COLUMN: VanderSloot defends original statement
I would like to respond to the op-ed published by Piper Jaffray yesterday. First, I want to be clear that I have the highest respect for the folks at Piper Jaffray. The firm has a great reputation and I believe they are worthy of it. We are not suggesting that Piper Jaffray or its employees have done anything shady or dishonest. However, we do have to correct one of the statements that they made in yesterday’s editorial on East Idaho News.
In his op-ed, Eric Heringer suggested that we were not truthful when we stated that District 91 actually directed them to come up with a second scenario that would show no taxes after first predicting that the bond would require a hike in the tax. Truth is an important thing to us. We assume the truth is important to everyone so when we are accused of not telling the truth, it’s important that we respond. Contrary to the assertions from Piper Jaffray, our statement was indeed accurate and truthful. Here’s the story:
Late last week, when it became apparent that many voters were understanding statements from the School District and others to mean that voters could pass the school bond with no increase in taxes, that seemed highly implausible to me.
We learned that Piper Jaffray had actually produced two reports that said very different things. The first report was dated Feb. 6, 2017. And the second was dated July 25. The Feb. 6 report clearly indicated that the tax levy rate would have to increase from the current $4.24 per $1000 value to $4.61 per $1000 value. Coupled with increased home values, the first report projected that it would take an approximate 34% increase in property taxes to pay for the bond. The second report dated July 25 showed no increase in tax rate.
I sent our most senior financial professionals to meet with the folks at Piper Jaffray to get clarification about their projections. They had two separate conversations on Oct. 26. The first meeting was a cordial open dialogue where a ton of helpful information was exchanged.
During that meeting, Piper Jaffray Vice President Michael Keith explained that after the School District received the first report, it became apparent that property values were increasing faster than was apparent in February and that the School District asked Piper Jeffray to produce a revised projection but this time Piper Jaffray was instructed to produce a scenario where there would be no increase in tax rate whatsoever.
So, with those instructions, Piper Jaffray produced a second projection on July 25. As directed, the new report showed no increase in tax rate. But, ironically, the second report actually showed it would be necessary to have an even higher increase in taxes (45%) but in this scenario, none of the increase would come from an increase in tax rate, but rather, the entire increase in taxes would all come from a much more substantial increase in property values than had been predicted in the first report. It is also interesting to note that in the second report the amount of the bond increased from $100,000,000 to $110,000,000.
We had more questions and asked for a second meeting. We were told that there would be no more meetings unless their client, School District 91, was present. We met again the afternoon of Oct. 26.
This time Piper Jaffray Managing Director, Eric Heringer, and George Boland from the School District were present. Eric Heringer reiterated the same story about the two reports. He made it clear that after the first report, Piper Jaffray was instructed to come up with a second projection that showed no increase in tax rate. We feel there was no mistake about what was said here. We believe we understood both Mr. Keith and Mr. Heringer correctly. We believe they are honorable men. We do not believe they have done anything wrong. We simply do not understand why they are now denying they told us what they told us. But, we stand by our original statement that they disclosed that they had been instructed by the School District to come up with a new scenario that would show no increase in tax rates. So, that’s what they did. At least that is what they told us.
In addition to their verbal explanations to us, it is clear from reading the two reports themselves that the objective of the July 25 report was to show a scenario with no tax rate increase as opposed to what had been projected on the Feb. 6 report. The different stated objectives for the two reports speak for themselves:
Please read for yourself the stated “goal of analysis” as actually written on each report:
February 6 objective:
• “Review projected bond repayment costs of $100 million bond proposal for an August 2017 election.”
• “Evaluate impact of $100 million bond on the District’s total property tax rate under different market value growth assumptions.”
July 25 objective:
• “Review projected bond repayment costs of $110 million bond proposal for a November 2017 election.”
• “Structure bond sale to fit within District’s current total tax rate structure of $4.24 per $1000 without a tax increase.”
The July 25 report is a written document that clearly states that Piper Jaffray was given the direction to come up with a scenario that would show no tax rate increase. It’s what they told us. And it’s exactly what they did. We stand by our original statement.
Let’s be clear. I am neutral on the bond. I am certainly not suggesting people should vote against the bond. In fact, people who are willing to pay the higher tax to build a new Idaho Falls high school and remodel Skyline should vote yes.
People have suggested that I am unwilling to pay the increase in tax myself and that is my motive for getting involved. That’s not the case. As I pointed out, most of the real estate that I own is outside District 91 so the bond will not have a big impact on my family. However, I do have a home and some outbuildings within District 91. I am willing to pay the necessary higher tax to pay for the high school. I strongly believe we must provide the best schools possible for our kids. I might point out that in addition to our property taxes, Belinda and I have spent more than $8 million of our own money over the last four years to support education, including totally rebuilding the New Sweden school with our own funds and building the American Heritage Public High School with no cost to taxpayers whatsoever.
To make it perfectly clear, I will publicly commit to paying the increased amount even if the school bond does not pass. In fact, I promise to pay an equal amount towards education and development of kids regardless of whether the bond passes or not. That’s not an empty promise. That’s exactly what Belinda and I will do.
Now back to the point. I’m OK with paying more taxes. And I’m totally OK with voters passing the school bond as long as they know what it’s going to cost them. But I’m not OK with folks telling my neighbors that they will not have to pay any increased taxes if the school bond passes. Some of my neighbors can’t afford more taxes. They deserve to know the truth. It’s wrong to mislead them into believing that the school bond will cost them nothing.
Piper Jaffray now forecasts that the 45% tax increase necessary to pay for the bond is going to come entirely from an increase in assessed property values. Some people suggest that, since property values are going to go up anyway, there is nothing you can do to stop taxes from also going up. But that’s not true. If you haven’t spent the money, you can actually choose to decrease the tax rate and hold taxes steady or even lower them even though the value of your home has gone up. But if you have a bond to pay off, you will not be able to lower the tax rate and the higher valuation will cause your taxes to go up. That’s ok if that is what you want.
Again, people should vote their conscience. But they should vote with accurate data. They deserve to have the facts before they vote.