Bank says Aurora Christian not repaying loan
Aurora Christian School Superintendent Colleen House says her school will reopen in the fall, despite financial troubles that include a bank suing it over an unpaid loan.
Fifth Third Bank claims, in an April 29 suit filed in Kane County, the school has failed to repay $240,873 of a $500,000 revolving loan. House said Thursday the loan is a line of credit the school uses to cover expenses during the summer months, when it is not in session.
“We are working with Fifth Third Bank and hope to resume classes on this campus in August, but we are pursuing alternate locations if that becomes necessary,” House wrote in response to questions emailed to her.
The two-year loan was due to be paid up March 1. Fifth Third seeks repayment of the remaining balance, including taking the collateral put up for the loan _ furniture, computer systems, fixtures, personal property, inventory and miscellaneous equipment _ from the school at 2255 W. Sullivan Road. It also wants $34.99 a day in interest.
The suit said the school’s governing board hadn’t responded to requests by the bank for a meeting, but House said that has happened in the meantime.
Besides working on this problem, the bank and school are trying to restructure the school’s long-term debt, she said. Fifth Third has supplied letters of credit guaranteeing repayment of more than $18 million the school borrowed in the mid-2000s to buy, remodel and outfit its Sullivan Road campus.
According to the lawsuit, in March 2010 the school’s then-principal, Paul House, signed a revolving note for $500,000, a continuation of a $500,000 note from March of 2009.
Besides the items listed above, the collateral includes any investment property, letters of credit, cash and securities held by the school.
The school doesn’t have to make principal payments on the bonds it issued for the $18 million debt until 2012, and it intended to sell unused land on Deerpath Road to cover the interest payments in the meantime.
But since the real estate crash started in 2007, it has had a hard time selling the land. In 2009 the bank planned to pull its letters of credit unless the school started making those payments out of operating revenues, not asset sales.
The school’s 2008 federal tax return _ the most recent publicly available _ showed that as of Nov. 13, 2009, it took in $6.79 million for the year but spent $7.98 million.
House met with parents Wednesday night to discuss the school’s financial situation, and the school will give weekly updates at a Thursday-night worship-and-prayer service. It also intends to post a video of Wednesday’s session on its website, aurorachristian.org.
The nondenominational school started in 1975 with 82 students in kindergarten through ninth grade in space borrowed in a church. It bought a former factory on Illinois Avenue in 1976, added on to it in 1986, and purchased the former Benjamin Franklin Junior High School on Blackhawk Street in 1978.
In the 1990s, it made plans to build a new high school west of town, on Deerpath Road near Orchard Road. But what seemed like a better plan came along _ more space for less money, on a different site.
In 2004, it moved the middle- and high-schoolers into a former Chicago Sun-Times distribution warehouse on a 26-acre campus on Sullivan, adding a gymnasium and football field (the field was paid for by donations). This year it consolidated all grades on the Sullivan campus, in part to save money.
The school has 740 students in prekindergarten through 12th grade. In 2009, it had 900.