In December 2008 the District 65 School Board approved a resolution of intent to sell bonds in an amount up to $20 million for building improvement projects and to pay for technology projects. In January 2009 the Board approved the sale of $10 million of the bonds. On Nov. 16 the Board approved the issuance of the second $10 million in bonds, contemplated by the resolution of intent.
A resolution of the Board says the $10 million in bonds will be used to pay for building and technology projects. The District has estimated that building improvement projects planned for the summer of 2010 will cost $8.5 million.
The Board also approved a sale of up to $1 million in general obligation bonds, which will be used to refinance and extend out the payment schedule of existing bonds. This refinancing will enable the District to stay under debt service limits and to issue the $10 million in bonds as a new type of taxable bond called “Build America Bonds,” that is provided for under the federal stimulus program.
Under the taxable Build American Bonds, the District may receive 35 percent of the annual interest costs back in the form of rebates, which will be paid to the District twice a year over 12 years. The District estimates the rebates will total about $1.4 million, which the District will deposit into its operating funds, said Mary Brown, chief financial officer for the District.
By using this strategy, the District can increase revenues for its operating funds by about $1.4 million over 12 years. In essence the District gets around property tax caps by generating these rebates.
The District’s financial consultant Raphalata McKenzie said the District would save about $1 million by selling the Build America Bonds and refinancing some existing bonds, rather than issuing Capital Appreciation Bonds, which was another alternative.