Should Naperville Dist. 203 keep $3 million in tax revenues?
A plan to keep $3 million in tax revenue that historically has been returned to property owners in Naperville Unit District 203 drew questions from the city's business leaders Monday during a legislative committee meeting of the Naperville Area Chamber of Commerce.
Administrators are recommending the district keep the $3 million it is authorized to collect under a building plan voters approved in 2008 and use the money to pay down debt early or make improvements to schools.
Retaining the money also will help the district maintain healthy reserves, balanced budgets and financial flexibility over the next five years, said Brad Cauffman, chief financial officer.
But some chamber members questioned whether the district needs to keep the revenue, which it has refunded four out of the last five years.
Dave Weeks, a former District 203 board member who attended the meeting, said keeping the revenue and spending it on capital projects to improve schools "is not fair to the taxpayer." Using the money for such a purpose would effectively increase the district's reserves further above the 10 percent of operating expenditures it maintains by policy, Weeks said.
Cauffman said the district's reserve account now holds 16.2 percent of its operating expenses, for an estimated total of $46 million. If the district keeps the $3 million in tax revenue, its reserves are projected to grow slightly over the next five years, increasing to 17.3 percent of operating expenditures, or $49.5 million.
Cauffman said the best value for taxpayers would be to use the additional revenue to help pay off early a $10 million loan from 2008, which would avoid annual interest payments of $400,000 a year.
"Let's pay off these bonds now instead of as we go," Cauffman said. "The motivation to get on it now is saving as much interest as possible."
If no early repayment agreement can be formed or the premium is too high, the district could wait until 2018 to pay back the loan at face value, and Cauffman said spending the $3 million on facilities improvements would be the "next-best thing" to provide long-term savings.
Weeks disagreed.
"The best way to do that is to return it to the taxpayers," Weeks said.
Ron Davidson of Naperville Bank & Trust asked whether the district has considered a blended approach of returning some of the tax money to property owners, keeping some of it and cutting some expenses from the budget.
Cauffman said the district has looked into such an approach, but its priority is to pay off the loan early and save on interest payments. Paying off the loan would require the district to have $10 million on hand, so administrators are not recommending the loan be paid early unless the board votes to keep the tax revenue.
A vote on whether to keep or refund the $3 million in taxes is scheduled for the next board meeting at 7 p.m. Monday, March 17, in the administrative center, 203 W. Hillside Road.