PDH Board re-figures bond estimates12/09/2009
Plumas District Hospital board member John Kimmel said in a recent interview that the board and administrators are working hard to find every possible way to decrease the taxpayer’s burden on the Measure A hospital bonds.
The top row of the accompanying chart shows the estimates used to figure the first year, highest year and average tax rate as shown on the ballot measure.
Rows two through six show estimates that will help the board decide when or if it will issue the second set of bonds.
Assessed value (annual A.V.) is the collective value of all assessed property in the district. Each individual parcel cannot go up more than 2 percent per year, as dictated by Proposition 13.
The collective assessed value goes up when a property is sold, at which time its assessed value reflects true market value, and when there is new construction (which is limited, as there are few empty parcels in the district).
As Kimmel explained, in each of the new estimates the growth rate in annual assessed value is figured conservatively: with the first year at 0 percent, the second year at 1 percent, third year at 2 percent, fourth year at 3 percent, fifth year at 4 percent, and for the sixth through 13th year, at 4.75 percent, which is the historical average growth rate in assessed value.
That projected slow growth in assessed value over time explains why the tax rate decreases over time.
The highest rate occurs when the second set of bonds is sold, which, if things had gone as planned, would have been in the second year of the bond tax.
Many voters have been confused about this, thinking the rate went up gradually over time and did not reach the high rate until years later.
Another point of confusion, the maximum amount of bonds that can be issued based on total assessed property value in the district is $15.3 million—down from the $17.5 million total bond issue the voters passed, on which the ballot figures were based.
The only variable, then, is the interest rate. Row 2, for example shows the projected low, high and average if the bonds are sold at an interest rate of 4 percent. If the board were to decide that a tax high of $125 would be acceptable to voters, it would need to wait until interest rates fell to 4.5 percent.
Kimmel still feels this is a good time to build, because “inflation hasn’t hit hard yet.” If the new hospital can be built in today’s dollars and paid back in inflated dollars, the hospital and the community will be the winner he said.
For example, with the average assessed home value at $120,867 according to county assessor Chuck Leonhardt, a high rate of $125 per $100,000 of assessed value would mean the yearly payment on that “average home” would be $165.
“Is the hospital worth that to people?” Kimmel asked. For him, the answer is definitely yes, but he said unequivocally, “If I felt people made a decision (against building) based on fact and lack of affordability, I would definitely respect and honor that decision.”
He said again that he feels badly the ballot’s language was so confusing. “The vote was clouded because of that.”
According to Kimmel, deciding on funding the bonds based on assessed value versus a fixed amount per parcel seemed to him a fairer way to tax most people. It has a minimizing effect on long-term residents with low assessments. “They’ve already paid for a hospital,” he said.
It also allows for businesses like Sierra Pacific Industries to share more in the cost. “It just doesn’t make sense that grandma’s parcel worth $100,000 would be assessed the same as a million dollar property. The downside is that those who bought recently get hit harder,” he added.
New buyers can figure the tax in when deciding what they can afford to buy. The people who get hurt the most with a property tax are those who have high-priced homes they’ve bought in the last five years.
In addition to looking at bond rates, the board is once again looking at ways to pare down building costs. An innovative option suggested by Kimmel was to build only the first floor of the hospital now, which includes the emergency room and the operating rooms. The second floor, which consists of patient rooms, could be added at a later date.