School board briefed on bond limits
School board briefed on bond limits
Schools leaders could ask voters for nearly $180 million to modernize Alameda’s public schools, a bond consultant told the Board of Education on Tuesday night. The board is considering whether to put a bond measure to fund schools fixes on the November ballot.
That dollar amount reflects the total bond debt the district could incur based on what’s still owed for 2004 Measure C bonds and projected property values over the years property owners will pay off the debt. Board members didn’t discuss how much debt they might ultimately ask voters for permission to take on.
The new figures were presented as part of an ongoing effort to shape a bond program to fix up Alameda’s schools and modernize them to meet students’ current and anticipated educational needs. A final community meeting on proposed facilities fixes is set to begin at 7 p.m. today at Lum Elementary School, and the school board will be tasked with approving a final plan and deciding what they will ask voters to let the district spend money to fix.
The district unveiled a facilities assessment in 2012 that detailed $92 million in needed fixes, though cost estimates for upgrades that have been proposed for the master plan have not yet been released. The district has also released a report detailing the facilities changes that should be made to support students’ educational needs and a demographic report projecting an increase of 1,000 students over the next decade.
The state law that allows school districts to issue facilities bonds with 55 percent voter approval – Proposition 39 – limits the amount of debt a district can issue to 2.5 percent of the total assessed value of property in the district. The total value of property in Alameda is assessed at nearly $10.5 billion for 2014-15, which lets the district take on $262 million in bond debt.
The district still owes $59 million of the $63 million Measure C bonds, lowering that amount to $202 million (the interest owed on the bonds isn’t included in the calculation). Layering in one more restriction – a per-bond cap in the amount districts can charge of $60 per $100,000 in assessed value – lowers that amount to $179.5 million based on historical property values.
Under that scenario, the district could consider issuing three separate series of bonds, with the first in 2015, if voters say okay. Under a more conservative scenario offered by the district’s bond consultants, the board could ask voters for $161.3 million, which could be spread over two bond issues. In both cases, the bonds would be paid off by 2042 – 25 years after they are issued, as now required by state law.
If the district were to ask for voter approval to take out $179.5 million in bonds under current interest rates and property values, a resident whose home is worth $405,000 – the average home value in Alameda, according to a presentation given to the board – would pay $243 a year toward the new bond and a total of $455 a year when the cost of Measure C is included. Measure C won’t be paid off until 2036.
A series of $179.5 million in bonds could cost the district $155 million in interest, the bond consultants said Tuesday.
In addition to lowering the voter approval threshold and limiting the amount of debt a district can take on, Proposition 39 requires school districts to evaluate safety, class size reduction and information technology needs in assessing its bond-funded project lists and to perform spending audits. A separate law requires a citizen oversight committee to monitor spending.
Board member Mike McMahon asked whether the property value projections took into account a slew of developments planned for the city’s Northern Waterfront and ultimately, Alameda Point – development that could increase the amount of money the district could ask for or potentially, lower property owners’ payments.
The district’s consultant said the projections were based on historical growth during a period that included the 2008 recession – when property values in Alameda were flat.
Board member Barbara Kahn asked if the district could set aside bond money for cost overruns, so the bond program doesn’t run out of money before all the projects in it are built. The money must be tied to specific projects, the consultant said, and most of the money is supposed to be spent within three years of bonds being issued.
The board is expected to consider a facilities plan in May, and board members could sign off on a bond measure in June if two-thirds of the board offers its blessing.