District 25 schools to get cool down, but at what cost?

In April 2005, Arlington Heights Elementary District 25 voters approved a tax-rate increase.

It gave the district an additional $5.5 million a year, which was used to refinance old debt and build additions to two elementary schools.

That was the deal.

That tax increase shouldn't have anything to do with a massive air-conditioning project, said District 25 school board President Dan Petro.

"When we went to the public and asked for a tax-rate increase, we never said it was for air conditioning," said Petro, who has been on the board for 10 years. "We were very clear about how we were going to spend that money."

The tax rate in District 25 will go down by 21 cents per $100 of assessed value in 2009. Without the air-conditioning project, it would fall another 22 cents in 2011. With the project, that second tax rate drop might not come until 2013 or 2014, depending on the funding option the school board picks, Assistant Superintendent of Business Stacey Mallek said.

On Thursday, the school board will consider three funding options -- cash reserves, take a loan or some of both.

The loan option would cost the owner of $500,000 home an additional $150 a year in taxes though 2015. The combination option would cost that homeowner $100 a year though 2013. Using only cash reserves would cost taxpayers nothing.

However, it does inch the district closer to the day when it will have to ask for another tax-rate increase. Currently, a rate increase probably will be needed around 2017. Using $11 million of the district's cash reserves to air-condition buildings would bump up the need to ask for a rate increase to 2015 or 2016, Mallek said.

To take out a loan, or issue bonds, the board would need to hold a public hearing. Any taxpayer against the idea can get 10 percent of District 25's registered voters to sign a petition, which would force the issue onto the November ballot. It would also delay the project, which is slated to begin this summer.

While the bond option doesn't raise the tax rate, it does prevent it from going down for several more years, said Petro, who favors using only cash reserves to fund the project.

"It's not like we can avoid going to referendum down the road," he said. "We're going to have to return to the public and ask for more money. This just pushes it up a few years."

Board member Ken Nielsen agrees with Petro, but will consider the combo option. The board needs to be accountable to the public and not tie in the air-conditioning issue with the 2005 tax-rate increase, he said.

"We need to be able to say to people, 'Folks, we did exactly what we said we were going to do with your money,' " Nielsen said.

Board member David Page disagrees with Petro and favors the bond option. Although he prefers funding the project completely with bonds, he'd also go with the staff's combo idea, he said.

"It just leaves us some breathing room," Page said. "Who knows what the next great idea is? If that idea costs us $1 million, we should have the option to fund it (from the cash reserves)."

When air conditioning classrooms first came up almost a year ago, the board was divided on whether it was a good idea.

Petro was one of the board members who had serious reservations. However, he supports the project today.

"When we had the two open forums, everyone who spoke was in favor of this," he said. "This is something all of our neighboring districts already have. It's something we should do."

The District 25 school board will meet at 7:30 p.m. on Thursday at Thomas Middle School.

The plans

The District 25 school board has three options to fund the almost $11 million air-conditioning project.

No. 1: Bond sale

In 2005, Arlington Heights District 25 voters approved a tax-rate increase. It gave the district an additional $5.5 million a year. The tax increase paid to refinance debt from construction projects at Thomas and South middle schools and helped pay for additions at Dryden and Olive elementary schools.

Homeowners agreed to pay 19 cents more per $100 of assessed value through 2009, when the retirement of old debt will cause the tax rate to decrease by 21 cents per $100 of assessed value. This will be a reduction in taxes of about $450 on a $500,000 home.

Without the air-conditioning project, the rate would fall another 22 cents in 2011. If the school board picks this option, taxpayers won't see that second 22-cent tax rate drop until 2014.

This option doesn't use the district's cash reserves, saving money for future programs, emergencies and special projects, according to a District 25 staff report.

This option would require a public hearing and board vote. A petition signed by 10 percent of District 25's registered voters could override the school board and put the question on the November ballot.

Cost to taxpayers: The owner of a $500,000 home would pay $1,559 in taxes, over several years.

No. 2: Cash reserves

Funding the project entirely though cash reserves.

Two years ago, the District 25 school board voted against extending the downtown Arlington Heights special taxing district for another 12 years, saying the school district would lose $2 million a year in taxes over the 12-year extension. The district recently began collecting that money, which goes into its cash reserve and which could enable the reserve to fund the air-conditioning project.

The tax increment financing district -- or TIF -- allowed the village to collect property tax increases that normally would go to school, park and library districts for 23 years. Instead, that money was used for economic development initiatives aimed at increasing property values.

Village officials had wanted to extend the life of the TIF, hoping to attract more retail development to downtown.

Cost to taxpayers: None.

No. 3: Combo plan

This is the option favored by District 25's administration. Here the district would use about $5 to 6 million of TIF funds and fund the remaining $6 million with the sale of bonds.

It would also require a public hearing and board vote. A petition signed by 10 percent of District 25's registered voters could override the school board and put the question on the November ballot.

Cost to taxpayers: The owner of a $500,000 home would pay $671 in taxes over several years.

Timeline of air-conditioning talk

May: The school board first talks about the proposal, which is to air-condition one school a year, starting with South Middle School in 2008 and ending with Greenbrier Elementary School in 2016.

• The plan would cost $1.1 million to $1.6 million per school, except at Thomas Middle School, where it would cost $2.7 million, according to a report by OWP/P, a Chicago design and consulting firm.

• Most classrooms in District 25 are not air-conditioned, while most school libraries, common areas and office spaces are.

September, October: The school board hosts two public hearings. At each one about 20 teachers, students and parents spoke in favor of air conditioning. Not a single person spoke against the idea.

November: The school board hears about financing options and a shorter time frame. The new plan air conditions South, Thomas, Greenbrier and Olive-Mary Stitt in summer 2008 and Dryden, Ivy Hill, Patton, Westgate and Windsor in 2009. The cost would be almost $11 million and increase annual energy costs by about $40,000.

Thursday: The District 25 school board will vote on the project and financing at a 7:30 p.m. meeting at Thomas Middle School, 1430 N. Belmont Ave., Arlington Heights. The meeting is open to the public.