Open Forum: CSD Bond Issue Presentation at City Hall Last Night
Decatur Metro | August 6, 2013
The Decatur City Commission and School Board met at City Hall yesterday afternoon to discuss the potential bond issue that the school system believes it needs in order to accommodate enrollment growth through 2018.
You can view the full presentation and discussion between members of both boards HERE.
Feel free to use this post to discuss the issue in-depth. There are already some initial reports and reactions in yesterday’s post on the subject.
Latest from Decaturish
Thanks, DM.
If/when the referendum is put to vote, it will be the most fiscally consequential local vote I’ve cast since moving to Decatur in ’96. Its outcome will also directly impact our 4th and 1st grade children’s daily experience of school through their graduation, so, on both counts, I’m highly motivated to become educated on all the pros and cons.
Hope everyone digs into this topic with gusto and becomes as informed as possible.
This is starting to look like an issue about who is going to pay. ie – Kids v. No Kids
But this is the wrong question and as Jim Basket points out, could harm the city’s reputation. He also mentions the possibility of an increased homestead exemption for seniors. But that will only help seniors that are homeowners, not senior renters or no-kids.
But why are we talking about who is going to pay?
Because of our broken commercial tax digest. Solving the real problem will go a long way to addressing the others.
Over the last decade commercial tax receipts as a share of the budget have declined steadily. From 70% res / 30% com. in the ’90’s to about 90% / 10% today.
If you’d like to see a boring analysis take a look at this:
http://www.youtube.com/watch?v=Tt191LIpzqc
Given the huge disparity between the tax appraised value and the actual market value, solving this problem would generate approx. $3.7 million dollars per year to CSD and similarly CoD.
Commissioners, please take the time to address one of your most important responsibilities – Defend the Digest.
This is interesting, Pat. Do you have any thoughts on why this might be? If I had to hazard a guess, I’d say it’s because we have very little turnover in commercial property, thus less opportunity for verified market pricing to impact reassessments. For example, the Sharian building’s been in the same hands for decades and decades and I’d guess the 246 building may be the same. The 355 commercial units are most likely also turning over less frequently than the residential units above.
I’m operating with the belief that reassessments are more common following a sale than otherwise but I may be wrong on that.
Meanwhile, the graph with residential seems to cover a period in Decatur history when a lot of previously unrealized value was becoming recognized and both appreciation and property turnover were going gangbusters.
Any thoughts on how commercial assessments can be adjusted, given present dynamics? Are we at the mercy of DeKalb county?
You may hear from some that the city has no role in property assessments, that it has been outsourced to DeKalb county, … all manner of excuses.
At the end of the day it is the Commission that has both the legal authority and responsibility to insure that every property is appraised at its fair market value. If outsourcing to DeKalb county produces these kind of results, then they need to find a better solution.
I received an explanation on this a long time ago from Ms. Merriss. Have I ever shared it?
I think I remember hearing something about this, but I can’t find anything in my files. btw – this is just the capital expense side of things, run the projections using 2018 enrollment numbers. I think Baskett is right, we’ve got to look at a way to insulate the resident elderly and better position new elderly as purchasers. But that can only be done responsibly in conjunction with addressing the commercial digest. Also, we should consider adding a senior community zoning that provides for no under 18 residents, but big homesteads or other reductions.
Is senior only zoning legal outside of senior care facilities? I vaguely remember lawsuits years ago in places like Arizona and Florida when widowers in senior housing communities would remarry younger women, have babies, and then not want to have to sell their home and leave.
Can we talk about “insulating the senior resident” a bit more? I’m going to try and explain my position as best I can with the caveat that I am not a senior but I love me some old people, ok? This is not a knock against those with more, um, experience on this earth than me. I am also a Decatur homeowner and a parent, but I do not have kids in the CSD system (you’re welcome!).
I am not a fan of extra homestead exemptions based on age (but ask me again in a few years…). I understand that a growing tax bill can be a burden on a fixed-income household. But there are other ways to address this, like “circuit breaker” legislation that cuts off appraisals from going too high, too fast (but that has to be addressed by the GA Legislature). But I’m open if anyone has a more compelling argument than an overly high tax burden, which other age cohorts could claim.
I know it’s an easy vote-getter to say you will reduce taxes for the elderly. But the funding mechanism for schools is primarily property tax shared by all property owners, right? I think all property owners regardless of age (or the presence of kids in the system) benefit from an educated population (though YMMV).
“I paid for my kids for 13 years why should I have to pay anymore rabble rabble…” I know. It seems a little unfair. But if everyone regardless of age is actually taxed at the same rate then it is kind of fair, right?
Now, if we want to keep those extra homestead exemptions then I have an idea that could offset that lost revenue: just get rid of property tax exemptions for religious property…
/ducks head
Good thinking, Pat. I’m not familiar with how business recruitment factors into the City’s master plan, but given the nature of our community believe we’re ripe to recruit “Industries of the Mind”, especially technology companies.
I have no idea what our commercial real estate inventory is for these kinds of low impact businesses, though we recently landed a rather large gaming software company that’s located in the Wachovia building.
The proposed annexation of the Publix shopping center area at Clairmont and N.Decatur was also aimed at growing out commercial share, I believe.
Wow Pat. Thanks for your initiative on this!
I expect it is much more difficult to develop sales comps for commercial properties, given their less frequent turnover, how sensitive they can be to location and the wide disparity in facility improvements. But that is not an excuse to overlook this untapped potential…
I find it hard to admit that I am calling for higher tax assessments for anyone. But I believe it is appropriate, given the disparity in treatment between residences and businesses. There is no question that the value of Decatur retail has exploded in the past 10 years, even if this value is more difficult to observe with the lack of sales turnover.
