New HMS Could Cost Taxpayers $5.4 Million More Than Planned Due to Bond Market

Just as a highly contested referendum question decided the fate of Hinsdale Middle School on election day, the bond market's volatility has decided the fate of the new building’s cost — and taxpayers might not like it.

The new HMS could cost $5.4 million more in taxpayer money than was originally predicted, the Chicago Tribune reported.

PMA Securities, a consultant for Hinsdale-Clarendon Hills Elementary District 181, originally estimated the net debt service at $83.4 million based on the bond scenario approved in August by the school board.

However, an updated PMA estimate presented Monday, based on information compiled Dec. 1, projected the net debt service to be $88.8 million, an increase of about $5.4 million.

The total cost, or estimated net debt service, includes the projected $53.5 million in building costs along with interest over the 20-year bond issue.

On election day, voters approved the school board selling up to $53.5 million in bonds to fund the new building. The bond sale will begin Dec. 13, at which point the board can sell up to $10 million in bonds. The rest will be doled out in sales throughout the next two years.

Bob Lewis, who works for PMA Securities, told the Tribune the volatility of the bond market started with the presidential election.

"There have been a lot of changes since the election," he said. "If the election had gone the other way, rates may have been lower. We don't know exactly where we'll be on the day of the sale until it's here."

The scenario presented Monday would result in a total tax bill of $9,672 for HMS bond payments for the owner of a home with a district-median value of $765,400. That is an increase of $583 from the original estimate of $9,089 in the original $83.4 million scenario

The school board decided it would inform the public of any monetary changes related to the new HMS after the bond sale Dec. 13.

Board member Leslie Gray told the Tribune she thinks it’s important to keep residents in the know about anything that might impact their tax bills, even though taxpayers shouldn’t see any extra money from this project on those bills until 2019.

"It seems like a very significant change," she said. "I know we couldn't control it, but we need to let people know."

--

Image via Shutterstock