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Rhonda Odom, the Putnam County School District’s assistant superintendent for business and finance, explains the bond referendum plan to the school board earlier this month.
CRESCENT CITY – Money was on local residents’ minds as Putnam County School District officials spent more than two hours answering questions regarding the agency’s plan to build new schools.
Officials said they received more than 90 questions before the community forum Thursday that centered on the district’s revitalization plan. Of those questions, 15 focused on how the district’s plan affects residents’ money.
The goal of the revitalization plan is to consolidate and rebuild schools over a period of 10 years. The district plans to use state money to revamp its junior-senior high schools and would use a bond referendum to fund building six elementary schools.
The bond referendum, which voters are asked to approve on the November general election ballot, would require increases in property taxes. The referendum – to be paid off in 30 years – is the best, most efficient course of action the school district has in securing the money, officials at the meeting said.
The Palatka Daily News will be splitting up some of the most-asked questions from the meeting into a three-part series about the district and its revitalization plan. Rhonda Odom, the district’s assistant superintendent for business and finance, answered the following questions from Putnam residents:
Why do you want to burden the homeowners with more property taxes when it would just be more fair to raise the sales tax? Then everyone pays, not just homeowners.
“Florida sales tax rate is currently, of course, at 6%. In Putnam County, we’re at 7% because the county has the Better Place Plan, which is a penny sales tax. … If we did another penny sales tax, which would put our county at 8%, it would only bring in roughly about $5 million. Now, I realize $5 million is a lot of money. I’m not putting that down or anything. But what we’re wanting to do is build six elementary schools that have projected costs of $300 million. So, in asking for a sales tax instead of a bond referendum, it would take 10 years to build one school, 60 years to build all six. That’s the reason we looked at general obligation bonds instead of a sales tax referendum.”
How long will we be paying extra taxes to support your plan?
“General obligation bonds will be paid back over a 30-year period. Bonds provide a way for a local government to raise money for projects that are not funded elsewhere. For a school district, they are backed by our ability to raise taxes through voted millage in the form of a property tax. Therefore, a “general obligation bond” is the additional tax placed on Putnam County homeowners over a 30-year period to fund the six new elementary schools.”
How will this affect property taxes?
“One example: If we use the appraised value of $125,000 with a school homestead exemption of $25,000 you’re left with a taxable value of $100,000. … So, if we sell $50 million in bonds in year one to build a first elementary school, the effect on that house, which has a taxable value of $100,000, is $55.25 of additional taxes. … Based on our bond calculator … for $50 million of bonds sold at a borrowing rate of 4.44% and a taxable assessed property value of $5.6 billion, the millage required to meet the principal and debt obligation in year one after sale of bonds is 0.5525 mills. A mill in property taxes is equal to $1 of tax for each $1,000 of taxable assessment.
“If we then sell another $50 million of bonds in, say, year three to build another school, then the additional increase would be $104.98 instead of the $55.25. … At the highest point for that property owner after all $300 million of bonds had been sold, it would be an increase of $266 in property taxes. We are projecting that to be in year six and then the additional taxes would go down each of the next 24 years. The average increase to property taxes over the entire life of the bond repayment time for that home with $100,000 taxable value is $168 annually added to that tax bill. A similar estimation can be provided for any property value.”
What interest rate assumptions were used in your projections?
“A 30-year interest rate for an all in true interest cost of 4.44% was assumed for fiscal year (2022-2023) up to a 4.75% interest rate in fiscal year (2027-2028).”
She added the district expects to sell bonds four times in those 30 years, which also includes $50 million in fiscal year 2024-2025 with an interest rate of 4.51%, $100 million in fiscal year 2025-2026 with an interest rate of 4.74%, and $100 million in fiscal year 2027-2028 at a 4.75% interest rate.
“As the interest rate is tied to the 30-year (U.S.) Treasury note, which is currently at 3.22%, we would expect the 30-year bond issuance rate to remain below the current projection.”
Does the district anticipate that new schools will reduce district operating expenses? If yes, will these savings be passed on to taxpayers in the form of a reduced millage rate?
“New schools will hopefully reduce current operating expenses. However, operational costs are continuing to climb. Florida Power & Light and Clay Electric recently raised their rates. Our retirement rates went up. Minimum wage was increased from $10 (an hour) to $15 an hour by the Legislature for this fiscal year. Diesel and gasoline prices increased. Property insurance increased, etc.
“We are already at the lowest operating millage allowed as set by the Florida Legislature. If we do not levy the required local efforts set yearly, we lose the 60-plus million dollars of state funds that are provided to operate our district. So, as we already levy at the minimum allowed, savings will not be passed on to taxpayers in the form of reduced millage rates.”
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