Nostalgia Corner: Classic Observer: On Backloaded bonds----

(Ed. note: This classic post by Mr. Bill Connors on backloaded bonds was part of a series of reflections on the "growth bicycle"----and occured about the time of the annual meeting for the Evansville School District in 2005 where some questions were raised about the ability of the community to pay the rising debt payments of the "backloaded bonds." The steep decrease in growth rate and plunging building permits has added a chilling element to the word "backloaded."

Evansville needs growth. A particular kind of growth. Commerical and Industrial and not shielded by TIF. Just because your residential property is "assessed more" does not mean that you can pay the bill. After all. You pay your mortgage from your real income, not your home equity line. Hopefully. Real rising employee income from quality jobs is the answer. This has not happened on an inflation adjusted basis. )

Monday, September 19, 2005
Re:Bill Connors writes: School District Debt Service Heavily Back Loaded; Reflection on the Growth bicycle; or What mix and rate of Growth is right?


--- billconnors wrote:

---------------------------------
Managing growth is essential. But it would not be
prudent to constrain growth too much. The school
district's debt service for 2005-06 is $1.98 million.
In 2014-15, the school district's debt service will
exceed $3 million, even if no additional debt is
issued between now and then. In 2020-21, the last
year of payment on the bonds for the new high school,
the school district's debt service will exceed $4
million. The school district heavily back-loaded the
repayment schedule on the bonds for the new high
school, which means they are counting on large
increases in the school district's property tax base
through new construction to be able to pay for the
escalating debt service costs.

This appears to be prudent financial planning on the
part of the school district, but I wonder how many
people are aware that continued growth is essential to
keeping the school district's mill rate in line.

Of course, we could get away with fewer new houses in
the school district if we had more commercial or
industrial development or a greater proportion of the
new houses were larger and more expansive, and fewer
new houses would save on operating costs for the
school district.

Bill Connors
Evansville City Administrator

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Posted by billconnors to Evansville Observer at
9/19/2005 10:20:06 AM