Propositions 1 and 3 School Bonds: Questions to Consider

FNSB Proposition 1 - $9,900,000 General Obligation Bonds for Ryan Middle School Capital Improvements (Ordinance No. 2011-39)

FNSB Proposition 3 - $10,390,000 General Obligation Bonds for Capital Improvements to Salcha & Woodriver Elementary Schools, North Pole Middle School & North Pole High School (Ordinance No. 2011-39)

Fact Sheet link: http://www.k12northstar.org/sites/default/files/2011_school_bond_fact_sheet.pdf

Both bonds are grouped together in the ordinance and fact sheet.

Passage of bond will result in:

Proposition 1
Ryan Middle School: renovation and system upgrades particularly to gymnasium wing (to include a weight room & dance floor according to Ryan Smith – I have not verified), preliminary design of future phased renovation and upgrade alternatives.

Proposition 2
Salcha Elementary: Replace and upgrade roof and building envelope.

Woodriver Elementary: Upgrade gymnasium interior, finishes, and mechanical, electrical and other systems.

North Pole Middle: Replace and upgrade roof and clearstories.

North Pole High: Renovations and mechanical, electrical, and other systems upgrades to the vocational wing.

If you’re not sure what a bond actually is read this article first: http://interioralaskavoterguides.blogspot.com/2011/09/repost-bonding-101.html

The estimated additional property tax amount due per $100,000 assessed value of property per year is $5.69. This is based on if the State reimburses 70%. If it doesn’t then the additional tax increase could be $18.96 per $100,000/yr.

I have not had time to research out the answers to the following questions but I believe they have merit to consider in deciding how to vote, especially considering our world economic variations.

• If my home is valued at $150,000 will my property tax be pro-rated accordingly?


• When is the state expected to reimburse the 70%? What if the state can’t or won’t reimburse the 70%?


• What if the number of property owners changes significantly? Is the “approximate amount” taxed redistributed every year?


• How many years will we be paying for this? When is the bond “due”?


• Who buys these bonds? What if no one wants to /buy them?


• How many school bonds are we paying on already?


• If I vote no can I opt out of the property tax increase and the accompanying “mortgage” responsibility? (I did find the answer to this: NO)


• According to the ordinance (2011-39) Section 2 it states: “…the Borough will levy ad valorem taxes* upon all taxable property in the Borough without limitation as to rate or amount to pay when due”. I am very uncomfortable with the idea that the borough can levy a tax on me “without limitation as to rate or amount” if need be. Essentially, a yes vote on this is putting up “our” property as collateral.


• Is the return for my risk acceptable?

Ultimately the bond litmus test question is:
Do I have a right to force a mortgage on my neighbor?

*Ad valorem tax: tax based on the assessed value of property.

Repost: Bonding 101

Original post: Friday, October 22, 2010

Bonding Propositions and Ballot Measure Up Next but first...
Despite having been an excellent student in public school I did not learn much. I knew how to test well but what I studied did not stick! I'm sure most of us can relate to that. Now I am on a learning adventure and boy is it fun!

Let me ask you something.... do you know what a bond is? Do you understand the different types of bonds? Who sells them, who buys them? If you wanted to, how would you buy one? What is the rate of return on one?

In researching for this upcoming election these are some of the questions I have had and am currently (in my mid 30's) learning about. I have been voting since 18 and am just now trying to be an informed voter instead of a blind approver.

When "we the people" vote yes on a bonding proposition we are authorizing an investment proposal without knowing all the detail's of it. And from what I have learned I'm not sure I want to approve an investment proposal with out that information.

Here's what I've learned so far:

"A general obligation bond is a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.

Most general obligation pledges at the local government level include a pledge to levy a property tax to meet debt service requirements, in which case holders of general obligation bonds have a right to compel the borrowing government to levy that tax to satisfy the local government's obligation."

Emphasis added, http://en.wikipedia.org/wiki/General_obligation_bond

In case you don't know, levy is defined as 1. impose tax: to use government authority to impose or collect a tax.

To me, and if my understanding is wrong please comment, the bond propositions are essentially "we the people" approving our government to sell pieces of paper (bonds) to investors who will then be paid back over an undisclosed period of time and at an undisclosed rate of interest. What money source will be used to pay back the investors? Who will the investors be? Why would they invest? If the money source is depleted before investors are fully paid the obligation owed them will additional taxes of the people be levied?

Just some food for thought....

Update 10/23/10 Just spoke with Rep. Tammy Wilson. Who I have always found to be quick to return my calls and willing to answer my questions. Some clarification and understanding on the bonding issues.

• The State of Alaska is guaranteeing the funds (which particular State funds used for the guarantee she was not certain on).



• She believes the bonds (essentially loans) are on a 30 year pay back plan.



• The terms of interest, etc. on the bonds is not delineated now; it is determined at the time when the bonds go out. Just like with a mortgage or car loan.

Update on Bonding Propositions

Update 10/23/10 Just spoke with Rep. Tammy Wilson. Who I have always found to be quick to return my calls and willing to answer my questions. Some clarification and understanding on the bonding issues.

• The State of Alaska is guaranteeing the funds (which particular State funds used for the guarantee she was not certain on).
• She believes the bonds (essentially loans) are on a 30 year pay back plan.
• The terms of interest, etc. on the bonds is not delineated now; it is determined at the time when the bonds go out. Just like with a mortgage or car loan.

