The Duluth News Tribune called this question a “bond restructuring referendum,” but the district is refinancing. A majority yes vote on this question will grant authorization to the school board to approve issuance of at least one new general obligation bond for an amount just shy of $22 million ($21,800,000.)
The district is refinancing two existing bonds: 2019A and 2021B. A yes vote will allow the school board to approve issuance of a new bond that will replace these bonds, which are currently being paid out of the district’s general fund. The new bond will be payable by Duluth taxpayers. At the bottom of the question on the ballot, there is a statement in capital letters: BY VOTING YES ON THIS BALLOT QUESTION, YOU ARE VOTING FOR A PROPERTY TAX INCREASE, but Duluth citizens don’t know how this increase will be laid out, or that they will be paying more for the Red Plan.
As stated In previous posts, the district has been pulling payments on some Red Plan bonds out of its budget for years. Two of those bonds–the 2010D and 2012B (with combined payments of about $600,000) will apparently continue to be paid out of the budget. 2010D payments stop in 2030; the 2012B bond will be paid off in 2032. The 2019A bond was issued on 5/29/19 and replaced another bond being paid out of the fund. This maneuver extended debt payments all the way out to 2036, and will cost more in the long run, but lowered the annual amount the district was paying out of its budget.
I only learned of the other bond when I started looking into this. I had requested (and received) the bond payment schedule on the new buildings (bus barn and administration building) recently constructed on the Central High campus, but apparently another bond had been issued for the project. That bond–the 2021B–is also being paid out of the budget. After all the trouble the district has had covering Red Plan bonds out of its budget, I was very surprised that another such arrangement had been set up for what I consider to be a wrap-up and extension to the Red Plan.
As I also pointed out in previous posts, Red Plan payments being covered by taxpayers were scheduled to drop significantly in 2029. Payments for the new bond that will be issued, if this referendum question passes, will be added onto the end of Red Plan payment schedule–effectively dropped into this new empty tax slot. Taxpayers will cover just shy of $22 million–for still outstanding Red Plan debt and for the new buildings recently constructed as a wrap-up to the Red Plan. Not only will Duluth citizens take on the obligation for Red Plan debt currently covered out of the district’s General Fund (debt that was supposed to be paid for by Red Plan efficiency savings and sales of unused property,) they will also make payments for the 2021C general obligation bond (already approved by the school board and issued on 3/9/21 for the Central campus buildings) with payments that will also become due in 2029.
The taxpayers are already on a long hook for that 2021C bond, with a five-year total repayment schedule of $39,485,250. The new bond or bonds issued if this referendum question is approved by voters will definitely help the school district, by putting a stop to robbing money from the General Fund to pay for buildings, but the public deserves to know all the details (the cost and what they are paying for) before voting.