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At its Feb. 12 meeting, the District 202 School Board approved the issuance of $5 million in debt certificates to increase funds available for capital improvements for Evanston Township High School’s buildings and grounds.
Chief Financial Officer Mary Rodino told Board members and administrators that the District has to fund between $3 million and $5 million in capital projects each year.
In addition to being subject to tax caps, which limit the amount of property taxes levied annually, school districts are restricted in the amount of debt they can incur. This is the case even for school districts that could afford to pay the service on additional debt.
At present, the District is allowed roughly $2 million in debt annually, so it issues $4 million to $5 million in bonds every other year, Ms. Rodino said.
The expiration of the Washington National tax-increment financing (TIF) district last fall will create about $1.5 million in new revenues each year, Ms. Rodino said. The District could put the money directly into the Capital Improvements Program, she said, “or it could stretch the dollars by issuing debt certificates, with a low interest rate and a ten-year repayment schedule.”
The repayment on these debt certificates would be about $550,000 annually – about one-third of the amount projected from the revenues on the former TIF property.
In a Feb. 6 memo, Ms. Rodino wrote, “Debt certificates are a useful tool, especially for a district that has a high credit rating like ETHS. Proceeds can be obtained through a ‘public’ or ‘private’ sale of debt certificates. Private buyers (banks) are especially interested in “small” issuances (less than $9 million) with credit-worthy issuers (like ETHS).”
Ms. Rodino also said issuing debt certificates would be “especially helpful while the District is trying to accomplish several major (badly needed) capital projects such as: locker room renovations, auditorium lighting and sound renovation, auditorium HVAC replacement, roof replacements, major masonry work and window replacement.”
She said recent sales of debt certificates showed that private sales are often cheaper than public ones, she thought looking at both options would be prudent.
“We can accept bids from banks, and, if you don’t like it the bids, then we can do a public sale,” Ms. Rodino said. “Now, because of China, a public sale would be more lucrative for us.”
The Board unanimously approved a resolution allowing the sale of $5,055,000 General Obligation Debt Certificates (Limited Tax) to fund capital needs.