When it comes to improving our school buildings, there’s no free lunch.
Four East Bay districts are proposing bond measures to raise money to construct or rehabilitate education facilities. But, bonds are a form of borrowing, much like a mortgage. The money must be paid back.
So school bond measures are also property tax measures, with the money raised used to pay off the debt. The total tax needed depends in part on the amount of money borrowed, interest rate for the bonds and duration of the payback period. The responsibility for paying off the bonds is divided between property owners based on the assessed valuation of their properties.
For our evaluations of the bond measures, we look at the districts’ plans for spending the money and the details of the financing. We also consider other supplemental school taxes that property owners already pay for past bonds and for ongoing district operations.
Here are our recommendations:
Antioch Measure B – Yes
Antioch is a tale of two cities — and that applies to school property taxes, too.
In the older parts of the city, residents in 2008 and 2012 voted to tax themselves modestly to make the payments on $118 million of bonds for upgrades to aging schools.
Meanwhile, in the newer sections of Antioch, built since 1989, property owners had been paying so-called Mello-Roos taxes to fund the construction of the schools there. Those taxes expired in 2016.
School officials have identified and prioritized over $1 billion of repairs and upgrades needed in schools across the city, about half of which are in the newer part of the city.
In 2020, the district sought voter approval in the newer part of the city to issue $105 million in bonds for school improvements there. It barely failed, garnering 54.62% of the vote when it needed 55%.
This time around, with Measure B, they are proposing a districtwide bond measure of $195 million. It’s still only a small portion of the need in Antioch. But it’s a reasonable start.
The bonds would be issued over about the next six years and would be paid off by 2059. No bonds would be issued for more than 30 years.
Paying off the bonds would cost property owners across the city up to $48 per $100,000 of assessed valuation. For a home with a median assessed valuation of $307,210, that works out to payments of about $147 annually.
Those in the older part of the city would also continue to pay off the bonds approved in 2008 and 2012, bringing their total, including the Measure B bonds, to $128 per $100,000 of assessed value, or $394 annually for that home with a median assessed value.
The spending plan is modest, and the taxing plan is reasonable. Voters should approve Measure B.
Hayward Measure I – No
The Hayward district has a legitimate need to upgrade aging schools. But this $550 million bond measure is too large.
Except for the fiscally reckless and much-larger West Contra Costa school district, no K-12 district in the East Bay has considered issuing so much debt to fund school reconstruction.
Voters in 2008, 2014 and 2018 approved the district’s issuing $816 million of bonds. Now school officials are asking for permission to borrow another $550 million.
The principal and interest on the outstanding bonds and the ones proposed in Measure I would cost taxpayers $2.4 billion over the next 34 years.
Consequently, property tax rates for school bond repayments would jump 62% in two years, to $154 per $100,000 of assessed value in 2026, according to district estimates. That works out to $836 annually for an average home with an assessed value of about $536,000.
At the same time, since the 2014 voter approval, district enrollment has declined 16%. And district projections show that trend continuing in the years to come.
The district, in trying to sell Measure I, has emphasized the need to relocate Bret Harte Middle School because it’s seismically unsafe and to build a new facility. Bret Harte has only about 560 students, or roughly 3% of the district’s total.
We certainly don’t want students housed in dangerous buildings. But the $110 million cost of rebuilding the school is not justification for a bond measure of five times that amount.
Fiscally responsible voters should reject Measure I.
Moraga Measure D – No
In 2016, Moraga school officials went to voters seeking borrowing authority to raise money to upgrade their elementary schools. We supported it at the time.
District officials had conducted a study that identified $18.5 million of construction projects at the schools. They added in another 14.5 million for contingencies, soft costs and escalation. With that study, voters approved $33 million of bonds.
Now the district is back, this time seeking another $52 million. They’re using similar boilerplate ballot language about needing to upgrade classrooms, replace leaky roofs and windows and provide modern technology.
But unfortunately, this time, there is no clear plan with a budget and priorities. They’re putting the cart before the horse, asking for money before they figure out how to spend it.
The measure would add about another $300 a year to the property tax bill for an average homeowner.
As it is, property owners pay $833 annually for parcel taxes for the operations of the Moraga district, which serves kindergarten through eighth-graders, and Acalanes high school district.
And they make payments to cover the bond costs of the two districts of about $55 per $100,000 of assessed value. Measure D would increase the bond payments to about $86 per $100,000 of assessed value. Put another way, the owner of a home with an average assessed value of about $943,500 would see annual payments for bonds increase from about $520 to about $811.
Moraga’s financing plan would be reasonable if there was a clear spending plan for the money with delineated priorities. But that’s lacking. Vote no.
San Leandro Measure J – No
When the San Leandro school district sought voter approval in 2020 for another school bond measure, we recommended against it, noting that it would be the fifth one on the property tax rolls.
Now the district wants property owners to pay the tab for a sixth bond measure, this one for another $174 million, on top of $514 million authorized in prior years. It brings the total amount of approved bonds to a whopping $80,000 per student and the future debt service — principal and interest — to over $1 billion. This is for a district with just 8,600 students.
Property owners already make annual payments equal to $180 for every $100,000 of assessed valuation. For an average home in the district, with an assessed value of about $482,000, that works out to $867 annually.
District officials claim the measure won’t raise taxes. Indeed, the way they propose to structure the debt for Measure J would not increase the annual tax rate for all the bond measures.
But that’s in part because they plan to postpone a significant portion of the Measure J repayments for more than a decade, until bonds from some of the earlier measures are paid off. That postponement will drive up the borrowing cost and the total price for taxpayers.
There’s another problematic issue with Measure J: District officials plan to spend about a third of the money on designing, acquiring and constructing rental housing units for teachers and staff, including all related amenities and facilities.
What exactly that would entail is not clear. How the district could provide housing more cost-efficiently than private developers is also not clear. And while stating in the measure that none of the bond money would go to teacher salaries, providing subsidized housing is just another form of compensation.
Yes, we need to help our teachers, police officers, firefighters and other essential workers live in the communities where they are employed. But there’s already an approved countywide housing bond measure that adds to property tax bills. Having every school district and city pile on with their own housing measures is not the answer.
But even without the housing element of Measure J, the economics of the plan, like for the one in 2020, do not make sense. Voters should reject it.