The $150 Million Question: How Will the New Middle School Affect Taxes?

A key concern for many Concord residents regarding the new middle school project is the tax implications. According to the School District, “the estimated tax impact of this project is $32–$207 in the first year for a property assessed at $350,000.” While this is technically accurate, the lack of a detailed breakdown leaves room for confusion. Taxpayers deserve a clearer picture of how these numbers were calculated.

Breaking Down the Project Costs

The total projected cost for the new middle school ranges from $136 million to $167 million. Although the School Board voted to cap it at $152 million for simplicity let’s work with a projected cost of $150 million. After factoring in state building aid, expected to cover no more than $29 million, the District’s share would be at least $120 million.

What Does This Mean for the Average Homeowner?

Using the $350,000 home as an example, we can calculate the total cost for the homeowner. The most recent total property tax assessment for the Concord School District from 2022 is approximately $4.66 billion. With property values increasing, we’ll estimate a $5 billion assessment base for today's purposes.

Dividing the $120 million cost spread across a $5 billion assessed property base results in a cost of $0.024 per dollar of assessment. This translates to a total cost of $8,400 for a homeowner with a $350,000 assessed property.

The District plans to borrow the funds, with an estimated interest rate of 4% and a bond term of 30 years. Based on this, the annual bond payments would total around $7 million. Spread over the $5 billion tax base, the cost for a $350,000 homeowner would be $480 annually. Calculated from a different perspective get the same result: if you amortize the upfront cost of $8,400 over 30 years at 4%, the annual repayment comes out to the same $480.

So, Why Does the District Say $32 to $207 in the First Year?

The District’s presentation of a much lower first-year tax impact relies on its use of a trust fund—a reserve intended for various school-related expenses. My understanding is the current amount n the trust fund allocated for new facilities is around $16 million.

Instead of using the trust fund as a down payment to lower the bond principal, the District plans to subsidize the initial bond payments with this fund. For example, if the District uses $7 million from the trust fund, it could cover the entire first-year bond payment, resulting in a first-year tax impact of $0. Alternatively, the District could use the trust fund over several years to “stabilize” the impact. The hope is that as total taxable property increases, the tax rate won’t need to rise too drastically in any one year to cover the new bond.

Is This Approach Fair?

While I don’t fault the District for using the trust fund to ease the initial tax shock—it’s actually a smart strategy—transparency is crucial. The trust fund exists because of taxes collected in past years that exceeded the District's immediate needs. Presenting the first-year tax figure as static can be misleading; the District has significant flexibility in how it applies the trust fund. If desired, they could even set the first-year increase to nothing at all! The underlying reasons for this flexibility should be clearly communicated to taxpayers.

This presentation approach resembles a car dealer focusing on the monthly payment while downplaying the total cost. The overall financial impact doesn’t change, regardless of how the District “massages” the numbers in the short term.

The Importance of Looking at the Bigger Picture

Ultimately, the actual tax burden won’t be fully felt until after use of the trust fund is completed. Additionally, while property values typically rise, boosting tax collections, we can’t always rely on continued appreciation. Market downturns, like those seen in 2008–09, remind us that relying on increasing property values to ease the tax burden can be risky.

To quote economist Milton Friedman: “Keep your eye on one thing and one thing only: how much the government is spending, because that’s the true tax.” While we may not feel the full tax impact right away, the cost of the project remains the same. Whether it’s paid in taxes or through borrowing, the bill eventually comes due.