District 128 to refinance construction loan
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Libertyville-Vernon Hills Area School District 128 officials on Monday voted again to refinance part of the loan that funded the construction of Vernon Hills High School more than a decade ago.
Paul Valade | Staff Photographer
With interest rates at favorable levels, Libertyville-Vernon Hills Area School District 128 officials on Monday voted to again refinance part of the loan that funded the construction of Vernon Hills High School more than a decade ago.
Board members also discussed using savings to pay back at least some of the $17.9 million principal of the loan. It made no final decision on that aspect of the financial plan and set a second talk on the matter for a committee meeting next month.
Refinancing could save the district more than $700,000 in interest payments. Paying the loan off could save much more, depending on how much officials would opt to withdraw from savings in the bank.
"Either way we go, we're going to save some money," said board member Jim Batson, who leads the board's facilities and finance committee.
The district borrowed $49.5 million to pay for the Vernon Hills High project and for improvements at sister school Libertyville High. Vernon Hills High opened in 1999.
The school board refinanced a chunk of the loan once already, in 2004, saving $1.4 million in interest payments, Assistant Superintendent for Business Yasmine Dada said.
Bond interest rates now are at "historically low" levels, Dada told the school board Monday, which makes it a good opportunity to refinance again.
Four annual payments remain, each in December. After the next payment, $17.9 million in principle will remain, Dada said.
The loan is set to be paid off in 2016.
Unlike a traditional refinancing on a home mortgage, the length of the loan won't be extended, Dada said.
Board members were divided on their financial options.
Alex Delli Paoli backed the refinancing option but said he opposes any effort to use savings to pay off part or all of the loan. He cited the state's financial instability and the pension crisis as reasons to hang onto cash.
Other board members said the possible savings are too significant to ignore.
The finance committee will discuss the proposals again when it meets at 6 p.m. Oct. 15 at Libertyville High.
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