East Porter County schools sign 12-year lease to renovate part of Washington Township Middle/High

KOUTS, Ind. East Porter County School Corporation has signed a 12-year lease to pay for renovating part of Washington Township Middle/High School, with yearly payments capped at $5,485,000, according to district notices, the latest posted Tuesday, Nov. 10.

The lease is between the school corporation and the East Porter County School Building Corporation, a separate body that takes title to the building, leases it back to the district and sells bonds to pay for the work, the district's notices show. It was executed as of Monday, Nov. 9, "pursuant to action previously taken by the Board of School Trustees," the Nov. 10 notice says. The trustees had scheduled a public hearing on the lease for 5:30 p.m. that day at the administration building, 502 E. College Ave. in Kouts, and the building corporation's directors had set a 4 p.m. meeting there to consider the lease and a bond issue.

For property owners in the district, which runs schools in Kouts and in Morgan and Washington townships, the lease carries out part of a $17.5 million borrowing plan the trustees first approved in August, and the district projected in its August notice that the tax levy that repays school debt will not rise above today's level as older debt is paid off.

What the lease costs

The school is at 381 E. State Road 2 in Valparaiso, according to the hearing notice the district dated Oct. 7. While the renovation is underway, the lease allows rent of up to $2,742,500 per payment, due June 30 and Dec. 31 starting June 30, 2027. After the work is finished, or June 30, 2029, whichever is later, rent can reach $5,485,000 a year. Once the building corporation sells its Series 2026 bonds, the notice says, the annual rent drops to the principal and interest due on those bonds, rounded up to the next $1,000, plus $5,000. The district also pays for insurance, taxes and repairs on the building, and it may buy the property on any rent payment date.

The hearing notice says the drawings, plans and cost estimates for the renovation, along with the lease, are open for public inspection on business days at the administration building.

The bigger borrowing plan

On Aug. 3, the trustees made a preliminary determination to borrow for "renovation and improvements to facilities throughout the School Corporation," including site work, solar arrays, furniture, buses, equipment and technology, according to a notice dated Aug. 11. That notice estimated $17.5 million in bonds at interest rates of 5% to 6%, with total estimated interest of $5,365,320, and a second notice dated Oct. 14 repeated the $17.5 million figure.

What it means for taxes

The district's current debt service levy is $7,575,483 and its debt service tax rate is $0.4912, the August notice says. With the new lease and bonds, the levy could rise by as much as $5,485,000 and the rate by as much as $0.3557, but "as existing obligations mature, the anticipated net increase to the Debt Service Fund levy is expected to be $0.00 above the current Debt Service Fund levy," the district wrote.

The notice includes a 10-year table showing the estimated debt service rate holding at $0.4912 in 2027, then falling to $0.3157 in 2029 and $0.1176 by 2036. The district also wrote that it expects no increase in yearly operating costs because the new space "will be more efficient" than the space it replaces.

How residents could weigh in

The August notice gave property owners and registered voters in the district 30 days after it was published to file a petition starting the petition and remonstrance process under Indiana Code 6-1.1-20-3.1. The hearing notice for the lease said anyone interested would have a right to be heard at the Nov. 9 hearing on whether the lease was necessary and whether its rent was fair and reasonable.

A copy of the signed lease is on file at the administration building and can be inspected during normal business hours, the Nov. 10 notice says. The administration office can be reached at 219-766-2214, according to the district's website.