The Black Hole of St. Croix County – otherwise known as New Richmond
By
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 year’s 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 District’s 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 year’s equalized valuation figure.
This current year’s 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? Let’s 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 week’s 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 Richmond’s 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 husband’s 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 District’s timing couldn’t 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.
No related posts.
Jack – what are the prospects for getting a restraining order which would stop the high school construction based upon serious misrepresentation in selling the referendum together with irreparable harm to the District’s taxpayers? There should be consequences to those who sold this to us.
Insiderman
Jack – Great post, abiet depressing to think about.
We already know that the graduation class size at New Richmond increased a mere 12 students from 1982 to 2007, putting the lie to the New Richmond Administration’s rational for the $93M building referendum. There was little growth over the past 25 years, and hence no reason to build big new schools and put 8,000 residents deeply in debt for the next twenty years.
But lets not let the real estate turn-down enable the liars in the administration and the chumps on the school board to evade the crticism they so richly deserve.
Like so many advocates of bigger government, the Administration have made a bad situation infinitely worse, and will naturally seek to put the blame on the private sector.
If we can’t stop this lunacy, we should at least demand that the authors of this catastrophe (ie administrators)and all their teacher minions live in this district and help pay throught the nose for the white elephants they are building.
Sorry Insiderman, the school board and administration will claim due diligence. They hired Hazel Reinhardt, a demographer to come up with the student enrollment which right now falls below her lowest estimate for 2008. Veilleux will retire in a couple of years and if the heat gets too great, the school board will bow out.
The bond consultant came up with equalized evaluation below the 10 year double digit percent increase. It’s obvious now that these numbers were pulled out of the air. Hey, he’s a financial guy, not a construction estimator of economist. What does he know about future construction estimating? Does anybody?
And as a taxpayer, Roadkill, you are roadkill. The school mill rate will increase by 4.5 percent per year until 2026 if equalized evaluation stays flat. With oil at $120/barrel and climbing, inflation should accelerate upward and maybe the mil rate will drop while your house increases in value. At any rate, you’re screwed.
For those of you who remember I backed the new school, all I can say is that I thought the enrollment projections were reasonable and the bond guy was within reason. My only concern was with his equalized evaluations. I made calculations using half of his numbers and there wasn’t that much difference. Sorry about that.
If I’d had stocks, I would have sold by now.
Oh, I forgot. When I was on the school board I caught hell from the teachers for voting for a new administration building for $600,000. We had the bucks at the time. They complained that the board should have put it into teaching.
I haven’t heard a peep from the teachers or teacher’s union about the new schools for $94.8 megabucks.
Jack:
These reported 2,694 students surely does not include the 4K “students” that the honorable Mr. Vellieux promised would never be brought into the school districts buildings nor for whom the district would ever have any expenses for, would it?
Sorry Ziller, you got it wrong again. It wasn’t Hazel that came up with those ridiculous enrollment figures. A full year before she was hired, Mr. Moberg on behalf of the Administrative Team stood up in front of the School Board and a packed room of predominantly Vote Yes’ers and showed three scenarios that he and his cohorts came up with. The low estimate came in at a 3% growth rate each and every year for the next 20 years. The middle estimate which was more realistic in Jeff’s opinion, came in at 5% growth each and every year for the next 20 years. Then the slightly more optimistic growth of 7% for each and every year for the next 20 years. Jeff then made the statement that our growth would be closer to five percent a year than 3%. He used a 13% growth in Somerset to back up his claim. When Jeff was challenged that his figures were quite a bit higher than the growth figures presented by the State – then and only then did he bring Hazel in. Hazel did exactly what she was paid to do. She presented figures to back up Jeff’s estimate. She did exactly what she was paid to do, present figures to put Jeff in a good light.
So let’s not blame Hazel. Her estimates weren’t valid estimates of projected growth. They were the slam dunk to Jeff’s claim that we would experience 3-5% growth; probably closer to 5 than three. If you want to blame anyone for being an incompetent enrollment projector, look elsewhere other than Hazel.
#5 – Correct, the declining student enrollment of 2,694 children in the District does not include the NR4Kids program which is not hosted at District facilities.
This is the same NR4Kids program the Veilluex and Heyerdahl were quoted in the NR News as promising would be paid for with “free money” from the State of Wisconsin.
Subsquently, Veilluex and Heyerdahl announced that the application submitted by New Richmond for the “free money” from Madison was rejected.
#1 – unfortunately, we can not imagine a court would approve an injunction to halt construction. One of the Judges in St. Croix County is Scott Needham. Prior to becoming a judge, he served on the New Richmond School Board. In 2006, he was appointed by the NR School Board to Chair the Long Range Planning Committee which recommended back to the School Board the “need” to build so many new schools. The LRPC used the phony enrollment growth numbers by Hazel Rheinhardt referenced by #6 created to justify Jeff Moberg’s fake growth estimates. Needham also has annually been appointed President of the Annual Meeting of the NR School District and swears the Board members in. His wife also employs two of the School Board members – Melby and Gartner. Needham also was involved in a legal dispute with the School District in his capacity as “Judge”. It wasn’t until this blog pointed out his numerous conflicts of interest and the ethically misplaced decisions he had made by choosing to serve on the case that he was finally forced to step aside. Unfortunately, it doesn’t appear any impartial treatment from the “Court” could be forthcoming.