Bonding Proposition B - State General Obligation Library, Education, and Educational Research Facility Bonds

State General Obligation Library, Education, and Educational Research Facility Bonds, $397,200,000

Shall the State of Alaska issue its general obligation bonds in the principal amount of not more than $397,200,000 for the purpose of design and construction of library, education and educational research facilities?

Bonds Yes [ ]
Bonds No [ ]

Click here for HB424

Rather then write up an entry on this I will refer you to fellow blogger at Alaska Pride. His entry on this topic is well researched and documented. If you want to know how your representative voted be sure to click on the dated links for when each branch passed it.

Commercial for yes on Propostition B “All without impacting local property taxes”

Some information:

This bond to provide for a swimming pool (Mt. Edgecumbe), State Library, Archives, and Museum facility, Replacement/Repair of some village schools, UA system (center for art and learning, arena/athletic facility, classroom/lab, student housing, career and tech ed center, campus renewal/renovation), Dep. Of Fish and Game research facility, and a vocational center.

Mount Edgecumbe High School is in Sitka.

Population in 2000 of Anchorage 260,283 Fairbanks was 30,224 Sitka 8,835.

Anchorage has 5 public swimming pools, Fairbanks (including North Pole) 3, and Sitka 2.

An informative article about the Mount Edgecumbe “Aquatic facility”.
http://www.juneauempire.com/stories/102210/sta_724421042.shtml

A commercial for yes on Proposition B states “All without impacting local property taxes”. From Alaska Pride, "A group called Yes On Prop B has been formed to advocate in favor of the bond. One of the primary players is Arliss Sturgulewski, an ardent supporter of Lisa Murkowski."


In regards to this bonding proposition I asked Tammy Wilson, "If the money source is depleted before investors are fully paid the obligation owed them will additional taxes of the people be levied?" Now I am paraphrasing her response but it was to the effect that as citizens of the State of Alaska we are approving this bonding loan effort and if passed committing to a 30 year loan. There is a chance if funding by the State runs out (example if oil price per barrel drops) "we the people" could be saddled with the payback responsibility through additional taxes or fees.

*His recommendations are not necessarily mine*

Bonding Proposition A - State Guaranteed Veterans Residential Mortgage Bonds

State Guaranteed Veterans Residential Mortgage Bonds, $600,000,000

Shall the State of Alaska unconditionally guarantee as a general obligation of the state the payment of principal and interest on revenue bonds of the Alaska Housing Finance Corporation issued in the principal amount of not more than $600,000,000 for the purpose of purchasing mortgages made for residences for qualifying veterans, as defined by law?

Bonds Yes [ ]
Bonds No [ ]

Click here for the SB217

*Note* Bonding propositions are "we the people" approving loans to be backed by the State. If the State cannot cover the obligation then "we the people" could be saddled with the funding obligation through additional taxes or fees. That said, the default rates on Veteran loans is very low, this type of bonding has been done before, and it is viewed as a wise investment.

New 10/28/10 Additionally my brother-in-law "took a class and learned that the Alaska housing finance is the only state program that actually MAKES MONEY for the state!"

Rather then write up an entry on this I will refer you to fellow blogger at Alaska Pride. His entry on this topic is well researched and documented. If you want to know how your representative voted be sure to click on the dated links for when each branch passed it.

*His recommendations are not necessarily mine*

Bonding Propositions and Ballot Measure Up Next but first...

Despite having been an excellent student in public school I did not learn much. I knew how to test well but what I studied did not stick! I'm sure most of us can relate to that. Now I am on a learning adventure and boy is it fun!

Let me ask you something.... do you know what a bond is? Do you understand the different types of bonds? Who sells them, who buys them? If you wanted to, how would you buy one? What is the rate of return on one?

In researching for this upcoming election these are some of the questions I have had and am currently (in my mid 30's) learning about. I have been voting since 18 and am just now trying to be an informed voter instead of a blind approver.

When "we the people" vote yes on a bonding proposition we are authorizing an investment proposal without knowing all the detail's of it. And from what I have learned I'm not sure I want to approve an investment proposal with out that information.

Here's what I've learned so far:

"A general obligation bond is a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.

Most general obligation pledges at the local government level include a pledge to levy a property tax to meet debt service requirements, in which case holders of general obligation bonds have a right to compel the borrowing government to levy that tax to satisfy the local government's obligation."

Emphasis added, http://en.wikipedia.org/wiki/General_obligation_bond

In case you don't know, levy is defined as 1. impose tax: to use government authority to impose or collect a tax.

To me, and if my understanding is wrong please comment, the bond propositions are essentially "we the people" approving our government to sell pieces of paper (bonds) to investors who will then be paid back over an undisclosed period of time and at an undisclosed rate of interest. What money source will be used to pay back the investors? Who will the investors be? Why would they invest? If the money source is depleted before investors are fully paid the obligation owed them will additional taxes of the people be levied?

Just some food for thought....

Update 10/23/10 Just spoke with Rep. Tammy Wilson. Who I have always found to be quick to return my calls and willing to answer my questions. Some clarification and understanding on the bonding issues.

• The State of Alaska is guaranteeing the funds (which particular State funds used for the guarantee she was not certain on).


• She believes the bonds (essentially loans) are on a 30 year pay back plan.


• The terms of interest, etc. on the bonds is not delineated now; it is determined at the time when the bonds go out. Just like with a mortgage or car loan.