Projected borrowing for $49.5 million upgrade plan calls for owner of $200,000 property to pay $298 more annually
Property owners in the Grafton School District are likely to face a tax-rate increase of $1.49 per $1,000 of equalized valuation if they approve a $49.5 million referendum to upgrade facilities, the School Board was told Monday.
In a presentation to the board, a consultant said the rate hike would be part of a 24-year financing plan to cover the cost of the referendum, which district officials are considering holding during the April 2016 general election.
Brian Brewer, a managing director for Robert W. Baird & Co., told the board the plan is designed to “give the district flexibility in making decisions” as it explores financing options for the upgrades.
The proposed referendum calls for $32.1 million in upgrades to Grafton High School, which would be expanded to accommodate the addition of seventh and eighth grades in an adjoining middle school; $7 million to convert John Long Middle School for use as Grafton Elementary School; $5.5 million to upgrade Woodview Elementary School; $3.9 million to upgrade Kennedy Elementary School; $600,000 to demolish the current Grafton Elementary School; and $400,000 to upgrade district offices.
After the Citizens Facilities Committee recommended district officials consider either a $57.5 million or $49.5 million referendum question, the board agreed this fall to focus on the less expensive option.
Brewer outlined a proposal that calls for the district to borrow $49.5 million in phases, starting with $10 million in general obligation bonds in 2016, followed by a $29.5 million bond issue in 2017 and a $10 million bond issue in 2018. Interest rates for each phase were estimated at 4.25%, 3.5% and 4.5%, respectively.
Subsequent borrowing phases, as needed, would begin in 2019, 2020 and 2021.
Brewer said that although the district should only borrow the money needed at the time each renovation project is done, “the idea is to lock in to as much long-term borrowing as possible because interest rates are expected to increase.”
The proposal is one of several borrowing options the district has for the referendum and provides a starting point, he told the board.
For the 2015-16 year, property owners are paying 90 cents per $1,000 of equalized valuation on debt service for a $16.4 million referendum approved in 2000. The district has five more years to pay off that debt.
Based on a projected levy to support the proposed referendum, the debt-service rate would increase to $2.39, effective with the 2016-17 school budget, Brewer said.
With an increase of $1.49 per $1,000 of valuation, the owner of a $200,000 property would pay $298 more per year in school taxes if the referendum is approved. The owner of a $300,000 property would pay $447 more annually.
The proposed borrowing plan calls for the $1.49 rate hike to be in effect for eight years, followed by lower rates in subsequent years depending on the board’s debt-payment decisions.
The calculations could change depending on annual budget factors, including state aid, operating costs, enrollment, equalized value and interest rates, Director of Business Services Kristin Sobocinski told the board.
“The difficulty is calculating the variables. This is our best estimate,” she said.
Supt. Mel Lightner said it’s crucial for the district to explore borrowing options and their potential impact on property owners. The tax-impact has become a point of discussion in community feedback sessions, he noted.
“Given the fact that the board has directed us to seek public feedback on a possible referendum, it’s important for us to come up with figures,” he said.
“We’ve been at this for several months now. We have to give citizens a number.”
Taxpayers in the Port Washington-Saukville School District are facing a $1.89 tax-rate increase after they approved a $49.4 million referendum to upgrade schools last April. Although the total cost of the upgrades in the districts is comparable, the Port Washington-Saukville rate is higher because it has a lower property-tax base, Brewer said.
Grafton board members made few comments on the projected tax-rate increase if the referendum passes. However, Board Treasurer Paul Lorge said the initial figures are promising.
“I think it’s a great plan on the surface,” Lorge said. “There is a good value in the $1.49 (rate increase) compared to our neighbor and the last referendum.”
Grafton’s 2000 referendum resulted in a $1.87 tax-rate increase, Lorge said.
“Now, we would be getting more bang for the buck,” he added.
Offering another comparison, Lightner said the owner of a $200,000 house facing a $298 tax increase “would be paying less than $1 per day.”
The board took no action following Brewer’s presentation but agreed by consensus to use the projected $1.49 tax-rate increase in continuing referendum discussions.
Based on public feedback, the board is expected to decide on Jan. 11 whether to hold a referendum. The district has until Jan. 26 to file a referendum question with the Ozaukee County clerk’s office for an April 5 vote.