Jack, I think you should bring a suit on behalf of the taxpayers. You have all the facts to present your case, you can gain in the public support by filing a class action. You appear to have passion like no others would have in fighting off taxing entities. It would be a great test of American Free speech and will. It will also prove how right your are in all of your allegations. Do you really think you would have a case?
Sorry #6, but Reinhardt came up with 10 year enrollment projections as follows: Low estimate for 2005 to 2016 of 2.02%/year compounded. The high estimate for the same years was 3.125%/year. These are in her report dated 9/28/2005. The administration threw out Moberg’s figures of 3%, 5%, and 7%/per year at the beginning of the discussion. It was obvious these were WAG’s (wild assed guesses) so they brought in a Ph. D. demographer to buttress their case for new schools.
I was amazed that Reinhardt’s projections came in so low. They do not back up the School Board’s numbers.
I thought her numbers were reasonable. They showed that the most critical overcrowding was in the elementary schools.
It was amazing the watch the Long Range Planning Committee. The irony is a sentence in my alternative proposal dated 3/5/2006. One can only reach the conclusion that this committee acted like a group of 22 people sitting around discussing how to spend a $360 million lottery.
Bob, you never should have voted for or advocated for this boondoggle. You have helped to bankrupt your neighbors and created a situation where it will be difficult to sell a house in New Richmond. You will never see the growth that was projected and the passage of this monstrous referendum will assure as much. I don’t know what you were thinking, but maybe you weren’t. However you have provided an excellent test case in the ability to tax a community into prosperity when our administration comes forward with their own boondoggle this fall.
I noticed the low rent housing is filling up fast. I suppose those who have lost their homes have to have some place to live, while their children attend the new schools. Last year families had to bring extra pencils and paper for those who could not afford it. I would like to see the figures of how many kids get free lunches, or pay lower than the rest. I would like to see the figures of those who voted for the new schools and improvements that pay no or low taxes.
I feel sorry for those folks who have roots here and do not want to move to saner grounds and forced to pay for this insane debt.
The question now, is what to do. Is there anyway we can stop this madness? Does anyone have any ideas?
Daisymay,
Real estate pays taxes of course, but if you are a land owner with farmland you pay no taxes at all because it is used for farming. Did you realize the $3,000,000 parcel of land purchased by the district was only taxed by a couple hundred dollars before the purchase? If that was a house, it should have paid ??????? All the land right around the school and directly to the south of the city is taxed at nothing but will be sold in the future at $30,000 per acre, with no taxes collected?. Maybe those land owners should pay for the value of the property like the homeowners and business and like do, so me as a homeowner with declining values doesn’t get hit so hard? With 18.00 bushel wheat and corn, why not? Maybe they could be sued too for not paying taxes? Is there anything we can do? Jack you must have some ideas?
rearviewmirror,
You are right, the farmer not only gets subsidized, the farm land gets a break, to keep the food prices down.
So suppose the land owner paid $200 per acre, years ago for 100 acres. He pays about $500 a year for taxes. In ten years that is $5000 in taxes, plus $20,000. for the land he paid for.. Now he sells it for $3 million. He will pay a 15% capital gain tax of around $450,000. It is 15% now, and will probably go up. If the land owner would pay $4500 a year in taxes for 100 acres, it would take 100 years to equal the $450,000 in capital gains made in one year if it sells.
So you see, one way or the other, taxed now or later, the taxes will be paid.
Another point, just because the school district was not diligent in land prices, as there was other lands available at a cheaper price, does not mean surrounding land values are the same. Walmart has megabucks, and the school district seem to think the same, as not they, but us are going to have to pay for the play grounds and brick buildings.
The schools have large parking lots, and the kids will be driving instead of taking the bus, not cool! We will taking our refund checks from Bush, money borrowed from China and running to Walmart to cash them in on products made in “China”.
Who did you say we should sue? The farmers??
What’s Wrong With This Picture?
I recently read an article that the St. Croix National Golf Course was up for sale at $2,000,000 – but there were no takers. So the property went up for sale at auction. I don’t know what the actual purchase price was, but I assume it was less than the two million dollar asking price. The golf course is beautiful, considered to be one of the best courses in the State of Wisconsin. Over 300 acres of beautiful rolling hills, trees, and well kept greens. Not to mention the beautiful country club to host weddings and other social events.
Let’s see. The golf course is 300+ acres for less than two million dollars. That equates to $6,000 an acre including the country club and other out buildings. How does that compare to what the New Richmond School Board negotiated for 100 acres of undeveloped corn field? $30,000 an acre? I would like to meet their negotiator as I have a lot of things I would like to sell to a buyer like that.
#16 – the District’s negotiator was (is) Morrie Veilluex. He can be reached at the School District’s main office. Phone number is 243-7411.
Bill Derrick has been laughing ever since they “negotiated”.