When the Mt. Diablo and West Contra Costa school districts asked voters to approve multimillion-dollar construction bond measures to improve school facilities, ballot information included estimates of how much homeowners would pay in property taxes each year to pay off the bonds.
Given the sagging economy, the Mt. Diablo district overestimated its tax revenue growth. That could impact how much homeowners will end up paying on the bonds each year, especially if the trend continues.
In contrast, the West Contra Costa district is anticipating an unexpected boom in its property tax revenues, based on a judge's decision to hike the Chevron refinery's assessments in Richmond.
Contra Costa County Assessor Gus Kramer is projecting that assessed values in the Mt. Diablo district will drop 2.23 percent in 2012-13, and that they'll rise 6.72 percent in the West Contra Costa district.
"We submit our numbers to the clerk, then the tax collector sends out the bill," he said. "It's kind of the 'tax trilogy,' if you will."
The Mt. Diablo district had estimated values would stay flat in 2012-13, then rise 2 percent a year for the following two years and jump to 4 percent a year after that. Mt. Diablo voters have approved two construction bond measures -- in 2002 and 2010 -- that they are paying off each year until 2040.
In 2010, the district told voters it would extend the tax rate of $60 per $100,000 in assessed value if they approved the second $348 million bond measure. But in April, the board agreed to raise the tax rate to $89 per $100,000 for both measures, so it could issue $150 million still remaining. It agreed to raise the tax rate to $95 for both measures in 2015, when it plans to the final $77 million in bonds.
Although some residents have expressed concern that the lower-than-expected growth rate could force the rate higher or delay the final bond issue, financial adviser Jon Isom said he doesn't expect any drastic changes.
"Despite a modest decline in assessed values," he said in an e-mail, "we do not project an increase in the $89 tax rate nor do we project a delay in the issuance of the future $77 million in remaining bonds scheduled to be sold in 2015."
According to Proposition 39, districts can tax property owners at a maximum rate of $60 per $100,000 in assessed value for each bond measure. Therefore, the Mt. Diablo district could legally raise the rate to $120 per $100,000 in assessed valuation for both measures.
The West Contra Costa district, which has five outstanding bond measures, plans to tax property owners at the maximum rates, despite its higher-than-anticipated growth rate. This is because Chevron may appeal its increased assessments, which would jeopardize the district's revenues, according to a report presented to the board last month.
In addition, the district wants to build up reserves in tax stabilization funds to offset fluctuations in future tax rates, the report from KNN Public Finance states. For the five bond measures, the district wants to tax homeowners a total of $235.80 per $100,000 in assessed value, which would enable it to build up a total of $10.3 million in reserves for four of the measures.
Contra Costa Auditor-Controller Bob Campbell said the board of supervisors will set the tax rates in September, based on his staff's recommendation. He agreed that it makes sense for West Contra Costa to build up tax stabilization funds, due to the uncertain economy and possible Chevron appeal.
"If they were to take it to court and the court was to reverse the decision of the appeals court," he said, "that may create a financial hardship on the school at least temporarily, until they're able to reset their tax rates to make up for the loss."
2011-12 and projected 2012-13 assessed property values
District 2011-12 2012-13 Growth rate
Mt. Diablo $29.2 billion $28.54 billion (-2.23 percent)
West Contra Costa $21.87 billion $23.34 billion +6.72 percent
Source: Contra Costa County Assessor's Office
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