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Brandon School Board ponders millage options

May 21, 2014 - By Susan Bromley

Staff Writer

Brandon Twp.- A change in state law in 2012 that forces school districts to pay back loans from the state sooner means a jump in millage rates is coming.

District officials here have protested the move and pleaded to be exempt and "grandfathered in," holding to their original repayment agreement with the state, all to no avail. Now, the board is considering requesting the state reduce the amount of mills that will have to be levied in exchange for a longer period of years in which to levy the mills.

At the May 19 school board meeting, RJ Naughton of Stauder, Barch & Associates, Inc., the district's public financial consultants, presented an option that would extend by nine years the district's mandatory loan repayment date. Under this option, district residents would see their bond millage rate jump to 12 mills next year, instead of the currently forecast 9.66 mills. The following year, 12 mills would also be levied, but then the millage rate would fall to 11.38 for 2016, and would fall slightly every year until evening out at 11.16 in 2019, where it is estimated to remain through 2040-41.

District residents currently are levied 8.24 mills, but with P.A. 437, the repayment plan that will take hold with no further action calls for 9.66 mills to be levied in 2014, and then 13 mills to be levied from 2015-2035, before falling to 11.17 in 2036, the final repayment year. The option presented by Naughton at Monday night's meeting would raise the total debt payment by $14,561,668 to $211,412,155 from $196,850,487, but would provide tax relief to residents sooner.

"In the original default option, we pay faster, but it's more costly to the current homeowner," said Superintendent Lorrie McMahon. "We would have a year to work with the legislature and see if they would help us. Under the second option, RJ feels we are making a deal with the treasury, but they didn't live up to the last deal. I don't have any reason to believe we can trust what they do."

Naughton stressed at the meeting that the estimated millages are projections only and can be impacted by housing growth and property tax values. The projections use an estimated 2 percent annual increase in property taxes.

"Neither proposal is appealing or acceptable to me," said Board President Greg Allar. "We should be grandfathered in— no ifs, ands, or buts."

Public Act 437, passed in 2012, mandates that schools pay off loans from the state within six years of paying off bonds. The district anticipates paying off a $73 million bond passed by voters in 2006, in 2026. Under P.A. 437 the loans the district has had to take out every year since 2006 must be paid off by 2032. The housing market crashed shortly after the bond passed and the district has had to borrow from the state every year to make payments on the bond's principal and interest. The district currently owes the state $38 million, which includes more than $8.8 million of accrued interest at a 3.52280 percent rate.

The school board will likely make a decision on whether to request the state treasury consider the new option of a smaller levy, extended over more years, at their next meeting, set for 6:30 p.m., June 16, at central district office, 1025 S. Ortonville Road.

Susan covers Brandon Township and Ortonville
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