Tuesday, February 3, 2015

Houses vs. Office Buildings

At an Eanes ISD community bond forum, I got the chance to ask a question about what type of development would be most beneficial to the school district - single family house or office development. The answer was counter intuitive because I would have thought that the office development with more capital value would be preferred from the perspective of school financing. That turned out not to be true for three reasons. First EISD is not at capacity for students so additional students don't require new facilities, within limits of course. Secondly,  the benefits financially have to be viewed as a delta to the existing conditions. And, third, EISD has an expense shortfall of between 4M and 5M dollars annually. The state recaptures 54% of our local tax dollars now and that will increase to 63% in five years. And, apparently it's even worse when it's looked at from the perspective of a delta. If I remember correctly, 90% of the delta due to capital improvements of property would go to the state. Therefore, whether the land is developed  for house or office buildings is not important to EISD with respect to  tax revenue. However, the additional capital value of the offices would give the district more ability for bond issues. On the other hand, single family homes would presumably bring more students into the district thereby increasing the amount of money given by the state per student. This would  help alleviate EISD's operating expense short fall.

If you'd like a copy of the presentation given at the forum on January 14, 2015, click here.

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