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Consultants tell Hillsborough board half‑penny sales tax, impact fees and borrowing shape capital capacity
Summary
At a June 24 workshop, financial advisers detailed the district’s major capital revenue streams (local capital-improvement millage, the half‑penny sales tax, Community Investment Tax share and impact fees), warned the half‑penny’s 2028 expiration could create a funding gap, and outlined pros and cons of pay-as-you-go funding vs. debt financing.
Consultants and district finance staff told the Hillsborough County School Board on June 24 that the district’s capital program rests primarily on four revenue streams — the local capital‑improvement millage, the half‑penny sales tax, the Community Investment Tax (CIT) and impact fees — and that each source has distinct limits and uncertainty.
John Ford of Ford and Associates, who led the revenue overview, said the district’s local capital‑improvement millage (the 1.5‑mill levy) is a substantial recurring source and that fiscal‑year 2025 receipts were estimated at roughly $263 million under the modeling assumptions used in the presentation. Ford said the half‑penny capital outlay surtax produced about $206 million in the past 12 months, based on Department of Revenue receipts, and he flagged the tax’s scheduled expiration at the end of 2028 as a “big hole” in projected funding if the tax is not renewed.
Ford and district staff emphasized the volatility of impact fees and pointed to a county‑supplied county estimate the presentation used: about $40 million in the current period with a projection of $30 million in subsequent years, and a note that the technical study’s estimate can move substantially. Ford cautioned the board that any long‑range projection depends on assumptions that are likely to be wrong in specific years and that the district must reassess frequently.
The board heard a comparison of funding approaches. Pay‑as‑you‑go (using accumulated cash) avoids interest and issuance costs but limits how much the district can build at once and leaves the district exposed to construction‑price inflation if projects are delayed. Debt financing spreads cost over time and can let the district build sooner, but it introduces interest expense and transactional costs and can constrain future annual budgets. As one numerical example, Ford used a twenty‑year financing illustration at a recent all‑in cost estimate of about 4.41 percent, which he said would translate to roughly $6 million a year in annual debt service per $100 million borrowed under that assumption.
The consultants discussed certificates of participation (COPs), lease‑purchase agreements and other market structures used by Florida districts. Ford said COPs remain common in Florida and that Hillsborough’s credit ratings (single‑A by S&P and Fitch; A2 by Moody’s with a positive outlook, as described in the presentation) influence borrowing costs. The presentation noted higher issuance and debt-service costs for conduit or third‑party lease‑build structures compared with district‑issued COPs.
Board members asked for more granular fiscal modeling and asked staff to prepare a funding dashboard and follow‑up materials showing how various revenue scenarios would affect capacity to build new schools. No formal financing decisions were made at the workshop; presenters asked the board to consider options at future meetings.
