Glendale school officials are looking to increase the current bond tax rate, charging property owners more per year, but saving more than $200 million in interest over the life of the bond.
In April 2011, voters approved the $270-million bond with a landslide 69.5% of the vote, significantly above the 55% threshold needed to pass.
But back then, Glendale school officials told voters that property taxes for both the Measure S and 1997 Measure K bonds would remain at $46 per $100,000 assessed value during the 30-year financing plan.
But with the implementation of a new state law this year, school districts are required to pay off capital appreciation bonds within 25 years.
The bill was created, in part, to avoid previous situations where some districts agreed to pay up to 20 times what they paid on construction projects.
The Placentia-Linda Unified School District planned to pay $280 million over the course of 38 years to receive $22 million in construction funds, according to the Orange County Register.
Glendale school officials pay about $2.18 for one Measure S or Measure K dollar.
Now that Glendale school officials are planning to issue its remaining bond funds on a 25-year financing plan, they look to increase the current $46 tax rate to $60. If the current and lower tax rate were maintained, Glendale would need to delay its schedule for issuing bonds by about seven years, according to Eva Lueck, chief business and financial officer for the district.
By increasing the tax rate by $14 per year, local taxpayers will save about $213 million in bond payments, she added.
Even so, Lueck said school officials are concerned over voters’ trust in the district as they look to increase the tax rate.
“We had told them we were going to focus on keeping the $46 rate,” she said. “It’s that trust. We don’t want to violate that trust we made.”
The $270-million Measure S has largely picked up where the 1997 Measure K bond left off, leading to the construction of solar panels, improved security measures and the expansion of the district’s technological infrastructure.
It has also paid for roof and gym floor improvements, Hoover’s track and field upgrade and the forthcoming all together reconstructed College View campus for special needs students, among other projects.
The Glendale school board is expected to vote on the increased tax rate at its April 1 meeting.
In the meantime, Lueck said school officials will continue to publicize the change.
“From our perspective, we feel we made a commitment. We want all the property tax owners to know why we are changing that commitment…Our concern is, later on if a future [school] board holds an election, we don’t want them to look back and say we wouldn’t keep your promise.”
By increasing the rate and keeping to the same schedule at which it issues bond funds, district officials say they will be enabled to access millions in state funds that require a district match — a plan district officials say require the Measure S funds.
For school board President Nayiri Nahabedian, the district’s decision to increase the rate is a financially sound one that should increase voters’ confidence in the district.
“It’s like making a good decision for your family,” she said. “We are entrusted to make sound, financial decisions for our Glendale family, and after looking at all of the options and speaking to a lot of stakeholders, it is the case that this is the soundest decision to make.”
Follow Kelly Corrigan on Twitter: @kellymcorrigan.