TELLURIDE – True to its election year promise, residential and commercial property owners will pay less school-related taxes in the new year now that the Telluride School District has paid down the remaining $2.4 million balance on $4 million in bonds it issued in 1998.
In tandem with paying off those bonds 10 years before their due date, the five-member board of education voted unanimously on Friday to reset its debt service mil levy from 5.671 mils in 2008 to 3.330 mils in 2009.
On Dec. 1, “The bonds became callable and I called them,” said Kurt Shugars, executive director of administrative services for the Telluride School District, adding that the district will save an estimated $660,000 in interest payments.
“This is how the board is watching out for the local taxpayers’ best interest,” he said.
The adjusted mil levy will provide enough tax revenue to pay principal and interest amounts due on two series of bonds issued in 2002 and 2004.
It will also generate an extra $495,000 annually, which the district will put toward a “sinking fund” (sort of a savings account used to retire bonds early) to pay off the principal on the 2002 bonds, Shugars said. As a result, the district will retire those bonds 10 years early when they become callable in 2012 to save about $1.5 million in interest.
“It only makes sense to me,” said Shugars. “There’s no need to give money to AIG,” he quipped, referring to the insurance giant American International Group that received an $85 billion government bailout in September to prevent the company from falling into bankruptcy.
The move comes after 57 percent of district voters resoundingly defeated question 5A on the November ballot in which the Telluride School District sought $18 million in bonding to fund the construction of eight new classrooms on the northeast corner of the Telluride High/Middle School campus, renovations of the historic Telluride Elementary School, technology and infrastructure upgrades, and the development of seven lots in Ilium Valley for affordable housing for district employees.
In campaigning for the tax increase, the district tried to communicate that even with the voters’ approval of an additional 1.18 mil levy increase, because the district had planned to retire the 1998 bonds at the same time, the net effect would have remained a tax cut – just not as deep a cut as now.
Had that ballot question passed, Shugars estimated the mil levy would have been reset to somewhere around 4.5 mils.
“We don’t know how the bonds would have sold,” he said, explaining the estimate.
Since the Telluride School District had always planned to retire its 1998 bonds early, “This has no bearing of the non-passage of additional debt [in the election],” he said. Except that, “Now I’m faced with facility and maintenance issues I don’t have funding for.”