DeKALB – The average homeowner in District 428 could see their annual property tax bill spike by $600 by 2021 unless leaders change plans for paying off school construction bonds or property values skyrocket.
Although the owner of a home worth $200,000 in 2008 has paid about $330 in property taxes annually toward repaying the bonds, those payments will jump to $550 in 2018 and reach $944 by 2021, according to a report from financial consultants at William Blair. That assumes property values make modest increases and the district does not refinance or pay down its debt using some of what's left of a $21 million grant.
“We don't have a plan determined yet how to address this, but we are working on it,” School Board President Tracy Williams said.
This potential increase is caused by a drop in property values within the school district and the way the district leaders structured the payments on $108 million in bonds they issued after a voter-approved school-building referendum in 2008.
The district borrowed the money to pay for a new DeKalb High School, Cortland Elementary School and other building improvements in four installments from 2008 to 2011. District officials structured the debt so payments would be flat for the first nine years and increase in the last 11 years. At the time, area property values were expected to grow between 5 and 7 percent annually.
In 2007, the average annual property value growth based on the last decade was over 7 percent. Since then, the housing market collapse has caused property values across DeKalb County to spiral down. In the past five years, the value of property throughout the District 428 has dropped by an average of 5 percent a year.
Andrea Gorla, the district's D428 assistant superintendent of business and finance, said the easiest fix would be for new commercial and industrial development to boost the district's overall property values.
“The [equalized assessed valuation] is going to be our decision driver,” Gorla said. “If we start to see a rebound of EAV, that could mitigate those increases.”
The district could refinance the bonds, stretching out payments for another eight years. However, the district can't refinance them until 2017. The district also could abate some of the property taxes using the $10 million it planned to keep in reserve from a $21 million grant it received in 2010.
District officials, though, are hesitant to give that money back to taxpayers because of uncertainties in state funding. Although they anticipate some changes during the next two years, district leaders want to have a cushion in their budget.
“To give up money in front of not knowing what the state is going to do isn't the wisest thing,” Gorla said.
Refinancing the bonds and abating property taxes could reduce the burden on taxpayers, although current projections show the average homeowner still would pay well over $700 from 2025 through the bonds being paid off in 2036.
Williams said the Finance and Facilities Advisory Committee, as well as the school board, will continue to look at the projections.
“We will make a decision as soon as we have completed all the preliminary work to make a well-informed, economically sound decision for the taxpayers,” Williams said.