NOCONA

School districts hold bond elections seeking approval from voters to sell bonds thus generating revenue for large capital projects. Bonds are issued once the voters have authorized a ballot proposition. Bonds are repaid over a period of 25 years from local tax revenues in the Nocona ISD’s Interest and Sinking (I&S) budget.

A bond is being proposed because the district does not have $16.8 million to pay for constructing a new high school. By using a bond, the district is able to spread the cost of the facilities over 25 years (similar to a mortgage on a home or business).

The Nocona Board of Trustees invited any citizen interested in reviewing current and future facility needs to serve on a Facility Advisory Committee (FAC). The FAC examined school facilities and made recommendations for improvements, addressing the needs for the next 10 years, with a vision of 20 or more years. The current Nocona High School was built in 1953 or 63 years ago. The FAC explored many options and determined a new high school on a campus that could eventually house all the education needs for Nocona ISD was the most practical approach. The Board of Trustees accepted the FAC’s recommendation and called for the bond election.

At some point money is better spent building new rather than to repair and replace a piece at a time, which has been the practice of the school district since 1979. The increased tax rate would still be necessary to accumulate enough funds to build a new facility in 25 years. 

Texas State law requires each county to establish a county appraisal district.  The Montague County Appraisal District and its board have the authority to set and adjust property valuations.

The State Property Tax Code allows for school property taxes on an individual homestead to be “frozen” at the age of 65. If you are 65 years of age or older and you have filed for the “Over 65 Homestead Exemption”, there is a ceiling on the amount of school taxes to be paid. The only exception is if improvements are made to a home. As such, a tax increase from a new bond program cannot increase the tax ceiling of such a taxpayer. To request this exemption or learn what your ceiling is set, contact the Montague County Appraisal District at 940-894-6011. Download an Over-65 Exemption form at: http://www.window.state.tx.us/taxinfo/taxforms/50-114.pdf.

Normal repairs, maintenance and the economic impact of the market cannot increase the amount of taxes you will pay once a tax ceiling is in place on that homestead.

It is a limit on the amount of taxes you must pay on your residence. If you qualify your home for an age 65 or older or disabled person homestead exemption for school taxes, the school taxes on that home cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualified for the age 65 or older or disabled person exemption. The school taxes on your home may go below the ceiling but not above the amount of the ceiling. However, if you improve the home (other than normal repairs or maintenance), the tax ceiling may go higher because of the new additions. For example, if you add on a garage or bedroom to the house after you have established a tax ceiling, the ceiling will be adjusted to a higher level to reflect the value of that addition.

A financial advisor with U.S. Capital Advisors conducted a preliminary tax rate analysis using certified taxable assessed valuation, collection rate, and interest rate assumptions to estimate a tax rate needed to pay debt for the new high school. The tax rate was assessed for impact on homeowners. The financial advisory conservatively estimated the interest rate at 3.75%. Interest rates are currently at a 35-year low. Between February and April 2016, interest rates were between 3.25% and 2.7%.

Bonds sold will require bidders to submit sealed bids on the day of pricing, and the District then awards the bonds to the bidder providing the lowest interest rate. Bonds will be sold at a “competitive price”, in fact the District will receive the best price (lowest interest rate) on the day we price. The Competitive Sale process ensures that the Bond Guarantee Program under the Texas Permanent School Fund (PSF) backs all school construction bonds. The PSF guarantee has received “AAA” ratings from major bond rating services.

If the bond is approved a tax rate increase would not exceed $0.437.

Divide the taxable value of your property (less homestead exemptions) by 100. Then, multiply that number by .437 for the annual impact of the total bond proposal.

Almost half of the homes in Nocona ISD area are valued under $40,000. The additional tax on a homestead valued at $40,000 is $5.47 a month.

Schools are the only governing entity in Texas with a cap on both the M&O and I&S tax rates. Prior to selling the bonds, the Texas Attorney General (AG) must approve the bonds. The bond tax rate must be within the cap limit set forth by law, which is $0.50. If there is any chance that the I&S tax rate cap will be exceeded due to the sale of the bond or future revenue shortfalls, then the sale of the bonds will not be authorized by the AG. The AG will also verify that the Texas Permanent School Fund has sufficient funds that are not obligated which will be used to cover the entire cost of the bond should there be a default.  If the AG approves the bonds, then the school district will receive authorization to sell the bonds. The use, amount, and spending of the bond proceeds are monitored by the Texas Education Agency and by tightly regulated by laws governing the use of bond proceeds. 

Nocona ISD will use a Construction Manager at Risk as its construction delivery method, which provides a Guaranteed Maximum Price (GMP). If voters approve the bond, there will be a thorough evaluation of all the projects, and a scope of work will be laid out. The voters will not incur any taxes to support bonds in an amount greater than what is set forth in the proposition to be voted on at the November 8, 2016 election.

We recognize the individual impact the oil and gas industry has on our citizens. However, because of our tax base, Nocona ISD is not dependent upon oil and gas revenues; therefore, NISD is not subject to wild fluctuations in property values that come with being oil and gas dependent.