Factual Information Regarding the 69 Cent Special Operating Levy Proposal for the Savannah R-III School District at the April 7th, 2020 Election
1. What is the purpose of the 69 Cent Operating Levy Proposal?
The 69 Cent Operating Levy will be used as a revenue source to (a) repay a lease financing that will produce up-front funding for the construction, equipping, and furnishing of a new performing arts center, auxiliary (storm shelter) gymnasium, new classrooms and repurposing existing classrooms at Savannah High School; and (b) fund ongoing maintenance projects. The 69 Cent Operating Levy will sunset in 10 years.
In August 2018, the Savannah R-III Board of Education appointed an Ad Hoc committee to review the physical needs of all district buildings. The Facility Committee, which included community members, teachers, administration and board members, recommended that the Board of Education hire an architect to conduct a building audit. After reviewing the audit results, the Board of Education decided to place an issue on the August ballot to address the needs outlined by the building study. The intent of the issue is to immediately address some major building needs (performing arts center, auxiliary gym and new classrooms) and to provide a source of funding for scheduled maintenance projects. These ongoing maintenance projects include improvements to the building envelope (the outside structure) and water drainage issues; plus improvement of drop-off/pick-up lines at John Glenn and Minnie Cline for better access and safety. In addition, a yearly budget of $600,000 will be established for ongoing projects like HVACs, roofs, etc.
2. Why did the Board of Education select this method to fund the project instead of a general obligation bond issue?
The District has historically selected a lease financing over a general obligation bond issue mainly due to Article VI, Section 26(b) of the Missouri Constitution which limits the amount of authorized bonds of a school district to 15.00% of assessed valuation. This was the case in 2007 in which the District constructed a new middle school and media center at the high school, and completed various improvements at the elementary schools. The lease financing has proved to work well for the District as our debt was refinanced in 2016 and 2017 when interest rates were more favorable achieving total interest savings of $1,753,722. A lease financing supported by a tax levy also provides more flexibility with the overall funding amount. A levy increase is needed whether we fund the projects through Lease Certificates or General Obligation Bonds.
3. How does our current levy compare to other surrounding Districts?
Currently, the District’s total levy is $3.6536. This increase would make the new levy $4.3436. Below are some neighboring District levies for Fiscal Year 2018-19:
|Union Star R-II||$5.0542|
|King City R-I||$4.6667|
|Avenue City R-IX||$4.4432|
|North Andrew Co. R-IV||$4.3734|
|South Holt Co. R-I||$3.3094|
4. How much will this operating levy increase actually cost me?
The increase in ad valorem taxes will cost $131.10 annually for a home with an appraised value of $100,000 ($65.55 for a $50,000 home and $196.65 for a $150,000 residence). With regard to agricultural property including livestock, poultry, and farm machinery, the increase in tax expense is about $41.40 for $50,000 worth of that type of property. For a 320 acre farm with Soil Grade 4, the annual expense is approximately $107.31 as agricultural property is assessed at 12% of its production value (not fair market value).
5. What is the likely interest rate for the proposed lease certificates of participation?
Since the lease financing is to be repaid over twenty years or less, the average interest rate is expected to be less than 3.50% under current conditions in the municipal bond market assuming the current “A” lease rating from S&P Global. The interest paid by the District to the investors is exempt from federal and state of Missouri income taxes.
6. Will local investors be allowed to purchase the Lease Certificates of Participation?
Yes, the District’s municipal bond underwriter, L.J. Hart & Company of St. Louis, Missouri has been directed by the Board of Education to make these lease certificates available to local individuals and banks within the School District area prior to selling them elsewhere. The lease certificates will be sold in $5,000 denominations. Anyone interested in purchasing the lease certificates should provide their name, address and telephone number to the Board of Education, Superintendent, or to L.J. Hart & Company at 800-264-4477 in order to have a preliminary official statement (prospectus) mailed directly to them. The lease certificates will contain a five year optional redemption (call) provision that enables the District to pay them off early without penalty in the event surplus revenue makes that possible. The call feature also can accommodate a refunding to lower interest rates whenever such action proves to be economical.
7.Can I vote by absentee ballot?
Yes, the Andrew and DeKalb County Clerks will mail absentee ballots to those who request them beginning February 25th, 2020, but no later than April 1st, 2020. People can vote in the County Clerk’s office by absentee ballot through April 6th, 2020. To be valid, all mailed absentee ballots must be received by April 7th, 2020.
8 .How many votes are required for approval of the 69 Cent Operating Levy Increase?
To pass the proposal, it is necessary that it receives a simple majority of all the votes cast.
9.What does the actual ballot say?
The official ballot for Proposition SR3 appears below:
Shall the Board of Education of the Savannah R-III School District, Missouri, be authorized to increase the operating tax levy of the District by $0.6900 per one hundred dollars of assessed valuation through Tax Year 2029 in order to provide funds for the (a) construction, equipping, and furnishing of a new performing arts center, auxiliary (storm shelter) gymnasium, new classrooms and repurposing existing classrooms at Savannah High School; and (b) completion of other ongoing District maintenance projects?
(If this proposition is approved, the adjusted operating levy of the District is estimated to increase by $0.6900 from $3.6536, currently, to $4.3436 per one hundred dollars of assessed valuation for Tax Year 2020 and can be applied to the assessed valuation for each year thereafter through Tax Year 2029.)