Story posted Wednesday, June 17, 2009
Great Time To Borrow
Dist. 62 Excited About Plan To Fund School Building Upgrades
By DWIGHT ESAU Journal & Topics Reporter
This is a great time to borrow money.
With these words, Des Plaines Elementary School Dist. 62 got an optimistic report this week on the financing of its master plan school building upgrade project.
"Interest rates are near to an all-time historic low, but will probably rise in the future as the economy improves, contractor bids are likely to be lower than initial cost estimates, and federal stimulus funds may be available to borrow at low interest rates," said Brian Della of William Blair & Company. He and Celia Sinclair of the PFM Group recommended a six-month financing timetable that starts this month and concludes with the issuance of bonds in December.
Blair and PFM are both assisting the district as financial advisors.
The board approved the suggested timetable, but officials agreed that it might be altered depending on changed market conditions in the current volatile economy and other factors that could affect interest rates.
Della and Sinclair both said that the district is in excellent financial condition, thanks primarily to the successful 2004 tax rate referendum, has an excellent triple-A credit rating, and financing of the many construction projects planned should go smoothly.
Design work by the district's architects is underway and actual construction is set to begin in the summer of 2010. Preliminary cost estimates call for the district to spend about $86 million in the next three years to upgrade restrooms, classrooms, technology areas, entrances, and mechanical infrastructure at all 11 of its aging school buildings.
Also planned is a major addition on Forest School that will house a centralized Early Learning Center.
The district will probably issue either debt certificates or revenue bonds to finance the work, depending on which alternative offers the most favorable interest rates. Both methods would involve paying off the debt from the district's general operating funds, probably over a 20-year period.
Board member James Poskozim suggested that the district remain flexible on the timeline for the financing, to take advantage of possibly unanticipated changes in market conditions. "November or December for the issuance of bonds may be too late, since the market may turn upward before then, and it will happen quickly," he said. Susan Shepard, assistant superintendent for business, responded that the financial staff would monitor the market carefully and make appropriate recommendations at the appropriate times.
"We are also looking into the American Recovery and Reconstruction Act (ARRA) funds, which might provide a borrowing source at very favorable interest rates," Shepard said.
At its July 20 meeting, the board will hold an in-depth discussion of all this, focusing on cost estimates and financing options. The district's current debt limit is about $155 million.
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