VanderSloot: Residents should understand they will pay higher taxes if D91 bond passes

Published at 7:58 am, October 30, 2017 | Updated at 2:17 am, February 5, 2021

EastIdahoNews.com staff

IDAHO FALLS – The CEO of Melaleuca fears voters believe the bond advocated by Idaho Falls School District 91 will not result in any new taxes. He believes the opposite is true.

Frank VanderSloot came to the conclusion after his company studied and performed an independent analysis on the $110 million proposal.

“I sent Melaleuca’s top CPAs and financial analysts to talk to School District 91, Bonneville County and Piper Jaffray, the company who did the projections for the school district,” VanderSloot says. “We love our kids. We want the best education for our kids. We’ve got to give them the best education but we should do it as prudentially as we can.”

The bond would be used to build a new $70 million Idaho Falls High School off 49th South near Taylorview Middle School. Another $40 million would be used for a top-to-bottom renovation of Skyline High School.

District 91 says it is necessary to modernize the schools. If the bond passes, officials say the “tax levy rate will not go up” but VanderSloot points out that does not mean taxes will not go up.

The school district projects that “growth in the tax base” will be enough to produce the taxes necessary to pay the $154 million (including interest) expense. VanderSloot believes that people think that means the additional taxes will come from new construction and that voter’s own taxes will not be affected.

“That’s not at all what we think is going to happen,” VanderSloot says. “They’re not going to have to change the ‘rate’ of the tax because they’re counting on the assessor’s office to crank up the value of your home. That’s what they mean by ‘growth in the tax base.’ They’re careful not to say it, evidentially, and they’re careful not to point it out and the people aren’t understanding it at all.”

The Melaleuca analysis shows 25 percent of the increase in projected taxes will come from new construction with the remaining 75 percent coming from current homeowners whose home values will have to increase, according to VanderSloot.

“The Piper Jaffray report supports that,” VanderSloot says. “With 154 million dollars, including interest, it’s going to have to come from some place and it’s not going to come from new construction. It’s going to come from increased values of everyone’s home so they have to all pitch in and pay a higher tax.”

Once the bond has been issued, there will be no backing down. VanderSloot points out that if the assessed values of current homes do not increase fast enough, it still might be necessary to increase the actual rate of taxes.

For District 91’s scenario to work, and the ‘tax levy rate’ not increase, the ‘tax base’ has to continue to grow much faster than it has recently. Most of the growth in tax base has traditionally come from simply increasing the assessed value of homes. Only a small percentage has traditionally come from new construction.

The Piper Jaffray bond election planning report shows an estimated six percent growth rate is needed in 2018, followed by a five percent growth rate in 2019 and 2020, and a 2.5 percent growth rate between 2021 and 2029.

“When we talked to the Piper Jaffray folks, we asked them what the probability was that those numbers would actually happen. They’ll just not give you any probability at all,” VanderSloot says. “It’s also important to note that they were given the objective before they did the projection – at least that’s our understanding from what they told us. The school district told them what they wanted the report to say – to come up with a scenario that says no new tax rate increase so that’s what they did. It doesn’t mean folks at Piper Jaffery really think that is what is going to happen. In fact, they refused to give us any assurance or even a percentage of probability. It is just a projection that they were asked to make. And it shows what it was supposed to show.”

“Let’s say Melaleuca is growing at five percent a year but I say (to my accountants), ‘Give me a projection if we grow 20 percent a year,’” VanderSloot continues. “That’s not what we’ve been doing but if we grew by that much, then the numbers would change. It’s that kind of thing when you say, ‘Give us a projection that doesn’t show a tax rate increase.’ Then you can come up with any kind of numbers. It’s important to note that if you go back the last eight years, the trend is not at all the trend that’s being predicted by these projections.”

VanderSloot also takes issue with the argument supporters of the bond make that Idaho Falls High School has an inadequate electrical structure for modern technology and thick walls prevent reliable internet Wifi.

“That’s just a false narrative,” he says. “We know a lot about retrofitting old buildings because we’ve upgraded about eight old buildings in Idaho Falls and Rexburg. All you need is the proper system. You could retrofit Idaho Falls High School for about four percent, in our estimation, of what it costs to build a new high school. People need to know it can be done and you can have the latest and greatest technology available to the kids without that kind of investment.”

VanderSloot says the bond won’t affect Melaleuca because Melaleuca’s new office building is located in Shelley School District 60 and he’s speaking out because he believes people should make an informed decision.

“I think District 91 has chosen very, very carefully to give the impression to the public that their taxes are not going to go up. They chose the words ‘no tax rate increase’ knowing people would understand it differently than it really is,” he says.

VanderSloot wants all the facts laid on the table before the public makes a major decision on an issue that will impact family budgets for the next 20 years.

“We’re not saying you should vote yes or no. We’re just trying to get accurate data in front of people and if they vote yes, we want them to do it with a full knowledge that it’s going to be an expensive bond,” VanderSloot says. “If the people want to pass this bond with full knowledge that their taxes are going to go up, then they should do it with that knowledge. But they shouldn’t vote for this with the understanding that they’re not going to have to pay more taxes because that’s not the case.”

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