When I wrote about Lewisville ISD’s $737.6 million bond package last week, I included a statistic in the article’s sidebar that related the maximum monthly cost of the associated tax increase. The sidebar related that for a hypothetical owner of a home valued at $310,269, the district’s average single-family home value, the tax increase would amount to $15.81 per month in the peak year 2022. The district rounds it to $16, but our calculation methods were basically the same.
My current thinking is that the owner of that $310,269 average home within the Denton County portion of Lewisville ISD would pay much less in most years, and probably more in the peak year, but the more I looked at not only how it was calculated but why it was calculated the more I realize how difficult and mostly pointless that exercise is.
Let’s start with why I don’t think that $16 number works. Very simply, the district has taken the peak projected tax rate in 2022, and subtracted the current year’s rate from it. They’ve then multiplied that rate times the district’s average home value, and it comes out to around $16 a month. My problem with that number is that the peak tax rate depends on a district-wide property valuation that is somewhere around 25 to 30 percent higher than the values today. That tax impact takes place in the future where we all think home values will be much higher, but where there is little certainty about how much higher.
I got my trusty spreadsheet out and did some calculations based on district projections and came out with a little more than a $20 monthly difference for the future inflated value of that home. That was based on comparing this proposed bond to a hypothetical smaller replacement bond that voters might pass that would keep our tax rate at the same level.
If I compared to the scenario where voters approved no additional bonds, and the district never borrowed money again to build schools, then the maximum difference got up close to $50.
The problem with using any of these numbers is that there are so many variables that can impact the tax rate, you’re basically speculating. No matter how accurate you get your math, if it’s based on estimates, it’s not going to be worth as much.
Another issue is with the concept of this number. The $16 was supposed to represent a worst-case scenario in terms of impact. But this turns out to be the singular number that people will remember. In reality, because of the timing of the bond sales, and the declining current debt, most years have substantially lower impact.
The heart of the matter is there are just too many variables that will have an impact on the tax rates, like the pace and timing of bond sales, bond interest rates, how much and how quickly the average home value rises, statewide economic conditions, population growth and inflation rates. A lot of this is outside the control of anyone in Lewisville.
There are just too many factors in play, even with good projections provided by LISD. Even after the projections were provided, LISD delayed some spending on the 2008 bond program, which means that money is likely to be spent first, and would delay some of the first year’s 2017 bonds from being sold.
While I could provide you some numbers which would theoretically give you a closer estimate, I wouldn’t bet any amount of money they would be correct.
Instead here’s what I do trust: each year the Board of Trustees and district financial staff will evaluate the situation on the ground and adjust timing and sequence of projects and purchases to keep the tax rates as low as they can. Even with the projected borrowing over five years, the top rate is something we’ve been close to before. Property values will rise, but that’s not something the district can control. We’ll likely pay more than we’re paying now, but it will not be for more than a few years.
Beyond that history says we can expect to see another bond election in 5 to 8 years. Voters will have a chance at that point to look at the situation then, and look back on what they were told about this bond election. When they do, I’d prefer they not read this post and say that The Lewisville Texan Journal or LISD promised them $16 was the impact.