District discusses funding renovations by raising taxes to
voter-approved level
Morgan Hill – The Morgan Hill School District is considering raising taxes to a level voters first approved in 1999 in order to raise as much as $8.6 million to finish renovations to Live Oak High School.
Superintendent Alan Nishino called a special board meeting on Thursday night featuring a presentation by California Financial Services to demonstrate how trustees could “refund” some of the bonds issued in the June 1999 election to gain additional revenue for renovations.
If the board decides to select the largest of three possible refunding options, it would raise an additional $8.6 million for the district. Taxpayers would see an initial tax rate increase to $65 a year per $100,000 of assessed property from the current rate of $47 under that option. Though the move would increase taxes property owners pay, it will also save almost $1 million in interest and bring the $72.5 million bond to maturity seven years early by 2018.
The decision will be made by the district trustees and will not go to a public vote. Deputy Superintendent Bonnie Tognazzini said taxpayers already agreed to the $65 rate when they passed the original bond in 1999, after three attempts by the district. The rate had decreased to $47 annually per $100,000 of assessed property value as Morgan Hill’s tax base grew.
The bond was earmarked to pay for the construction of Sobrato High School and Barrett Elementary in addition to renovations at Live Oak. Once Barrett Elementary and Sobrato High were finished, only $4 million of the bond remained to complete Live Oak – the district had already spent $23 million on the first two phases of renovation, which included classroom buildings, a new library, pool, practice gym and track and football field. The school still needs work on the auditorium, locker rooms and other classroom buildings.
“This may be an opportunity to have some additional resources with the same source,” Tognazzini told trustees. “refunding is no different than if you took a second mortgage on your house. This is a board decision, not a taxpayer decision … We know just the auditorium and the boys’ locker room will take some substantial funding. We already have a priority listing for projects, we know what we have done and what haven’t done.”
Addressing possible concerns about mismanagement of the original bond funds, Nishino said overspending on construction is common.
“I don’t think there’s a school district that hasn’t had cost overruns, had to downsize projects. It’s typical and normal,” he said.
Trustee Don Moody said he would need additional information about proposed renovation projects.
“I would like to see an estimate of costs from Al (Solis, director of construction), including the soft costs, whatever it will take,” he said. “That’s something that’s going to help me make up my mind.”
Trustees will consider passing a resolution to go ahead with refunding – but not necessarily a specific option – during their regular meeting Tuesday at 6pm.
Michael Ogburn, senior vice president of California Financial Services told trustees he would recommend the refunding option that would give them the highest yield, as they can only refund the bond package once every 10 years.
Trustee Shelle Thomas said she wants public input before deciding.
“My decision will be based on input I receive from the community,” she said. “We know the needs Live Oak has. We know the commitment that was made to Live Oak. We are going to be evaluated on the decisions we have made in the past and how well we spent the bond money in the past. We need to make sure we are in a good position to embrace this idea and make sure our community embraces this idea.”
Trustee Julia Hover-Smoot said she has grave concerns about the refunding.
“It’s a big step,” she said. “We would be acting to raise the current tax rate because the current tax rate is not that high.”
Trustee Kathy Sullivan said there are positives for the taxpayer.
“You have to remember when you’re talking about the taxpayers that the value of a good school system definitely increases the value of their property,” she said.
Nishino said the district would be serving the needs and wishes of the taxpayers with the refund.
“Live Oak is the primary piece of this whole thing,” he said. “We wanted to fix Live Oak the way the taxpayers thought it would be. We want to take care of the needs of Live Oak, but the thing this will do is allow us to then use other funding to take care of other projects. This is a one-shot deal. When you go out there looking for funding for education, deals like these don’t come very often. We really need to take a look at the long-term benefit to the district.”
