OCEANSIDE -- Though the language of Proposition T -- Tri-City Medical Center's $596 million construction bond -- allows flexibility in the tax rate charged to taxpayers, the hospital's top money manager said he's confident the amount will never top $23.40 per $100,000 of a property's assessed value.

"This tax rate has been built to be as conservative as possible," Robert Wardwell said. "We expect to be at $23.40, and probably less than that, for the life of the bond."

The hospital hired Citigroup, a multinational banking firm, to estimate the tax rate. Documents provided by Tri-City show that Citigroup projected that the hospital district's tax base -- the total assessed value of all property in most of Carlsbad, Vista and Oceanside -- would increase every year at a rate of 5.7 percent to 8.1 percent. Citigroup also used current municipal bond interest rates to arrive at an estimated tax rate of $23.40 per $100,000 of a property's assessed value if Prop. T passes on Nov. 7.

Though Wardwell insisted that Citibank, which has decades of experience in estimating tax rates, was conservative in its financial projections, some in the community who oppose the bond are not satisfied.

Retired Oceanside civil engineer Larry Jellison, who spent his career helping the state build large wastewater and road projects, said Thursday that today's relatively favorable financial conditions may not last.

"The cost of money is at a historical low," Jellison said. "If real estate values stay flat for a long time, they will see an effect in the tax base."

In August, home prices in San Diego County dropped 1.4 percent, compared with August 2005 and real estate experts nationwide project further declines in the housing market through 2008.

Jeff Olson, division chief of assessment services with the San Diego County Assessor's Office, said that short-term slumps in the real estate market generally do not produce similar decreases in a region's total assessed value. Assessed value is used to determine property taxes and can be much less than market value, depending on when the property was last sold or remodeled.

Olson said that assessed value can increase even when real estate prices decrease on the open market. He said, for example, that in 1991 the local real estate market had peaked and by 1995 prices had fallen off significantly.

"Even though the market value went down from 1991 to 1995, we actually saw a $19 billion increase in assessed value countywide," Olson said.

He attributed the increase partly to Proposition 13, a state ballot measure that voters passed in 1978. Prop. 13 limited increases in a home's assessed value to 2 percent per year. The assessor's office can only recalculate a home's assessed value to reflect current market rates if it is sold or remodeled.

This means that homes that have been owned by the same person for years or decades without being remodeled can have much lower assessed values than homes sold or remodeled recently.

Olson explained that the sale of homes held for a long time can produce sudden large jumps in assessed value.

For example: Imagine a homeowner who purchased his Carlsbad home in 1978 for $100,000 and stayed put until 2006.

If that home's assessed value increased 2 percent every year from 1978 through 2006, it would be worth $174,102 today. Now imagine that that Carlsbad home was sold for $500,000.

Last year, the home may have gone for $600,000, but even with a $100,000 drop in market value, the home's assessed value -- and thus the areas total tax base -- would increase $325,898.

In creating the tax rate estimate of $23.40 per $100,000 for Prop. T, Citigroup looked at the growth rate for the Tri-City Hospital District's tax base and found that, on average, the area's tax base has grown 8.1 percent since 1995.

If Prop. T passes in November, Tri-City would issue bonds in four chunks over a 10-year period, likely starting in 2007. It would take 40 years to pay off four 30-year bonds that together add up to $596 million.

Citigroup estimates an 8.1 percent growth rate for the hospital district's tax base from 2007 to 2010, a 7.2 percent growth rate from 2011 to 2013, a 6.2 percent rate in 2014 and 2015, and 5.7 percent tax base growth through 2058.

Jellison said he is wary of projecting growth so far into the future.

"If the real estate values fall off for a long period of time, those numbers could be wrong," he said.

If Citibank's financial projections turn out to be wrong, or if interest rates are not favorable, then the tax rate could be increased to make sure enough money is available to pay hospital bonds. But Wardwell said he expects just the opposite.

"Because our projections are very conservative, we expect that the rate could actually be less than $23.40," Wardwell said, noting that tax base growth last year topped 13 percent, far higher than the 8.1 percent projected by Citigroup. Likewise, current 30-year municipal bond rates are at 4.3 percent while Citigroup's tax rate estimate assumes 5 percent.

Contact staff writer Paul Sisson at (760) 901-4087 or psisson@nctimes.com.