Suburban schools try new approach for wind farm

When three suburban school districts devised a new funding model to build a 20-Megawatt wind farm downstate, one of its architects described the districts as the "Don Quixotes looking for the windmills."

That has become an apt metaphor for the struggles of Community Unit District 300, Keeneyville District 20 and Prospect Heights District 23 to reduce their energy costs and become better stewards of the environment.

In early August, the districts proposed a financial model that relied on private investors who would lease the wind farm for several years before turning it over to a consortium of the three districts.

The model would have taken advantage of tax credits provided under the federal stimulus package and could have generated $3 million in annual profits to be split by the members of the consortium.

But the school districts recently discovered that while Illinois law allows districts to own and operate wind farms, it does not explicitly allow leasing them. It is also unclear whether the proposed partnership would qualify for federal tax credits.

"We would have to change legislation, and then there's still no proof that the (Internal Revenue Service) would accept that model," said Dave Ulm, District 300's supervisor of facilities and energy management. "It's been abandoned."

Instead, the school districts unveiled a new model this month that is simpler on paper, though far from a certain success.

Like the previous model, the new funding structure takes advantage of tax credits, the federal stimulus and private investment.

Under the new model, District 300, by far the largest of the three districts, would issue about $22 million in Build America Bonds. The federal government, under the provisions of the stimulus package, subsidizes 35 percent of the interest on the bonds, reducing payback costs.

Private investors would provide almost $23 million, for a combined $45 million to develop and operate a 20-Megawatt wind farm in central Illinois for 25 years.

The consortium of the three school districts would repay the bonds over an estimated 15 or 16 years, using revenue from the wind farm.

Any revenue leftover would be split between the districts. They project $1 million in annual profits for the first seven years, $1.5 million for each of the next eight years and $3.5 million annually for 10 years after that.

Investors would receive an estimated $35 million in federal new-market tax credits, designed to spur growth in depressed areas.

Consortium members say they are hopeful the new model will work but acknowledged it requires many months of further study.

"No one has ever done this. When you're the first school district that does this, you don't know how the federal government will react," said Gary Ofisher, director of operations in District 20. "We're moving cautiously."

The District 300 school board is set to vote Monday on whether to start phase one of the wind farm development. The $55,000 phase will take 12 to 18 months and will look for private investors and a suitable site for the farm.