Aurora Christian sets June 30 for decision on school site
Leaders at financially-strapped Aurora Christian School intend to decide no later than June 30 whether to conduct classes at its Sullivan Road campus or move elsewhere.
Parents were informed of the news earlier this month, and it was repeated this week on the school website.
Officials are looking at leasing empty school buildings within a 20-minute drive of the campus. It hasn’t announced what buildings are being considered.
The school has financial problems on two fronts.
Fifth Third Bank in April sued the school over a $500,000 line of credit issued in 2009, which the school used to pay bills when income dipped, such as in the summer when tuition payments aren’t being received. The bank contends the school has failed to repay almost half of that line, which expired in March.
The bigger woe is a debt of $18 million which was used to develop its main campus on Sullivan Road. The school issued bonds in 2004 to buy a former newspaper distribution site and convert it to a high school. It has since moved its preschool, elementary and middle school students to the Sullivan campus.
The bond money was also used to fund some school operations.
The collateral for the bonds included the school’s buildings, and land it owns on Deerpath Road near Interstate 88. Fifth Third has an interest in what happens because it issued a letter of credit guaranteeing repayment of the bonds.
The problem is the value of that collateral has dropped — from $33 million when the letter of credit was extended to $5.6 million today.
The school planned to repay the bonds by selling the Deerpath land to commercial developers. But that plan sputtered when the recession started in 2007 and the commercial real estate market tanked.
It has to start repaying the principal on the bonds in 2012.
The school has returned tuition deposit checks to parents, because it did not want to risk losing their money by depositing it into the school’s checking account. The bank has the right to draw from that account to repay the line of credit.
School leaders continue to negotiate with Fifth Third to restructure the main debt, including possibly writing off part of it.
“The school will never be able to pay off the loan based on the cash flow (of tuition and fundraising), and the bank knows it,” said Nick Calamos, explaining why he is hopeful a deal can be reached.
Calamos, whose children attend the school, is on the committee working on the finances.
The school’s superintendent could not be reached for comment Friday.