The residents and business community within the boundaries of School District #428 of DeKalb, Cortland and Malta, need to pay close attention to what the Board and Administration are doing with the up to $110 million they were authorized to borrow for building a new high school in DeKalb, a new grade school in Cortland, and “repurposing” and renovation Chesebro Elementary School, Huntley Middle School and the current high school in DeKalb.

The Cortland elementary school is under construction. It will require around $15 million.

The new high school is nearing the point of no return. Bids will be let out as soon as the Board gives authority to do so. The almost $90 million proposed price tag has stayed constant throughout the process since the February elections.

One long-standing member of the Facilities Planning Committee, (a veteran of all four referendum attempts since 2000), told me of his grave concerns of the current plans for the high school and of his disappointment in the post-elections process. He took great pride in the work of the FPC in the successful referendum because he felt the results were data driven. He no longer feels that way.

Neither do I, and I, too, was a proponent for the referendum.

On April 17, 2008, the district sold the first $30 million of the referendum-approved bonds. The Board of Education elected to sell the bonds in three phases based on its construction spending requirements in order to reduce the interest cost on the borrowing. The additional bond issues will be sold in 2009 and 2010 as dictated by the construction draw schedule.

Voters were told that the repayment schedule of the entire project would amount to $270 per year for the owner of a $200,000 home. The owner of that price of home will see an increase of $280 on next year’s tax bill. That’s close to what was promised but only $30 million in debt bonds have been sold. Another $80 million may likely be needed to finance the balance of the project.

What has changed? Hint: The economy. What hasn’t? The plan to spend $110 million.

Regrettably, little has changed in response to higher interest rates on bonds, lower enrollment projections reported, and a complete nosedive in new construction. If the public, through its apathy allows it, a new roughly 400,000 sq ft high school will be built with a core capacity for 3,000 students and classroom space for 2,500.

The core capacity of the high school, as proposed, includes a field house and a theater/auditorium plus two competitive gymnasiums. Possible additions include an artificial turf football field and all the infrastructure necessary to construct a full blown football stadium, should the district decide to do that at some future date.

A former coach at DHS told me that he thought the district would be nuts to spend $110 million and not build a football stadium. He wondered how any idiot could oppose the idea (of including a football stadium). This idiot told him that promises are important and the district and the Renew Our Schools referendum committee unequivocally made that promise.

I do agree that they would be nuts to spend $110 million. My opinion is data driven.

The debt repayment plan, pre-referendum (when promises are made), assumed $20 million in new construction EAV ($60 million total) to be added each year for the duration of the debt bonds (around 20 years). Data clearly shows that new construction has tanked and few if any forecasters indicate a rebound to the level of DeKalb County’s highest decade of new construction in history anytime soon. The district’s new housing start projections are based on that historic period of growth and not the current economy. Assumptions on new construction played a key role in determining the advertised repayment amount.

Enrollment numbers pre-referendum are significantly higher than those post-referendum. The slowdown in new construction played a part in that. So has a loss of jobs. The new data was completely dismissed because, well, the pre-referendum FPC and Renew Our Schools committee worked hard on their plans, darn it.

Interest rates were lower pre-referendum than they are now. Selling municipal bonds were much easier then as opposed to now as well. Data now indicates that the promised repayment amount, for the owner of a $200,000 home, will be significantly higher as time goes on and the district sells all $110 million in debt bonds.

The promised repayment amount of around $280 per year on a $200,000 home was important, make that critical, to a lot of yes votes for the referendum. The concern was based on affordability. Data now indicates those concerns were very valid. There has been a record number of foreclosures in District 428 since the referendum passed.

Many of those homeowners, who live in DeKalb’s TIF districts, will pay whatever the increase levy calls for to repay the debt bonds issued by the school district. None of the money they pay, however, will go towards the debt reduction, or so it appears from information I’ve obtained. It also appears that the school district could use $2 million from those TIF districts to pay for some of the improvements at Chesebro or Huntley. Data shows that $2 million used now saves a lot of interest later.

Letter from me to: Mayor Kris Povlsen, City Manager Mark Biernacki, Dist. 428 President Mike Verbic, Superintendent Dr. James Briscoe

Gentlemen:

A person of whom I consider to be an extremely reliable source shared some information that, if accurate as I understand it, is very troubling. I seek clarification on the following questions:

1) Does the City of DeKalb owe District #428 a sum of up to $2 million related to the City’s TIF program? If so,
a) when did this debt occur and where is it notated on public records?
b) what is the repayment schedule and where is that notated on public records?

