Debt costs to taxpayers concerning Grayslake D46

Grayslake Elementary District 46 officials have endorsed seeking a way to restructure debt to minimize the potential bite on taxpayers because of a lack of construction growth and declining property values.

Chief School Business Official Todd Covault received a go-ahead to seek options on how to slice debt repayment costs during a financial presentation to board members at a meeting late Wednesday.

“The housing starts have stopped,” Covault said. “Although we were projecting 5 percent continued growth, we’re not receiving 5 percent continued growth.”

To reduce the overall tax rate, Covault said, the school board should consider restructuring debt repayments that were based on an escalating equalized assessed valuation that hasn’t materialized.

Tax rates for the debt repayment portion of bills are projected to be higher than initially calculated on what Covault said is similar to a 20-year mortgage.

He said the district’s outstanding principal should be about $61 million at year’s end, with total debt repayment currently set for 2025. Refinancing the debt structure could extend the mortgagelike payments from two to four years.

Board members agreed Covault should seek a specialized financial adviser to review options on how to potentially reduce the tax burden on property owners.

District 46’s equalized assessed valuation had been estimated to reach $1 billion this year and slightly beyond in 2012, according to Covault’s budget update. There also was a projected 5 percent annual growth rate from 2011 to 2025.

It was supposed to translate into a debt-reduction tax rate of 55 cents per $100 of assessed value for property owners this year and in 2012.

But the tax-rate estimates have been adjusted higher because of the lack of construction and equalized assessed valuation growth within District 46’s boundaries, Covault told the elected officials.

This year’s tax rate for debt repayment was recalculated at 72 cents per $100 of assessed value and estimated at 76 cents in 2012. Covault said the 2012 figure is based on the assumption of no growth in property values.

New estimates show District 46’s equalized assessed valuation for this year and 2012 to be about $774 million — well below the $1 billion forecast roughly six years ago. Covault said the projected equalized assessed valuation growth rate is now 2 percent.

“If housing continues to be as bad as it is right now, 2 percent (growth) may be an overestimate,” he said.

District 46 will hold a budget hearing at 6:30 p.m. Sept. 21 at Meadowview School, 291 Lexington Lane, Grayslake. Superintendent Ellen Correll agreed to direct building principals to include a message in an electronic newsletter encouraging parents to attend the session.

Board members Shannon Smigielski and Michael Carbone said the district should be proactive in trying to educate residents on what’s expected to happen with their tax bills and why.

“Instead of getting people hostile and not understanding, I think it’s a great way to communicate and help them understand the whole, entire process,” Carbone said.