West Aurora waiting on state to save millions on construction borrowing
As it ramps up an $84.2 million construction plan, West Aurora District 129 officials want to know if the state is going to decide if the district can borrow money at reduced interest rates through a federal program.
They have been waiting months for an answer.
"It's an easy win. Every other state has figured this out," Angie Smith, West Aurora's assistant superintendent of operations, said of the Qualified School Construction Bond (QSCB) program.
The construction bond program was created in the American Reinvestment and Recovery Act of 2009, a spending package meant to goose employment during the Great Recession. In it, the federal government covers most, if not all, of the interest costs on money borrowed.
That could save District 129 property taxpayers up to $750,000 in interest for every $1 million borrowed, according to finance director Ryan Abrahamson. The district wants to borrow up to $60 million this way so that could cut interest costs by $45 million.
The federal government in 2009 and 2010 allocated $495 million for the state. The Chicago Public School system received a direct allocation of $511.4 million. But Illinois hasn't acted on applications recently.
"QSCBs are under review by the administration. We are aware of the situation but are not yet moving forward at this time," Laine Evans, communications director for the state board of education, said in a written reply to questions from the Daily Herald.
Smith said from her calls to state officials, it appears the governor's office and the state school board are unsure about who has the authority to release the allocation: the governor, the board or the state legislature.
Meanwhile, the district is awarding contracts for work, including the installation of geothermal heating and cooling systems. Wednesday night, the Aurora Planning Commission reviewed the plan for an addition to West Aurora High School.
"There is going to come a point in construction where there are contractors I am going to have to pay," Smith said. And if she can't sell the construction bonds, that will mean using the more common tax exempt bonds, with the district bearing the interest costs.
Smith said she has been speaking with administrators in other affected districts, including one in Quincy and Glenbard District 87.
Last month, Glenbard board member Margaret DeLaRosa suggested the board start a letter-writing campaign to get the governor's office to authorize the state board to allocate the construction bond money. District 87 is in the midst of a $35 million building project.
Some breaks approved
For some of the geothermal work, West Aurora has already borrowed $4.81 million in Qualified Energy Conservation Bonds. That money can only be spent on projects that decrease energy use. These are taxable bonds, and the federal government will reimburse the district for interest costs. The district will save about $2.52 million in interest.
And the school board Monday approved borrowing $3.3 million in Qualified Zone Academy Bonds.
The academy bonds are for schools with at least 35 percent low-income students. They can be spent on energy-efficiency projects, renovations and repairs, equipment, developing and improving curriculum, and training teachers. The district will spend the money for heating and classroom renovations at McCleery, Nicholson and Greenman elementary schools and Jefferson Middle School. Bond buyers will receive tax credits in lieu of interest. That will save about $600,000 per $1 million borrowed, Abrahamson estimated.