Berkeley residents are expected to save millions of dollars in property taxes through savings by the Berkeley Unified School District.
Through refinancing, improving credit rating and gaining access to federal subsidies, the district estimates that taxpayers will save around $17.2 million over the life of bond measures passed in 2000 and 2010, according to an Oct. 14 announcement on the district’s website.
“I think the board is very grateful to our community’s unwavering support for public education,” said Karen Hemphill, director of the school district’s Board of Education. “We really value that support, so when we had the chance to save taxpayers some money, it was a wonderful opportunity.”
Savings by the district were seen through Measures I and AA, which both provided bonds funded by property taxes for school construction and maintenance across the district.
The bulk of the district’s savings came from Measure I, passed by voters in 2010, which awarded the district up to $210 million in bonds, according Josh Daniels, school board director.
Under the measure, the district saved approximately $10 million through a subsidy from the U.S. Treasury, intended to lower the interest rates of the bonds.
The district saved an additional $1 million through restructuring the issuances of funding through the Measure I bonds. By initially taking out a $35 million bond as opposed to the originally-planned $30 million bond, the district was able to begin maintenance projects sooner, saving money that would have been lost through inflation, according to the announcement.
The district secured lower interest rates on all bond measures by improving their credit rating from A+ to AA-, which saved the district around $1.2 million under Measure I alone, the announcement said.
“We were able to petition to increase our credit rating, and whenever we have the opportunity to do these steps, we save the taxpayers,” Hemphill said. “That’s out of an appreciation for our taxpayers’ support.”
An additional estimated $5 million was saved through refinancing the bonds under Measure AA, passed by voters in 2000, according to Daniels. The district refinanced in order to acquire lower interest rates, according to a report presented at the Oct. 12 board meeting.
“The way that the taxpayer would actually see the benefits is that over the next 25 years, maybe a little bit longer, we will be saving $17 million in interest costs,” Daniels said. “We’re not spending anymore or any less. We are not borrowing any more money, and the savings is really to the taxpayer.”
However, the expected benefits of the bond refinancing have raised doubts about whether taxpayers will see an immediate impact.
“Refinancing gives more flexibility in the debt service,” said Priscilla Myrick, who ran for the district school board in 2010. “But even though they refinanced, and it saves the district some interest expenses over the life of the whole bond, it will probably never make a direct impact on the tax rate.”