I get that we would like to see more revenue from the commercial side. But how can you compare residential property values to commercial values? It’s an apples to oranges comparison.
I know it seems right to say, “Hey, that 3 bedroom condo is $250,000. Shouldn’t a commercial space be at least that much?” But that doesn’t necessarily follow.
From DeKalb County’s tax appraisal website:
“A big part of appraising residential property is looking at recent real estate sales, or the market approach to value. After we have updated all changes to our existing data, we conduct sales ratio studies. In this process we compare sale prices of recent sales to our fair market values.
For commercial property or income producing property, in many instances we use the income approach to value, by requesting income and expense reports, rent rolls, and other information from property owners.”
Given the downtown in commercial rents in the past few years, wouldn’t we be surprised to see an increase in commercial appraisals if using the income approach? Many commercial property owners were doing incredible deals to keep businesses in their buildings, so the rents they charged – and the value determined from those rents – would be lower.
I want to see commercial values thrive in Decatur and the burden relieved on the homeowner. But I’m not convinced that assigning commercial properties a higher value simply because they MUST be more valuable than residential properties is a helpful way to look at it. And with the rise in demand for residential properties in the city, it could be argued that those are more valuable now anyway.
An opportunity to suggest that it would benefit the Commissioners and the Board of Ed if both the City and CSD had liaisons assigned to attend one another’s board meetings, report back, form a working relationship, etc. No surprises, questions raised early.
Good to see them all at the same table, however.
While I guess there was not any new news presented to the joint meeting, I’m curious about the lack of discussion on this board. With annexation off the table, this bond issuance is the biggest issue facing Decatur over the next 5 years.
I believe it should definitely go to a vote in November. There are not a significant amount of new insights we are likely to get with another year of reflection, but we are likely to see costs increase as interest rates rise and construction becomes more challenging as trailers begin filling the space around the schools.
While I am open to listening to alternatives, I believe the CSD did a good job making the case and doing due diligence. The price tag is very big, and we should aggressively pursue options to temper how much of that bond is actually consumed. But I really don’t think there is any way to avoid the fact that our schools need to accommodate unprecedented growth. the only way to slow that growth is to make the schools worse, and that is not an option.
Pat brings up a fair point around harvesting other sources of revenue besides further increases to the residential tax base. That can mitigate the impact to residences, but we are all going to feel the pinch.
Yup. I find the relative silence on this topic curious given the consequences.
A few additional observations from the work session video, and randomly:
• Can you imagine, in another year as rainy as this one has been, having students at Renfroe transition from 20 trailers to the school building, several times a day, in an orderly fashion, during down pours?
• Imagine the challenge of coordinating emergency preparedness for tornadoes and the like with students in 20 trailers.
• Devry, year round calendar, and split shift sessions appear to have been discussed as alternatives by the school board. I still believe the idea of acquiring the ATT property on College remains a viable one.
• It’s becoming clear to me we’re not dealing with a bubble, but a new baseline of a student population.
• The idea of developing a technology corridor/midrise commercial district (along E. Howard from Trinity to Commerce?) aimed at recruiting new tax revenue generating commercial property, and business taxes to help offset some of the homeowner tax burden seems interesting to me.
• There are likely cheaper short term alternatives to the plan being proposed, but given the long term implications of our growth, I don’t have a lot of confidence that there exists a significantly cheaper long term solution.
and lastly,
The thoroughness of the thought and work put into the proposal was impressive, as well as the sense of stewardship the board expressed for our kids as well as our community’s financial resources—they went into this knowing there would be lots of financial scrutiny, and, I believe, developed a solution that was as sensitive to that reality as it could be while accomplishing its goals of accommodating our growth.
I certainly won’t cheer higher taxes, but I won’t feel I was uniformed about the process and justification that led to them.
Well said, Rick. I have had fairly well publicized differences with some members of our school board, but believe there is nothing more important to the continued strengthening of our City than to support the school board’s bond referendum. We have had the benefit of gifted and visionary leadership in our City Commission, from the days in the 1970s when the Commission voted against merging our school system with DeKalb County’s, to the 1980s and 1990s when, with the support of outstanding staff, the Commission plotted and planned for the amazing Decatur we have today. A huge factor in making this happen, however, was the magnet our school system was in the 1980s and 1990s — and continues to be today — for involved families who are committed to a living, active community. Our schools are far from perfect. (The benefits of the 4-5 school, if there were any, are hugely outweighed by they logistical problems it creates and the benefits of fewer transitions and longer-term attachments in K-5 or K-6 schools, especially for at risk kids. Ah, but I digress.) Additionally, there is no question that we have benefitted enormously for the last few years and will continue to benefit for the foreseeable future by the ineptitude of leadership in neighboring school systems. There is almost no doubt, however, that investments in our schools in general, and the investments proposed in with the referendum funding in particular, will strengthen our long term financial position as a City as a whole by continuing to make us attractive to informed, active and committed families across the metro area. I only have one more year with a child in this school system. I could wish nothing more for the future of our City, as well as my school-age young neighbors, and the soon to be elected new members of the school board, than to empower all of those with the resources from the proposed bond referendum.
For more of the Commissioners’ thoughts on it, click on Item V. Reports and Other Business (from same link as in post). Their closing remarks start around 12:30 mark.