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updated: 2/8/2011 2:33 PM

Dist. 15 leader supports modified loan

Interim superintendent says working cash bonds are too costly

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In a major deviation from the previous administration at Palatine Township Elementary District 15, interim Superintendent Scott Thompson this week recommended the board of education not borrow money for working cash if given the opportunity.

Should voters approve a $27 million loan through the November referendum, Thompson instead believes the board should issue just $16 million in bonds for capital improvements.

Thompson said it's important to address "absolutely necessary" repairs and maintenance needs and take advantage of Build America Bonds, which are loans solely for capital projects in which the federal government rebates 35 percent of the interest.

Build America Bonds are expected to expire at the end of the year, or at least have their rebate reduced.

"I believe it'd be shortsighted to spend down revenue we have to do these things (capital projects)," he said. "That would put us in a financial position that really would be detrimental and dire in the near future."

Unlike ousted Superintendent Dan Lukich and the former finance head, Thompson said the controversial working cash bonds would prove too costly due in part to the refinancing of existing debt that would need to take place.

Board member Mark Bloom - one of three to originally vote against the bond issue - said he's considering backing Thompson's recommendation and could support a bond issue provided it doesn't refinance existing debt, involves only capital projects, takes advantage of Build American Bonds and doesn't build a working cash fund.

The working cash fund, which serves as an internal bank account to cover short-term loans, caused a public uproar because of a higher interest rate, refinancing cost and fear that the district would spend it down on operational expenses.

The opposition led 7,500 people to sign a petition forcing the bond issue to a referendum.

If voters approve the $27 million loan and the board follow the superintendent's $16 million borrowing recommendation, Thompson said estimates show the owner of a $220,000 home would pay about $15 more annually over the loan's 20-year life span, or $45 more for a $660,000 house.

Board member Tim Millar cautioned there might be a legal issue as to whether capital improvements that don't last the full 20 years would be allowed under the Build America program, such as certain mechanical vents and lighting.

Board member Sue Quinn also worried about the three-year window Build America Bonds require for projects to be completed.

She suggested spacing projects out more so District 15 isn't faced with a mass of repairs to do at one time in the future.