As a member of the budget advisory committee I was surprised to hear of this information. I would think the item should be thoroughly and publicly discussed by the city council, advisory committee and financial consultants.

2) Is it true that
a) all properties within the City of DeKalb’s TIF District(s) are subject to the property tax increase required by the District #428 construction bond issuance?
b) but those tax monies collected from the District #428 debt bond levy within the TIF District(s) are designated for use as TIF Funds?
c) an intergovernmental agreement between the City of DeKalb and District #428 returns the above described tax monies in full or in part to District #428 as unencumbered funds?

As a member of the facilities planning committee for District #428 I was again surprised to hear of this information. I certainly hope that ALL tax monies collected related to District #428 debt bond levy as approved by voters in the referendum are exclusively designated for school construction debt repayment, regardless of TIF designation.

I appreciate your taking time from your busy schedules to address this urgent matter.

Respectfully,
Mac McIntyre

Mark Biernacki was the only one who responded to my email. I know schedules are busy so I appreciate his taking the time to answer my letter. I do think it would have been courteous to at least have received an acknowledgment of receiving my email from the other individuals mentioned.

Hello Mac,

A 2003 intergovernmental agreement between the City and the SD, commonly referred to as the “make whole” agreement, obligates the City to return TIF dollars to the SD in the form of a reimbursement of the SD’s expenses related to capital improvements to Clinton Rosette, Huntley, and Chesebro. Based on a formula within the agreement, the maximum amount the City returns to the SD is an amount equal to the net property tax impact the SD realizes due to the existence of the TIF. Upon receipt of verifiable expenses, the City reimburses the SD up to this maximum amount. To date, there are approx. $2.0M in expenses the SD can incur at these locations that can be reimburssed by the City through the TIF. These monies are currenlty available in the TIF’s fund balance. This agreement expires at the end of FY2010,so any expanses incurred thereafter would not be eligible for reimbursement.

Thereafter, a new agreement kicks in where the City will return 50% of the TIF increment to all taxing districts as unencumbered money, meaning the dollars can be used for any purpose, not just TIF elgible purposes. This new agreement expires in FY 2021

Regarding your #2 question, I’ll let the SD respond. However, any tax increase by another taxing district is placed upon the EAV that is accessible to them. EAV from properties in the TIF is caputured by the TIF,and therefore is not accessbile to the taxing district.

Please call or stop by if you have any further questions.

Mark

There are three meetings next week at the school district administrative offices. A special meeting of the Board of Education (Agenda) on Monday, Jan 12; an FPC meeting on Tuesday Jan 13 (Agenda) and a Thursday Jan. 15 meeting of the Citizens Finance Advisory Committee (Agenda).

Those with concerns should communicate, immediately, with the Board of Education members listed below. Otherwise, the future of DeKalb may take an unintended course and the owners of those $200,000 homes may have to sell them for a lot less in order to move to a community they can afford.

	Mr. Mike Verbic School Board President (2005-2009)
	Mr. Andy Small School Board Vice President (2003-2009)
	Mrs. Holly Wallace School Board Secretary (2007-2011)
	Mr. Michael Lord School Board Member (2007-2009)
	Mr. James Mitchell School Board Member (2007-2011)
	Ms. Tia Robinson School Board Member (2007-2011)
	Mr. Fred Davis School Board Member (2007-2011)

We have existing tools to produce strong and lasting economic recovery that are sadly misused and abused. Two programs: CDGB and locally administered TIF, if practiced to theory could:

- increase free market demand for alternative energy sources;
- reduce demand for energy
- refurbish blighted neighborhoods;
- create job demand and retraining resources;
- generate increasing funding sources for government services
- provide for a cleaner ecology

The programs as widely practiced are rightfully criticized for promotion of pet projects that benefit few, but handsomely.

The end-user of the funds available in CDBG and TIF is seldom if ever the recipient of those funds. The regulatory process required to receive funding contributes to an unhealthy relationship between the government administrative agencies and private developers. This relationship produces corruption far more often than public benefit.

A healthier more productive partnership is between the citizens and its government. Vouchers from current level funding of CDBG and TIF programs should be delivered directly to the individual citizen to

- induce purchasing of approved alternative energy products and services
- induce purchasing of building material and construction services for property renovation and environmental enhancement
- neighborhood job retraining and creation
- generate sales, circular cash flow and tax revenues
- rebuild Main Street, America

CDBG and TIF should be examined closely and retooled to serve as a catalyst for a bottoms-up economic recovery.