On Crystal Lake High School District 155’s agenda this week is a resolution to borrow $9.8 million:
“Resolution providing for the issue of not to exceed $9,800,000 General Obligation Limited Refunding School Bonds of the District for the purpose of refunding certain outstanding bonds of the District, providing for the levy of a direct annual tax to pay the principal and interest on said bonds, authorizing the execution of an escrow agreement in connection therewith, and authorizing the sale of said bonds to the purchaser thereof.”
I asked former Cary Grade School Board President Scott Coffey to explain what was up. Here is his reply:
It looks like they are planning to refinance their 2014 Bonds.
The current outstanding principal of the 2014 Bonds is $9,110,000.
They are planning to issue up to $9,800,000 in new bonds.
The document claims they expect to reduce the interest expense by approximately $1,000,000.
However, there are no documents in the board packet which demonstrates the estimated debt service schedule by year which would identify the savings.
Additionally, it appears that they are increasing the amount of the outstanding principal by $690,000 to $9,800,000.
My guess is that the incremental proceeds will be used, at least in part, to pay for the debt issuance expense (i.e. underwriter fees, bond consul, credit rating fees, etc.).
Note, the district also does not disclose in the board packet those fees expected to be incurred in this transaction.
Also, the incremental $690,000 in new debt is far in excess of what is needed to cover those issuance expenses.
This excess provides additional cash for the district to spend on services.
Its practical effect is to reduce the amount of savings that would otherwise be recognized by the taxpayers in the form of lower future debt service levies.
The meeting will be held November 17th at 7:30.
“Members of the public wishing to view this meeting may do so by going to the District website Board or click D155 Board youtube channel. to view live streams,” the agenda says.