Municipal advisor outlines bond, refinancing and life‑safety options for District 65 capital needs

District municipal advisor Mr. Lewis (Lewis) presented a review of capital‑finance tools to the Finance Committee on June 2, laying out short‑term refinancing options and longer‑term paths for funding building projects, including life‑safety bonds, referendum building bonds and limiting‑rate (operating levy) increases.

Lewis said three near‑term decisions are available: (1) complete a public bond sale in late summer to refinance callable 2014 and 2015 capital‑appreciation (CAB) bonds at lower interest rates; (2) use part of the available non‑referendum debt authority to issue bonds to make a December 1, 2025 lease‑certificate payment that otherwise would be due from operating funds; and (3) monitor market conditions and structure a combined financing to maximize tax‑exempt savings. Lewis estimated net present‑value savings of roughly $750,000 from the combined refundings and reported that a separate refinancing of the 2015 series could yield estimated savings of about $300,000 (net present value). Transaction costs were included in the estimates.

The advisor cautioned about capital‑appreciation bonds: because CABs delay interest payments until maturity, refinancing them can create short‑term negative cash‑flow effects that must be managed within the district's Debt Service Extension Base (DSEB). Lewis explained that Cook County tax caps and an historical DSEB calculation limit the district's non‑referendum borrowing capacity (the district's current DSEB was cited as about $7.0 million). "We could combine these financings into one sale," Lewis said, but timing and market conditions determine whether the refundings and the lease‑payment financing are cost‑effective.

For larger capital projects — including replacement of aging facilities or the Foster School project discussed earlier in committee materials — Lewis outlined four paths: referendum building bonds (voter approval required), life‑safety bonds (ISBE approval required, no referendum), increasing the DSEB by referendum (complex and infrequently used), and alternate revenue bonds or lease/debt certificates paid from operating funds (which can affect operations). He said life‑safety bonds carry the advantage that ISBE must approve eligible items and the bonds do not count against the DSEB, but cautioned that not all capital work qualifies as "life safety." The advisor recommended that architects and staff identify which project elements would meet life‑safety criteria before choosing a financing path.

Board and staff asked for next steps: Lewis and administration agreed to prepare a parameters resolution for a potential August sale, to be presented to the board in June or August; staff will also return with exact figures for district debt service and timing so the board can decide whether to authorize a late‑summer bond sale. If the board approves a parameters resolution, administration noted, a public sale could follow in July–August with a closing in September.