CARY – District 26 is looking to refinance $5.54 million in bonds that it sold in 2004 to carry out construction projects in the district.
The refinancing is part of the district’s efforts to keep in line with its promises from the 2010 referendum, where voters authorized issuing $15 million in bonds to keep the district financially healthy.
District officials pledged to have a roughly $20 annual increase over four years in property-tax bills for the average house that was worth $300,000 in 2010.
In order to keep that promise, the district plans to refinance $5.54 million bonds still outstanding from a 2004 bond issue, Director of Finance and Operations Jeffrey Schubert said. The 2019 maturity date on the bonds would stay the same.
District 26 also has bonds sold in 2005 still outstanding and scheduled to be repaid through 2020. Depending on interest rates, about $8.4 million of those bonds potentially could be refinanced next year, Schubert said.
By doing that, the district could save about $1 million over the life of the bonds.
The 2004 bonds went toward construction projects at Prairie Hill School and Cary Junior High, board member Scott Coffey said.
“There’s significant interest expense savings that can be had by refinancing today,” Coffey said. “Those bonds were issued in 2004 at higher interest rates. Now we could go out sometime in January and refinance them at substantially lower rates. All that interest savings will be recognized by the taxpayer.”
The district would have to kick in $240,000 from fund balances to help move the deal forward.
This is expected to be finalized in December or January, Coffey said.
Within the next three to four months, after the refinancing is finalized, the district’s debt will be at its lowest point in about a decade, Coffey said.
The school district also is preparing its annual tax levy for its day-to-day operating funds, not including its bond and interest levy.
To ensure the school system captures any new growth, it is requesting a 4.95 percent increase over last year’s levy, by asking for $20.9 million in property-tax dollars.
Because the district is tax capped, it expects to only receive an increase of 1.7 percent over last year’s levy of $19.9 million, which is the rate of inflation under the consumer price index.
Under Property Tax Extension Law Limit, tax-capped communities and taxing bodies can increase their annual levies by 5 percent or the rate of inflation, whichever is less.
The tax levy request is scheduled to be adopted by the school board in November, but the final tax rate will not be set until assessed values on existing and new property are set in the spring.
“Everything being equal, it’s going to go up 1.7 percent,” Coffey said.