Four of the five community members of the Oak Park and River Forest High School District 200 Community Finance Committee (CFC) apparently favor sending the financing of the school’s approximately $102 million Project 2 to a referendum. The 12 person CFC, which also includes five OPRF employees and two school board members including president Tom Cofsky and member Kebreab Henry, met on Feb. 28 to discuss financing options for Project 2 and other matters.
Cal Davis, Petra Guerrero, new CFC member Kathleen Odell and CFC chairman Steve Miller all favored financing Project 2 primarily with referendum bonds, which are only issued after voters approve the borrowing in a referendum, rather than with debt certificates, a kind of borrowing that doesn’t require a referendum.
“We are the community finance committee so we do need to listen to the community I feel,” said CFC member Guerrero said. “And it is the right thing to do; I would definitely favor referendum bonds.”
Miller, who works as head of business operations for Schaumburg School District 54, said the size and expense of Project 2 seemed to call out for a referendum.
“I don’t feel like many of the scenarios really work without it,” Miller said. “That’s my perspective. I think it’s big enough that’s there is going to have to be a referendum piece to it.”
Project 2 is a plan to demolish and rebuild the southeast corner of the OPRF building, which mostly houses physical education spaces . The plan would include a new 25 by 40 yard swimming pool and a new third floor three court gym among a host of other upgrades.
Guerrero, Miller, Davis and Odell all said they did not favor using debt certificates, a kind of bond that is paid off from a school district’s operating levy rather than a specific bond levy and thus does not need to go before the voters in a referendum, to finance the project.
“I think we have more options than debt certificates so I think we should just take that one off the table,” Davis said. Miller, Guerrero and Odell agreed.
Debt certificates, because they are not backed by a specific tax levy as building bonds approved at a referendum are, generally carry a somewhat higher interest rate than referendum bonds.
“I don’t particularly favor debt certificates,” Davis said. “It would be a last resort for the most part.”
“Once you start getting long term on them, you’re paying a lot.”
Greg Kolar, the final CFC community member, did not voice an opinion on whether the borrowing necessary to pay for Project 2 should go to a referendum.
None of the school employees on the committee voiced an opinion and neither did Cofsky and Henry.
Monica Sheehan, who has been a critic of the size of the pool in Project 2 and who has argued for months that any borrowing for Project 2 should go to the voters in a referendum was pleased with the meeting and the support for a referendum.
“It was a positive meeting, and I appreciated that CFC members stated clearly that debt certificates should not be used to fund major capital projects,” Sheehan said in an email sent to Wednesday Journal after the meeting.
The CFC did not examine any of the five specific financing scenarios, one of which doesn’t require a referendum, that the district’s financial advisor has previously presented. The CFC will look at specific scenarios at its next meeting on March 13.
“There’s more work to be done,” Cofsky said.
The CFC members opposition to debt certificates is not likely to sit well with many of the most avid supporters of Project 2. They have been attending school board meetings consistently for months making public comments at the meetings calling upon the school board to vote to pay for Project 2 without a referendum. They argue that waiting for a referendum, which could not happen until 2024, would delay Project 2 by a year and raise costs. They typically don’t say this but avoiding a referendum would also eliminate the risk of losing at the ballot box. In 2016 a much smaller $25 million referendum to partially finance a new pool was defeated by a scant 28 votes. Some Project 2 advocates have said they are confident that they could pass a referendum this time if it comes to that. Opponents of Project 2 and those demanding a referendum, such as Sheehan, have also been attending school board and CFC meetings for months making public comments, demanding the issue be put to a referendum.
Project 2 proponents appearing before the school board have repeatedly pointed out that the one non-referendum option presented by financial advisor Elizabeth Hennessey of Raymond James Financial, has the lowest annual projected cost to taxpayers. But that result is obtained by assuming that issuing $44 million of debt certificates and paying them back at the rate of $3.5 million a year over 20 years will result in no additional cost to taxpayers because the operating levy would be the same with or without issuing debt certificates. If OPRF paid for Project 2 with referendum bonds instead of by debt certificates it could presumably reduce its operating levy compared to what it would levy if it was paying off debt certificates.
Before the meeting Sheehan sent the CFC members an email with calculations concluding that the cost of spending $3.5 annually to pay off debt certificates, as Hennessey’s non-referendum scenario 4 would do, would cost the owner of a home worth $500,000 an additional $199 a year in property taxes which, combined with other borrowing for Project 2, would no longer make the non-referendum scenario the least costly to property taxpayers.
But in an email Karin Sullivan, the OPRF communications person, challenged the idea that the operating levy would have to be higher to pay off debt certificates.
“It’s erroneous to assume future boards of education will vote to increase the annual levy by $3.5 million per year to pay off debt certificates, thereby increasing property tax bills,” Sullivan wrote. “In fact, the district’s already existing five-year financial projection — which does not include any debt — was used to estimate the affordability and impact of the debt certificate payments on operating fund balances. The annual tax levy was NOT increased in order to accommodate the payment of debt certificates. This ability to ‘make room’ in the budget has been discussed in many public meetings about the issue of debt certificates.”