Brandon Twp.- As of last June, the district had $81.4 million in outstanding bond debt. In 2006, voters approved a $73 million bond for capital improvements, including a new elementary school.
The bond was approved before the bubble burst on the housing market, foreclosures grew rampant, and property values tanked. Since the downward spiral, the district has borrowed money from the state in order to make their bond payments. Currently, the district owes $31 million to the state.
The passage of Senate Bill 770 in December during the lame duck session requires districts to pay off school bond loans from the state within six years of paying off the actual bond. The district will have the bond paid off in 2036. While the due date to pay off the school bond loans is many years off, the problem is immediate.
The state is requiring the district to have a professional assessment done to determine if the current millage rate is set high enough to pay off the loan in 2042, six years after the bond is paid.
‘We are borrowing $4 million a year (right now),? said Janice Meek, executive director of business operations for the district. ‘It’s not sustainable. As taxable values go down, a debt recalculation has to be done and we have to adjust the debt levy based on what the new recalculated amount comes out to… The only way possible (to pay off the loan in the shortened amount of time) is to adjust the levy and we don’t know what that is.?
The district currently levies 8.24 mills on taxpayers to pay off the 2006 bond and 2008 refunding bond (a refinanced 1998 bond).
SB770, which will take effect July 1, 2014, mandates that districts adjust their millages to pay off school loans, said Meek, who has been working with a bond analyst and said it is likely there will be an increase in the debt levy.
‘Residents will pay higher taxes,? she said. ‘The debt levy is on both homestead and non-homestead, all property in the district… Voters pass bonds in good faith and for the state to come in and change the levy, I have a real problem with it. I look at it as changing the rules.?
After property values are assessed this spring, Meek said the district will determine the debt levy.
‘It’s kind of like the perfect storm,? she said. ‘Taxable values were at their peak in 2006. No one knew the economy and housing market would crash like it did… The values would have to increase dramatically in order to not see a millage increase.?