How much will the bond cost? Islanders debate the issue
By LESLIE BROWN
Vashon-Maury Island Beachcomber Editor
January 20, 2009 · Updated 7:20 PM
Carol Ireland-McLean, a retired nurse and health care administrator, says she has always voted for school measures and expects she will when the ballot for the $75.5 million bond proposal gets mailed to her home next month. But in the next breath, she notes she’s worried about what it might cost her in escalating property taxes.
“I live on a small retirement and Social Security,” said Ireland-McLean, a mother and grandmother. “At the beginning of the month when I pay my bills, I see the balance and think, ‘Holy gosh.’”
David Hattery, a lawyer and father of two, sees the tax implications differently. He knows his taxes will go up if a new high school gets built, but so, too, he says, will the value of his home and the strength of his community.
“One of the defining characteristics of Vashon is community. This could enhance that sense of community,” he said. “And in doing that, you’re building not only a better place for us to live, but also more stable and higher property values.”
In the debate over whether to support an upcoming bond measure that will overhaul Vashon’s worn high school, one question some property owners are struggling with is the potential costs they’ll face as a result. Will property taxes go up only nominally, as the campaign’s Web site suggests? Or will they go up considerably, as some of the measure’s opponents contend? And either way, are there other tangible financial benefits that will strengthen the community, as Hattery says? Or will the Island become an increasingly expensive place to live, a haven for the well-to-do?
If approved by voters in a March 10 election, the measure will pay for a far-reaching rebuild of Vashon High School — refurbishing some buildings, erecting some new ones and improving the school’s track, field and grandstand.
And in some ways, the issue’s financial ramifications are straightforward: All Vashon property owners (except those who qualify for deferments or exemptions) will pay the same tax rate to retire the bond’s debt over the course of its 20-year life — estimated by the bond’s underwriter at $1.91 per $1,000 of a home’s assessed value.
But by necessity, there are also some built-in assumptions and variables — elements that make it impossible to say exactly how the bond’s costs will play out for individual property owners over time.
Bill Ameling, a park board commissioner and a strong supporter of the measure, put it succinctly when asked what will happen to property owners’ tax bills if the measure gets passed:
“Some people aren’t going to notice it; for some people it’s going to be a tipping point,” he said.
Exasperated by the issue, however, Ameling said he thinks the tax debate is a red herring — a way to divert attention from what he sees as the real issue: the need to invest in the high school and its ailing infrastructure.
“It’s really not socially acceptable to vote against schools, unless you have a reason,” he said. “So people start to look for reasons, and taxes are one of them.”
Hilary Emmer, a tax preparer who has taken a hard look at some of the district’s numbers, takes issue with that line of reasoning — in part because she thinks the tax burden is greater than the campaign is suggesting.
“People have been losing their jobs. Look at all the extra people going to the food bank,” she said. “Well, anyone who goes to the food bank cannot afford an increase in rent, and if I’m a landlord and I see a $900 increase in my property taxes, I’m going to pass it on to my tenants.”
Some things about the bond measure are not in dispute.
First, should the measure pass, the district will issue $75.5 million worth of bonds, collecting — with interest — $150 million over the course of 20 years to retire the debt. If the bond underwriter’s assumptions are correct, a levy rate of $1.91 should be sufficient, although the levy rate could change over time, district officials say.
Here’s why: According to the way the bond will be structured, the debt service will increase by 3 percent a year; at the same time, the bond underwriter told the district to factor into the calculations a 3 percent growth in the Island’s overall assessed value — the amount the King County Assessor says Islanders’ properties are worth.
If the Island’s overall assessed value drops — due, say, to falling real estate prices — the tax rate will have to
rise to bring in the amount needed to retire the debt. If the Island’s assessed value climbs higher than assumed, the tax rate will fall.
The company underwriting the bond — Seattle-Northwest Securities Corp. — has a long history of calculating tax rates and predicting assessed values for school districts in the region; its approach is conservative and careful, the company says.
“I’m very comfortable with the 3 percent growth assumption,” said Ryan Swanson, assistant vice president at Seattle-Northwest Securities.
