Explaining the Loan, Property Tax, and Bonds
On September 13, 1960, BVID residents were asked to cast their vote concerning the Virginia Ranch Dam Project (VRD) and to approve or reject entering into an agreement with the US Bureau of Reclamation (USBR) set forth in
CONTRACT BETWEEN THE UNITED STATES OF AMERICA AND BROWNS VALLEY IRRIGATION DISTRICT FOR A LOAN FOR THE CONSTRUCTION OF A SMALL RECLAMATION PROJECT(USBR 1960, Title Page). Entering into the 50 year $5,000,000 loan agreement was approved by a vote of 238 to 8. Studies conducted, prior to the public vote, considered the VRD project feasible based on property tax values, available water tolls and income from generation of electricity by Yuba River water made available by the VRD project. This was essentially a zero interest loan.
On September 20, 1960 the contract was signed that remains in effect until the final payment is made on August 1, 2012. The effective date of the repayment portion of the contract was set with the official completion of the project.
Per the contract, loan proceeds were made available for
construction of VRD and Reservoir (now named Collins Lake), a tunnel, new canals, a pumping plant and rehabilitation and enlargement of existing canals primarily for the purpose of delivering water for irrigation to lands within the District and incidentally for municipal water supply therein and for making water available for generation of power.(USBR 1960, 2)
Once completed the contract required BVID to
care for, operate, and maintain the project works(USBR 1960, 24) during the 50 year term of the contract. It also provided that
The District will cause to be levied and collected all necessary taxes and assessments and will use all of the authority and resources of the District to meet its obligations hereunder, to make in full all payments to be made pursuant to this contract on or before the date such payments become due and to meet its other obligations under this contract. The District may use funds available to it from any source and require the payment of toll charges and/or levy assessments to meet its obligations hereunder. (USBR 1960, 32) The tax rate, on value of bare land only, is set by the BVID Board of Directors every year in August. Originally BVID billed and collected the tax based on the Yuba County property tax appraisal. At a later date the Board contracted with Yuba County to collect the tax with their yearly tax statement.
In 1988 USBR advised BVID that they would be willing to accept a payoff of $850,000 for the outstanding loan balance of $2.9 million. At that time BVID sold $1,050,000 in refunding bonds to pay off the loan as well as funds to cover the cost of the bond sale. The payoff and refunding in 1988 did not provide any immediate savings to the District as the yearly bond payment was near the same as the USBR loan payment had been. The District did realize a net savings over the period of the loan of over 1.2 million by refinancing.
In 2002, to further save money by lowering the interest cost of the refunding bonds, with a remaining balance of $430,000, the bonds were paid off using proceeds from out of district water sales and a new $100,000 interest only bond. Since 2002, the only yearly debt payment has been the 5.5%25 interest owed on the $100,000 bond. Also each year $10,000 has been set aside to build a fund for paying off the present bond when it comes due in 2012. With the bond payoff BVID will lose its authority, per the 1960 vote, to tax the BVID properties.
Yes I said NO MORE BVID PROPERTY TAX after 2012. Property owners in the BVID will receive their normal Yuba County property tax statements around the first of Oct. 2012 which will include the BVID tax on land value only. The statement will have the normal required payments for Dec 2012 and April 2013. There will not be a BVID tax on the fall 2013 Yuba County tax statement.
-by Robert Bordsen
USBR. United States Department of the Interior Bureau of Reclamation. Contract Between The
United States Of America And Browns Valley Irrigation District For A Loan For The
Construction Of A Small Reclamation Project. September 20, 1960. bvid-us-vrd-loan