DeKALB – Property owners won't see a spike in property taxes in 2018, but over time they could have to shell out more in interest to pay back money DeKalb School District 428 borrowed to build its new high school and other projects.
The District 428 board unanimously approved measures Tuesday to refinance $9.9 million in bond debt and hire a company to help with the process.
The $9.9 million is the first portion the district is looking to refinance of the $108 million it borrowed in 2008 to build the new DeKalb High School, Cortland Elementary School and other building improvements in four installments from 2008 to 2011.
The hiring of Ehlers & Associates as financial advisers will cost the district an estimated $140,000, according to board documents.
Andrea Gorla, the assistant superintendent of business and finance, said refinancing the bonds while favorable interest rates are in place will help to prevent a spike in property taxes projected for 2018.
“Because of the recession, we weren’t able to structure the bonds like we wanted,” Gorla said. “[Equalized assessed values] were nose-diving.”
The debt was structured so payments would be flat for the first nine years and increase in the last 11 years. At the time, area property values were expected to grow between 5 percent and 7 percent annually.
Equalized assessed values in DeKalb have been estimated at $669,062,699 for 2016, an increase of 7.8 percent; values also increased by 1.32 percent in 2015, according to Gorla’s presentation to the board.
This is after DeKalb’s equalized assessed values decreased by 27.4 percent from 2009 to 2014, which caused the tax rate to increase over the past few years, according to Gorla’s presentation.
The process of restructuring the bond debt to reduce the district’s payments and protect taxpayers likely will take multiple years, Gorla said.
“Depending on interest rates every year, we’ll take a portion of [the bonds] and advance refund it,” she said. “It is a fluid plan; the main thing I want people to understand is there is a plan out there.”
Gorla said the bonds won’t be callable until winter 2017, but the district is starting the advance refunding process now to get the best possible interest rates.
“We are not doing this just to do it,” she said. “We will only continue if we find cost savings in this process. We want to see minimum present value savings of 3 percent.”