The pending sale of the Glenwood Academy campus in St. Charles had Kane County officials worried about local taxpayers being on the hook for $14 million of the school's debt. But county officials received assurances Thursday that the risks of the county losing any money through the sale are minimal at worst.
The county helped Glenwood, a nonprofit boarding school for underprivileged youth, issue $14 million in bonds in 1993. The borrowed money funded residence cottages and a field house on the 120-acre campus on Silver Glen Road.
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With the down economy fueling a funding drought for the academy, school officials decided to sell the campus. The sale, to a private buyer school officials are not identifying, is approximately 45 days from a closing.
The sale will provide money to pay off some, but not all of the academy's bond debt. All $14 million of the bonds remains outstanding today, along with another $16 million in debt the school issued through the Illinois Finance Authority.
Because the academy will still owe some of the money Kane County helped it borrow, school officials want to change some of the requirements in the bond documents. Specifically, a requirement stating Glenwood must maintain title to the St. Charles campus, insure the property and operate programs at the location. Glenwood -- which has no collateral put up to back the bonds -- would violate all those provisions with the sale.
Members of the Kane County Board's Finance Committee wanted a letter from their bond counsel absolving local taxpayers from any financial liability if they agree to the changes. Bond Counsel Don Kreger said he can't issue that letter until the closing of the sale.
"To give you an opinion before the deal closes makes no sense," Kreger said. "I can't give you an opinion until I see that they carry out what they are supposed to do."
Kreger told the county board's Executive Committee Thursday that the county's risk level is almost nonexistent. First, agreeing to the sale gives the school money to pay off a large share of the bonds. That means the remaining debt anyone would owe will be significantly less. Second, both Glenwood Academy and the bank that issued the bonds would have to go bankrupt simultaneously for creditors to come to the county. Even then, the only money the county could lose would be bond proceeds due to the county, which basically amount to attorney fees. In other words, the taxpayers are off the hook even in the worst case scenario for Glenwood Academy, Kreger said.
The committee voted to allow the changes to the bonds Glenwood Academy officials seek pending final clearance of the closing documents by Kreger.