The New Richmond School District currently has a student enrollment of 2,694 according to information recently provided by the District Office. This represents a decline of 16 students from last years enrollment of 2,710 students as listed on the Wisconsin Department of Public Instruction demographic enrollment information page for the New Richmond School District. Of particular interest to the 2,694 number is that this past September at the beginning of this current school year, the District reported to the WI DPI an enrollment of 2,731 students. This means that since the beginning of the school year, the District’s enrollment has declined by 37 students or more than 1% of the student population.

The $93 million Referendum planning presentation the District used to inform residents about their desire to build new schools, projected 2,761 students for the current school year of 2007-2008, 2,830 for school year 2008-2009 and 2,901 students for 2009-2010.

Where will these new students come from? Could it be from people moving into the District?

The Western Wisconsin Realtors Association just released sales information detailing the first quarter total number of homes sold in St. Croix County is down 16.9% from the first quarter in 2007. Just 191 homes sold in January, February and March. Even worse, the total value of these sales is down from $52.7 million to $37.6 million or a 20.9% from same period last year.

Perhaps more troubling, the number of homes sold in the first 3 months of the year is the lowest amount of homes sold in the same period since at least 2003 when 218 homes were sold valued at $43.5 million.

These first quarter numbers are not an anomaly either. Real estate sales have also been declining for several years. The total number of homes sold in all of 2007 were almost 17% lower than 2006, 29% lower than in 2005, 32.5% lower than in 2004 and 26.4% lower than in 2003.

Don’t think it has hit the bottom yet because April 2008 sales in the county were down 41.74% and the value off 45.2% compared to last April.

Perhaps this reflects why the St. Croix County Economic Development Corporation is forecasting the total population for the New Richmond School District will decline by 2.7% between 2007 and 2010.

The New Richmond School District was relying on population growth and appreciation in the value of all property, or what is called equalized property valuation, to increase by healthy percentages each year. The same Referendum presentation projecting student enrollment growth also forecast 8% equalized valuation growth in the first 3 years, 6% growth for the next 6 years, 4% growth for the next 4 years and 2% going forward.

The Wisconsin Department of Revenue lists the equalized valuation for all property in the New Richmond School District of $1.4 billion. The figure is used in helping calculate what the tax rate will be based upon what the District budget is. It is a complicated formula that has been explained here at OTBL previously. Perhaps some discussion could be generated about this and some of the implications that will result from declining student enrollment, etc.

Using the Districts estimates for equalized valuation increases over the next 3 years of consecutive 8% growth rates, the total equalized value will become $1.76 billion. After the next 6 years of 6% equalized valuation rate increases, the total value will become $2.5 billion.

Will these forecasts prove true? Double digit declines in property values in the real estate market are an important factor the calculation for next years equalized valuation figure.

This current years equalized valuation rate increased by less than 1%, far less than the 8% that was estimated. In order to get back on track with the District’s financial planning this year’s increase in valuation will have to increase by more than 15%. In actuality, we may likely see a decline in this number.

What will happen to the tax rate if the District’s forecasts prove incorrect?

The District is now committed to the $93 million of debt added on to the $25 million annual District operating budget.

The District is also required by state law to come before the voters once again to seek the operating expenses for the new elementary school and the new high school before these can be opened. The $500,000 annual operating levy budget over-ride vote was defeated on the same day voters approved the $93 million. Without the additional over budget $500,000 the District will not have the money to pay for new teachers, new aides, new administrative staff, new supplies, electricity, heat and the numerous other operational expenses. Funds from the $93 million cannot be used because the ballot question was specifically for capital expenditures and paying off the accumulated debt. When will the District bring this question back to the voters? What is it waiting for? Lets hope it does not call for an election during the summer when a low turnout would be likely and extra expense by the District would be necessary to hold such a special election. District resident would see right through this and understand what the District was attempting to do.

Granted this past weeks article in the New Richmond News about a 4% interest rate versus the estimated 5% interest rate is positive news. Total interest cost over the 20 years will be $42 million at 4% versus $54 million at 5%, a savings of $12 million. However, the District will still be paying off the $93 million in principal plus the $42 million in interest. That is right, the District will still has to pay of $135 million in debt and interest with declining property values, less people in the District and less student attending the extremely larger facilities.

What will $3.50 – $4.00 per gallon gasoline for the 35 mile (70 mile roundtrip) drive to the Cities have on New Richmonds ability to continue serving as a bedroom community for commuters? Home prices in West Lakeland, Stillwater, Lake Elmo and Woodbury have come down much as well. A buyer who historically needed to look out in New Richmond for a lower price can now find that same price range across the river with less than have the commute distance to the Cities.

Which of the 3 car dealerships on the north end of town will be the first to close? How much longer will Farm and Home last? School Board member Chris Skogland (and high school drop out) has already put a halt to she and her husbands development plans at the old Blue Seal and Legion properties attempting to get out from underneath the site for a mere fraction of they proposed to the City they would develop the site into. Again, the District will not see the increased valuation from this either.

Carrying the $93 million in debt will be incredibly burdensome. None of the data we see on student enrollment, property values, real estate home sales, population growth estimates, school operating costs and fuel costs are close to being in-line with the data the School District proposed when it told voters it needed to borrow more than any other school district in all of Wisconsin had ever borrowed before. The Districts timing couldnt be any worse.

New Richmond faces some very unfortunate years ahead. The over-reach by the District will have costly consequences. The housing market and the property valuations will take a long time to recover. The property tax payments on a reasonable family sized house will be so proportionally out-of-line with any community within a 50 mile drive. New Richmond will become known as the black hole among Realtors for anyone owning a home as they will never be able to get out what they put into it. Anyone who was ever hoping to get any equity out of their New Richmond home better have alternative sources of money. Future buyers will be so intimidated by the property tax levels that their purchasing power and monthly payments will become squeezed. You can already hear the Realtors in Somerset, Hudson, River Falls and Roberts telling prospective buyers to stay away from New Richmond for these very reasons.