The Durango School District Board of Education will decide later this month or in July whether to move forward in asking voter approval to issue about $90 million worth of bonds.
The bonds would finance upgrades to school security and safety, repair buildings where maintenance has been deferred, build a new career technical education center, and replace and rebuild Miller Middle School on its current site.
With COVID-19 causing economic turmoil, school board members likely will opt for a bond offering that will not require an increase in the mill levy, and with bonds issued in the early 2000s being paid off, taxpayers would not see an increase in their property tax bill.
If the measure does go to voters, and they reject it, as bonds are paid off, the owner of a $400,000 home could see his or her property tax bill go down by $166 a year by 2024.
Initially, 9-R had examined issuing up to $120 million in bonds, which would have led to an increase in property taxes of $30 a year for the owner of a home worth $500,000. The owner of a business with an assessed value of $5 million would have seen his or her property tax bill increase by about $1,500 per year.
But with the economic pain delivered by government-ordered health restrictions to slow the spread of the novel coronavirus, board members were cautioned that the political environment for passage of a bond issuance has darkened for this November.
Dan O’Connell with RBC Capital Markets, which assists 9-R in bond issuances, told board members at their meeting Tuesday that he was working with 10 school districts this year on bond issuances, but that number is now down to four, and all of those four districts, like 9-R, are able to issue bonds without raising taxes as older bonds are paid off.
Presidential-year elections with heavy turnout are seen as favorable for school districts to seek voter approval of bonds, O’Connell said, but that rule of thumb is trumped if the economy turns sour.
“There for a while, we were on pace every four years with favorable demographics to pass school bond elections, but with the recession of 2008, it didn’t work. Almost all the bond questions failed in the Great Recession,” O’Connell said.
School districts working with RBC on bond questions had seen an 80% success rate in presidential elections up to 2008, but 2008 “turned everything on its head,” O’Connell said. Only 20% of the school bond questions were approved the year the Great Recession hit.
The school district has until July 24 to inform the La Plata County Clerk and Recorder’s Office that it intends to pursue a bond question on the November ballot.
School board member Erika Brown and Kristin Smith both said they were willing to move ahead in asking voters’ approval for new bonds.
But board member Andrea Parmenter expressed some hesitation: “I want to get a pulse from the public before we put a lot of time and effort into it.”