Brandon Twp.- In 2006, voters here passed a $73 million bond for school district improvements.
The district has been borrowing money from the state every year since just to make their annual bond payments. Last year, the district borrowed $5 million to make their payment. As of June 30, the district will owe $38 million to the School Bond Loan Fund (SBLF) and Jan Meek, executive director of business operations, estimates that in the 2013-2014 fiscal year, the district will add $3.7 million to their loan debt.
‘We have nowhere near the revenue we need to make the bond payment,? said Meek during the public budget hearing June 10.
That’s bad news for the district and bad news for the taxpayers.
The 8.24 bond millage rate the district levies collected only $4,093,742 this past year, far short of the $7,637,363 paid in principal, interest and fees for the bond. This shortage means the district will increase the millage rate, possibly to the maximum legal levy rate of 13 mills.
Meek explains that when the bond passed, assumptions used were supposed to cover the bond payment. No one anticipated the housing market collapse and resulting loss of property tax revenue. Now a new state law, Senate Bill 770, which will take effect July 1, 2014, mandates that districts adjust their millages to pay off school loans within six years of their last bond payment.
The district has two outstanding bond issues. In addition to the 2006 bond, which paid for construction of the I-TEC building, Oakwood Elementary and the new football stadium,as well as other renovations, Brandon is still paying a bond from 1998, which they refinanced in 2008 for $26,020,000.
The older bond will be paid off in 2026, meaning the mandatory loan repayment date is 2032. The newer bond will be paid off in 2036.
‘Under the current circumstances, at the rate we are borrowing, we will not be able to pay it off,? said Meek.
The state is mandating that by October, a millage rate study be completed, which is where a new tax levy comes in. An impact to the millage rate is certain, Meek said.
‘The new law requires that we implement a millage rate that would allow us to pay off the loan per the mandatory date of 2032. Currently, the millage is 8.24 mills for both bonds. The maximum we could raise that to would be 13 mills. I believe that would cover it, but once the millage rate study is completed, we will have better information.?
SB770 requires the district to implement the new millage rate, whatever it may be, by July 1, 2014.
‘I am hopeful that we would not have to implement the maximum rate, that we could implement something less than the maximum rate,? she said. ‘In the next few years, we expect property values will increase and as payments decrease, that will help the situation and help us not have to borrow.?