As part of its Vision 2030 conversation the Odessa College Board of Trustees on Wednesday discussed some ideas and scenarios for a potential bond issue to finance completion of the initiative.
Julie MacMillan, vice president of RBC Capital Markets, reviewed some scenarios of bond amounts and the impact on taxpayers.
President Gregory Williams stressed that the discussion is just exploratory at this point and the college would want input from the community. He said meetings could be this summer.
MacMillan said she, Chief Financial Officer Brandy Ham and Vice President of Administrative Services Ken Zartner looked at incremental increases and what that would look like.
“We’re doing all of this as a way of providing information, informing you all (of) what that might do from a tax rate impact perspective.,” MacMillan said.
She added that the scenarios are built on conservative projections. The taxes would impact the interest and sinking side of the tax rate, which is used for debt service, rather than the maintenance and operations side which is used for day-to-day operations.
“To raise $100 million is likely to be about a two penny impact on the tax rate,” MacMillan said.
If it’s $150 million, it would be a 2.5 penny increase; $200 million would be about a 5 penny increase; and if they went to $250 million, it would be about a 6.5 penny increase.
“We also ran a $200 million scenario and a $250 million scenario where we would raise half the money in the first year and then raise the other half about five years later so it’s staggered a little bit over time. … A $200 million scenario provides for about a 4 penny increase and the $250 million scenario provides for about a 5 penny increase. If you split the capital projects up and kind of stagger them in over time, you may be able to phase the way the tax rate would increase with those projects,” MacMillan said.
“It would get you to that tax rate for about five years, maybe 10. It just depends and then they would start to kind of whittle down. This is all based on very modest projections for you all and then a number of other kind of assumptions we make around raising money,” she added.
Based on last year’s tax rate, Ham said the average median home price was $168,000.
Ham said for the $150 million, it would be a $33.50 increase to the average homeowner. If they went up to the $200 million, it would result in a $55.25 increase to the homeowner.
Going up to the $250 million, it would be $79.99.
For the $200 million in two installments, the increase would be $38.75 to the average homeowner. The $250 million in two installments would be a $55 increase.
Williams said if they decided to do the split, the numbers would be challenged by inflation.
He added that the college would bring together a committee of people to start having conversations about a potential bond and get their input. The deadline is Aug. 19 to decide.
Zartner said a lot of work has to be done before any work starts. OC started bidding on the new health sciences building three years ago.
Williams said one of their goals from a financial standpoint would be to get some other projects, like a pedestrian bridge across University Boulevard, done before they borrow any money.
“No one wants to pay more for whatever they’re buying. But we’re always trying to increase the value proposition of Odessa College where you say, I may not want to pay more for it, but that’s a good product, and I’m willing to invest in that service. Yes, and I’m willing to invest in that and in our community,” Williams said.
Board Chair Gary Johnson noted that the college is educating the workforce to earn good wages.
Board member Hortencia Del Bosque said the best voices are the students and recent graduates.
Johnson asked the board to think about doubling the homestead exemption for people over 65. Right now the exemption is $20,000 so it would increase to $40,000. If they used the estimated values, by doubling the exemption, if the same tax rate was in place, it would decrease revenue by about $340,000.
That would save the average homeowner about $35 a year.
Trustee Trudy Lewis said it always sounds like a nice idea, but then someone else has to take on that burden.
“I always feel like sort of we’re all in this together. … I like the idea that we’re all paying taxes and we’re all paying taxes to support the college. When you start exempting people I know I felt very uncomfortable during the school bond elections when they’ll say well, if you’re over 65, vote for this, it won’t affect you at all. No problem. I think well that’s okay. But then you’re shifting that burden to somebody else. And so I was feeling a little uncomfortable with a situation like that where you’re saying well you can vote for it’s not going to cost you anything, but it’s (going to) cost somebody and so this $340,000 is going to have to be shifted to someone else. That’s the young people who are rearing children, so I think we have to think of it in those terms,” Lewis said.
In the long term, Williams said Lewis was right. In the short term, he said they could replace those dollars with state funding because OC is getting more funding from the state because it’s based on performance and number of graduates.
“Later on, your point is exactly right,” Williams said.
Williams said he is always of the mind of exploring possibilities and earning the respect of the community.
He added that the college won’t do everything that it’s considering.
“We want to get the input from the community before we finalize our direction and then we’ll see what the board is interested in. We’re in that exploratory stage. Again, as I was saying, we’re always thinking about it and now we’re getting to a point where we’re starting to focus and refine. The next step would be to include our community to see what they’re comfortable with,” Williams said.
