Schools facilities improvements— How much could it cost?
- Published: April 4, 2021
If the Yellow Springs school district opts to build a new $35 million combined K-12 school, how much would it cost individual taxpayers to fund it?
Alternatively, what would it cost taxpayers to fund $12 million in renovations to both the Mills Lawn and McKinney Middle/Yellow Springs High School campuses?
At a community outreach forum on Wednesday, March 17, local district leaders and the district’s architect consultant, SHP of Cincinnati, shared various tax options for funding school facilities improvements.
A portion of the forum focused on what SHP’s Shea McMahon called, “assigning real world costs and real millage impacts … to the plans we’ve been discussing throughout.” A future article will cover other aspects of the meeting.
It was the third online public forum hosted by the district and SHP in less than a month. Two advisory groups also have been weighing facilities options, and a community survey is being conducted, all leading to the superintendent’s goal of making a final recommendation to the school board next month. Previously, district leaders have said they hope to put a measure on the November 2021 ballot.
According to options presented at the meeting, the tax measure may combine an income tax increase with a property tax bond levy.
In one scenario, a mix of 0.5% income tax and 6.73-mill property tax would finance the construction of a new $35-million K-12 building on the middle/high school campus on East Enon Road.
For that option, the average Yellow Springs household would pay — initially, at least — $714 annually, including $407 in property tax and $308 in income tax, according to News calculations.
A $12-million renovation addressing the basic needs at the Mills Lawn and middle school/high school campuses, meanwhile, would cost the average Yellow Springs homeowner $209 annually. That would be a 3.45-mill property tax with no income tax component.
The new taxes would be on top of the $2,795 that the average Yellow Springs homeowner currently pays to fund the local schools each year, which includes $2,180 in property tax (for 34.4 taxable mills) and $615 for a 1% income tax.
The News’ calculations for the average Yellow Springs household use the 2021 average appraised home value of $173,031 from the Greene County Auditor’s Office, and 2019 local median income of $61,522 from the U.S. Census Bureau’s American Community Survey.
The calculations rely on figures presented at the meeting provided by the district. For a new K-12, the property tax portion of a combined 0.5% income tax and property tax would cost $235 per $100,000 of appraised home value, while a property-tax-only renovation option would cost $121 per $100,000 of appraised home value.
But the calculations are rough estimates, and there are other considerations.
First, those who qualify for the homestead exemption — low-income homeowners who make less than $30,000 annually and who are 65 and older or with a disability — would pay less.
For instance, someone with a homestead exemption who lives in an average Yellow Springs house and earns $25,000 per year would pay an estimated $431 more annually in property and income taxes for a new K-12 building, and $157 annually for the $12 million renovation option. That’s based on district figures of $177 per $100,000 appraised home value for the new K-12, and $91 per $100,0000 appraised home value for renovation for those with a homestead exemption.
Under any combination of an income and property tax, the income tax would last 30 years and the property tax would last 37 years, according to information presented at the forum. Over that time period, however, the cost per taxpayer would not increase due to a property tax reappraisal. (Only taxes on inside millage, not voted levies, can increase following a reappraisal.)
The estimated costs of a bond levy assumed an interest rate of 4%, an assumption described at the meeting as “conservative.”
“Rates are low,” SHP’s McMahon added. “Now would be an appropriate time and an ideal time to borrow money as a public entity.”
Presenters from SHP also emphasized at the meeting that the $12 million renovation option only included the items deemed as necessary to keep students “warm, safe and dry.” It includes $4.7 million in improvements at Mills Lawn and $7.4 million at the middle school/high school.
Meanwhile, two other renovation options were presented based upon improvements deemed “high priority” and “medium priority” by the Facilities Task Force, a citizen group that studied the failure of the 2018 facilities levy and current building needs.
The cost of those options were presented as property-tax-only measures. Renovating only “high priority” items at both campuses would cost $22.3 million, or $221 per $100,000 appraised value. Renovations of both “high” and “medium priority” items at both campuses would cost $32.9 million, or $326 per $100,000.
A final option, also presented as a property-tax-only measure, was a K-12 demolition, renovation and addition at the East Enon Road campus, which would cost an initial $33 million, or $327 per year for every $100,000 of appraised home value.
For a comparison, the May 2018 levy was a combined property/income tax levy to fund an $18.5 million renovation/new build at the middle school/high school campus. It paired a 4.7-mill property tax levy with a 0.25% income tax increase and would have cost the average homeowner $450 per year, according to News calculations.
Another important consideration is how the OFCC reimbursement would affect the cost to taxpayers.
For either the new K-12 option or the K-12 demolition/renovation/addition option, the cost to taxpayers would go down after a 26% cost reimbursement from the Ohio Facilities Construction Commission. To get the reimbursement, the upgrades would have to follow OFCC standards.
According to McMahon at the meeting, the district could expect to be reimbursed after five to 10 years. However, since the timing of the funding reimbursement is unknown, total construction costs need to be raised by the ballot measure, hence a higher initial cost to taxpayers.
For the $35 million new K-12 option, the OFCC’s reimbursement of $9.1 million would drop the total local share to $25.9 million, money which would immediately be used to pay off the principal of the bond, district Treasurer Tammy Emrich has explained.
According to an email from Emrich this week, the OFCC’s reimbursement would drop the property tax component of the combined measure from 6.73 mills to an estimated 4.15 mills, using the current figure that 1.0 mill produces $168,000 in tax revenue for the district.
That means the annual costs for the average Yellow Springs homeowner to fund a new K-12 would drop from an estimated $714 annually to $560, due to a lower property tax payment of $253. The income tax portion, in this case $308 annually, would remain flat.
In line with OFCC requirements for receiving a 26% reimbursement, the income tax portion of a combined measure would earmark $89,989 annually for maintenance on the building, it was explained at the meeting.
Weighing in on the issue of when an OFCC reimbursement would be likely was Rebecca Princehorn, who was introduced as an attorney with Bricker and Eckler in Columbus with a specialization in public finance.
“In my experience, when we have downturns in the market, the state puts money in K-12 construction,” she said.
Princehorn added that governments often invest in “public works” during times of recession.
“Although we can’t predict when that will occur, it’s probably going to be sooner rather than later,” she said of the reimbursement.
Other items from the March 17 community forum will be covered in a future News article.