In a bait and switch, Acalanes school trustees plan to issue new construction bonds that will further increase tax rates beyond what voters were promised.
While the move might squeak through a legal loophole in state law, it's deplorable. The honest approach would be to seek new voter approval, but this time with full disclosure of the district's construction financing costs.
That might be difficult because the district irresponsibly structured the bonds already issued under the six-year-old program. Repayment, with interest, will cost taxpayers an outrageous five times the principal borrowed. By comparison, the ratio for a typical home loan is about 2-1.
School officials set the stage for this debacle in 2008 when they concocted a reckless funding plan to make Measure E, a $93 million construction program, look attractive to voters.
At the time, the district had other construction bonds outstanding. They promised voters that their property taxes would not increase, that the combined tax rate for retiring old and new bond debt would not exceed $35.58 a year for every $100,000 of assessed value.
There were two problems:
First, the old bonds required payments through 2024 that would use up most of the $35.58 rate. So, to issue more and stay within the promised tax limits, the district delayed repayment of new bonds for more than a decade. That's why the interest costs on the new bonds are exorbitant.
Second, the district's projected tax rates were based on irresponsible real estate market assumptions. When property values go up, the tax rate to pay off bonds goes down.
The district projected in 2008 that assessed value of property in the district would indefinitely increase at 5.75 percent annually. But, with the recession, property value increases in the district were already slowing.
As a result, the district today can't even make the bond debt payments on the old bonds and still keep property tax rates under the promised level of $35.58 per $100,000 of assessed value.
Meanwhile, the district has issued $68 million of the $93 million of new bonds voters approved in 2008. On Tuesday, trustees decided to issue $15 million more. For those, they don't plan to delay repayment. Property tax rates, already projected to hit $48 per $100,000, will now hit $51 by 2024.
Thus, even though their bond finance costs are already out of control, district trustees plan to borrow more money. They should either wait a decade until the old bonds are paid off or go back to voters and let them have a say on the higher tax rates.