If it’s true that timing is everything, then one of the most significant hurdles facing Truckee’s proposal for a performing arts and aquatic center will be overcoming the perception that the new bond measure to fund these facilities is anything like Measure C, the increasingly more expensive hospital bond that preceded it.
Both are general obligation bonds, which require a two-thirds vote to pass, and both are borrowed obligations of a special district that will be repaid by specially assessed property taxes — Measure C at $98.5 million for the Tahoe Forest Hospital District, and Measure J at $8.5 million for the Truckee Donner Park and Recreation District.
Proponents of the new bond measure say that’s about where the similarities end.
Park and Recreation District Board Member Kevin Murphy says the timing of the Measure C rate hike was “heartbreaking,” coming as it did on the heels of the decision to move forward with Measure J.
“It’s taken us over four years of hard public work to get the bond analyzed and correctly financed,” he wrote to Moonshine Ink. “The public backlash is now diverted to Measure J, and the risk of losing these projects due to misinformation and public anger is unfortunate.”
To get the two-thirds majority vote they need, Measure J proponents will have to convince voters who feel stung by the hospital tax that this is not a repeat of the same song.
The rate charged to taxpayers on general obligation bonds can fluctuate with the economy to satisfy the interest promised to investors when the bonds were sold. When the economy is good, as it was for more than a decade before the present recession, the bill to taxpayers remains stable.
But that’s not always the case.
This is a lesson many Truckee/Tahoe residents learned firsthand when the elected directors of the Tahoe Forest Hospital District decided recently to raise the rate on Measure C to meet their annual debt service payments to bondholders.
Measure C, which was approved by 72 percent of district voters in both Nevada and Placer counties, was billed as a $98.5 million bond measure that would be financed by an estimated average tax rate of $9 per $100,000 of homeowners’ assessed property value over 30 years.
Voters were told during the 2007 campaign to pass Measure C that the tax per $100,000 of assessed valuation was never likely to exceed $17.42. Today it is $30.67.
For many, the recent increase felt like a betrayal of the campaign promises, but with general obligation bonds the operative word is “likely.” The bonds are repaid over 30 years, and local taxing authorities have the ability to raise the rate if the share of property tax revenue being collected is insufficient to meet their annual interest payments to the purchasers of the bonds.
That’s what the hospital district board did on July 31. But park district officials predict that won’t be the case with Measure J, primarily because they say their projections on tax receipts are conservative, the timing of the bond issue comes when many analysts say the Truckee/Tahoe housing market is about as low as it will go, and the value of the bonds is but a fraction of the hospital district’s issue.
Measure J’s tax receipt estimates are based on the theory that property values will decline by 2 percent this year, remain flat in 2013-14, increase by 2 percent the following year, and increase by 3 percent per year for the remaining life of the bond.
The hospital’s Measure C, in contrast, projected an 8 percent increase in property values every year after 2007 for the 30-year life of the bonds. But the housing market took a dive in the years to follow, and the tax to homeowners was increased when receipts fell below projections.