But even if his assumptions are right, what brings an element of debate into the discussion is how people on either side of the issue interpret that $1.91 tax rate and its potential impact on property owners.
The campaign and district officials are looking at it in comparison to how much Islanders have paid in taxes to support the schools over the last 12 years. The average school-related tax rate between 1996 and 2008 was $1.58, they note. Thus, the price of a significant rebuild of Vashon High School pencils out to a modest increase in Islanders’ historic school-related tax burden: a mere 33 cents per $1,000 of assessed value. Or, put another way, an increase of $14 a month for a home valued at $500,000, the campaign Web site notes.
Bob Hennessey, who chairs the school district’s board, said he and other district officials believe averaging the tax rate over the past 12 years is an appropriate way to let Islanders know the bond measure’s potential impact. The reason is that this year’s tax rate is abnormally low — due to the early retirement of a bond used to repair Chautauqua Elementary School. Thus, comparing the new tax rate to the one property owners are paying this year would make it seem as though the increase in school-related taxes is much greater than what Islanders are used to paying, he said.
“It’s a good way because people know what the burden felt like in 2006 or 2005,” Hennessey said. “It gives them a reference point. ... They just need to add $14 to it and decide if they can afford it.”
But critics such as Emmer say another piece of information needs to be factored in — and that’s how much property values have escalated in the last few years.
The county assessor’s
office two years ago did a
thorough review of Island-ers’ properties, a kind of catch-up that involved a visual check of every parcel on the Island. All told, the Island’s assessed value climbed nearly 19 percent between 2007 and 2008, said Hazel Gantz, the budget and finance officer for the county assessor’s office; this year, she said, it went up another 9 percent.
Some residents experienced only modest increases in assessed value during the county’s Island-wide review — or in some cases, even a drop. Others saw their properties’ values skyrocket.
Shirley Bushnell, a retired University of Puget Sound administrator, was one of those Islanders who saw a staggering increase in her assessed value: Her waterfront home climbed from $491,000 in 2007 to just over $1 million this year.
She’s contesting the new valuation, but should it stick and the bond measure pass, her school-related taxes will go up commensurately: From $775 in 2007 to $1,912 in 2010 — or an increase of nearly 148 percent.
Coupled with the stock market’s decline, Bushnell — who by her admission has lived comfortably in retirement — says she’s now conflicted about the bond measure.
“This is a tough one,” she said. “My whole profession has been in the field of education. I’ve always supported to the nth degree anything for the schools. But I feel if this thing happens, I might be forced to give up the family home.”
Wendy Wharton, who lives in a modest home, has also seen her taxes jump and is worried about the impact of the bond measure.
“The statement that it will cost us ‘pennies more’ is misleading,” she said. “It’s going to cost me hundreds of dollars more.”
But Dennis Williams, who also owns a waterfront home that has risen dramatically in value, said he’s frustrated with such arguments. One way or another, property owners will pay school-related taxes — and whether this bond measure passes or not, those residents with assessed values that have gone up will see their tax bills climb, he said.
“You can’t assume we won’t have some bond at all,” he said. “That’s absurd.”
The real issue to him, he said, is the value the community will reap if the bond measure passes.
A youth basketball coach, he said he’s seen the escalating demand on the school’s facilities as well as the myriad ways the high school supports community life. The proposed school makeover — which would not only enhance classrooms but also sports facilities and the school’s theater — will give the community much in return, he said.
“The whole community uses the school facilities. Schools are our de facto community center on Vashon,” he said.
“You want to pay for bombs in Iraq? I don’t think so,” he added. “But do you want to pay for a social service that’s really working? That makes sense to me.”
Questions about the bond?
Do you have questions about the school district’s proposed measure that you’d like answered? The Beachcomber plans to run a Q&A about the proposal in the Feb. 25 issue.
If you have questions you’d like us to add to our list, please send them to email@example.com.Contact Vashon-Maury Island Beachcomber Editor Leslie Brown at firstname.lastname@example.org or 1-206-463-9195.