transparent about it.”
Yoo's comments followed a presentation from Isom on three revised options in schedules for selling the $194 million in bonds. The trustees had asked for the revisions after earlier schedules failed to show the district accumulating the $150 million it needs to rebuild Mill Valley Middle School within five years.
Yoo, a former finance specialist who won election to the board in November, said the earlier schedules for bond sales showed the last of the $150 million coming in by 2030. She added that, in addition to a higher tax rate, the revised schedules are also showing the district's debt repayment amount for the bonds will increase by $20 million from what was estimated earlier.
Board president Michele Crncich Hodge said this week that with interest rates rising and uncertainty in the banking market,
she was glad to have some clarity on the sales schedules that will achieve the district's goal of rebuilding the middle school.
“Of course, we understand that everything is evolving with the economy,” Hodge said Wednesday. Hodge said the matter was discussed further on Thursday at a meeting of the citizens bond oversight committee.
“We know that with a lot in flux, we're eager to hear if there is any movement,” Hodge said. She said the trustees have not yet selected a bond sale schedule option.
Isom said he is confident that the district, which has a AAA credit rating from Standard & Poor's and a tax base of nearly $14.5 billion, would be able to have a successful bond sale, whichever option is selected. The district's tax base has been growing an average of more than 5% annually, he said.
He said the increase of an average $2 or $3 per $100,000 assessed value in projected tax rates — and the extra $20 million in debt — is mostly because of recent interest rate increases as the Federal Reserve attempts to dampen inflation.
“For a district this size, it's all about the interest rates,” Isom told the board. “The recent jump from 3% to 4% is probably your $20 million right there. This is stuff we have no control over.”
He urged trustees to remain calm about the fluctuations.
“By the time you get to the 2026-27 bond sale, if your tax base outperforms the 5%, and if the rates go down, the added interest will just go away,” Isom said. He said the three schedule options he presented were calculated as of March 6.
Kimberly Berman, the district's superintendent, said trustees in any case need to create a project list before they select a bond sales schedule. She noted that the bond will be discussed at upcoming board meetings, and that the finance committee also plans a presentation.
Under the three options presented by Isom, the district could authorize bond sales of between $22.6 million and $54.5 million in this fiscal year, depending on which option is selected.
In 2024, there could be bond sales of between $52.6 million and $74.9 million.
In 2027, sales could be between $50 million and $79.5 million. At that point, each of the three options would have allowed the district to raise the $150 million it needs to rebuild Mill Valley Middle School, Isom said.
In 2029, the three schedule options allow for bond sales from $17 million to $46.5 million. Isom said the trustees could decide when to allocate bond sales revenue to finish other projects, such as safety improvements at the district's five elementary schools.
In other bond matters, the trustees have sent out a request for proposals for architectural and engineering services for the new middle school and the other bond projects. The deadline to respond is April 17, with trustees to interview candidates on May 1.
A team from AECOM, a construction management firm, was hired at the Feb. 9 board meeting. Company representatives will sit in during the May 1 interviews for the architectural and engineering firm.
On June 7, the trustees are set to review a master agreement between the construction contractors and the architects.