The Edmond Sun

February 9, 2013

$80M bond aims to stay ahead of school growth

Homeowners’ taxes to stay same as previous bonds retire

Patty Miller
The Edmond Sun

EDMOND — Edmond Public Schools officials are asking voters within its district boundaries to head to the polls Tuesday to vote for an $80 million bond proposal. Ballots will feature two propositions — $78.21 million on Proposition No. 1 for new schools, remodeling, renovations, security upgrades, land purchases and more while Proposition No. 2 is $1.79 million for transportation needs. State law requires transportation issues to be separated from the rest of the projects.

“Schools need to pass bond issues,” said Oklahoma County Assessor Leonard Sullivan. “State dollars cannot be used for capital improvements in school districts. That is why ad valorem taxes were created, to pay for bonds and bond issues were created for long-term capital improvements.”

Sullivan added school bonds are self imposed.

“The community decides and passes a bond themselves. Historically, Edmond has never had a bond issue fail, unlike other school districts,” Sullivan said. “The thing that concerns me most is that although it takes 60 percent of the votes cast to pass, less than 5 percent of the registered voters turn out to cast their ballot.”

Sullivan said many times voters will call his office after an election and say they didn’t know there was a bond issue on the ballot.  

This year Edmond Public Schools administration has done its best to get the word out to the public.

“We have spoken before organizations and PTOs throughout the city trying to get the word out,” said Bret Towne, associate superintendent of general administration.

Bonds are very much like purchasing a home and obtaining a mortgage to pay it off, only investment bonds are sold to pay the bill.

“A school district can only acquire debt up to a percentage of property value in the area,” said Mike Morrison, comptroller for the Oklahoma County Assessor’s office. This includes the land and cost of buildings within the school district.

The amount of and the length of time chosen to pay the bond off will determine how much can be borrowed and how long the school district will have to retire the bond.

In the Edmond School District the bond being voted on Tuesday will replace the next two bonds that will retire during the next two years.  

“If voters choose to pass the bond, the ad valorem tax amounts homeowners will be paying will be approximately the same amount as they have been paying,” Morrison said.

The market value of a property is reflected in the assessor’s value based on comparable sales in that area, and the county assessor’s office uses the previous year’s market value, Morrison added.

In 1996 voters passed a property tax bill limiting the amount the value on a dwelling could increase to 5 percent a year.

“They are looking at uncaptured value,” Morrison said, “what the value is worth and what people are paying. It includes already built homes and projected growth for the district.”

Last year the homeowner’s taxes on a home valued at $200,000 was $2,231, Morrison said, or $106.13 for every $1,000 the home is worth.

“For all practical purposes, even with the $80 million bond, taxes will stay equal to where they are today,” Morrison said.

Chris Cochran, representing Bank of Oklahoma as the district’s bond adviser who will handle the sale of the bonds, said, “Basically, Edmond issues five-year bonds every year so bonds have a maturity for five years. Every year we can fill in the gap with new bonds. The biggest component in all of this is the net assessed valuation of the school district. Every municipal entity has a net assessed property value and evaluated every year by the county assessor.”

The net assessed value takes of the school district includes all of the property in the school district area and places a net assessment value for the school district.

“The net assessed value for the school district is almost $1.5 billion,” Cochran said. “Five years ago it was $1.17 billion. That is the reason why five years ago the school district could issue $25 million to $35 million a year at the current tax rate and now they can issue $40 million at the current tax rate.

“You have a numerator and denominator and basically what you have is as the denominator gets larger the net assessed valuation or the numerator can get larger which in turn allows the total valuation can get larger,” Cochran said.

The bonds issued four and five years ago averaged a 3.25 percent interest rate. Cochran said they estimated a 2 percent interest rate to pay off the $80 million bond before voters Tuesday, but if the bonds were to sell today the interest rate would be significantly lower at about 1.5 percent.

“As the school district’s net assessment increases yearly their borrowing ability increases without the taxes increasing,” Cochran said.

The district had two choices, either it could choose to have a bond issue now and another one in six months, or it would have to wait 18 months to have one. By choosing to combine the two bond issues into one election, they are saving the school district about $20,000.

“We are confident that property tax millage rates will retain the stability that has characterized Edmond Public Schools’ sinking fund rates for more than a decade,” said Superintendent David Goin. “Since 2001 the tax variations averaged a decrease of $1.11 per $100,000 of home value. The greatest deviation from one year to the next was a decrease from 24.7 to 24.02 mils (tax decrease of $7.48 per $100,000 of home value) between 2010-11; the greatest increase from one year to the next was 23.97 to 24.4 mils (tax increase of $4.73 per $100,000 of home value) between 2008-09.”

Bond issue to provide for increasing number of students  

The bond will be addressing the ever-growing student population by purchasing land for a new high school, building a new middle school and elementary school, renovating existing facilities, purchasing technology, updating security measures and purchasing transportation vehicles.

With this bond issue, residents will be deciding if the district will be able to keep up with the student population growth, which has gone from a student population of 21,996 in the 2011 October student count to 22,501 in the Oct. 1 student count — an additional 505 students.

The Long Range Student Enrollment Projections and Capacity Study prepared for Edmond schools by Facility Program Management Inc. in association with McKibben Demographics Inc. projected the total enrollment for 2012-13 was 21,618.

“We currently have roughly 880 more students than the total projected,” said Susan Parks-Schlepp, district director of public information/community involvement. “For the year 2017-18 the study projected the district would have 22,207 students. This number has already been passed.”

Edmond Board of Education members are asking voters to approve $3.2 million to buy a minimum of 80 acres for a new high school complex, $27 million for a new middle school and $16.5 million for a new elementary school.

School officials are looking ahead to breaking ground for an additional high school in the next five to six years.

The new middle school will be on North Pennsylvania, just south of Edmond’s 16th elementary school, Frontier Elementary, now under construction. The additional elementary school, as yet unnamed, will be on Sorghum Mill Road and will become the district’s 17th elementary.

“Numerical growth over the last five years has exceeded 500 students per year, with an overall increase of about 2,600 students,” Goin said. “There is a need for an additional elementary school to accommodate growth in the north and northeast areas of the school district and for an additional middle school to accommodate growth along the western and north central areas of the school district.”

Goin added the passage of this bond issue will allow the district to construct new facilities to accommodate for the considerable growth in district student population.