NSSD-112 Board Approves $75 Million Middle School Renovation Plan

HIGHLAND PARK, IL — North Shore School District 112 board members Tuesday approved a plan to spend up to $75 million on improvements to its two middle schools through the use of alternate revenue bonds. The plan marks the culmination of first phase of a planning process initiated by Superintendent Mike Lubelfeld upon staring on the job over the summer. In four unanimous votes, the board approved the recommendation of the long-range planning committee Lubelfeld convened.

The middle school improvements will be financed with $55 million in alternate revenue bonds, which would be supplemented over time with the use of up to $20 million from the district's fund balance.

The work will begin with the issuance of bonds and construction bids in the spring. Administrators hope major renovations would be complete by the end of 2022.

"We're thrilled to be able to proffer a plan that can take existing resources with no tax increase and make dramatic improvements to the school district," Lubelfeld said in a memo to the board.

Alternate revenue bonds are a form of financing for public bodies that – unlike a general obligation bond backed by property taxes – do not require a referendum to be approved.

The law authorizing the bonds instead provides for a "backdoor referendum," where 7.5 percent of registered voters in the district must submit petitions within 30 days to get the issue on the next ballot. It would take signatures from an estimated 2,000 registered voters to trigger such a referendum, and the clock would not begin ticking until a final vote authorizing the bonds, which would come next month.

Because District 112 currently carries no debt, it is seeking a new credit rating ahead of potentially issuing the 20-year bond in April 2019, according to Chris Wildman, chief financial officer and treasurer. The district was last rated AAA in 2005.

Paying for the bond will require about $4 million a year over the life of the loan. Though it is guaranteed by revenue from the district's operating and construction fund, Wildman said the debt payment will abated on an annual basis during the levy process using transfers from the capital fund.

"This does not endanger the district's operations. It allows us to continue to do what we do and make improvements in other areas. But it does allow us to move the needle," Wildman said, "in terms of our capital work."

In recent years, the district has budgeted between $6 million and $7.5 million toward capital expenditures, an amount that could be reduced by financing capital projects using the bond.

Currently, District 112 has about $49 million across all its funds, with $15 million alone in its "working cash" fund, according to Wildman. He said the district planned to use the money from the bond before supplementing it with fund transfers.

The high level of savings – currently more than 60 percent of the district's annual operating budget – has resulted from both "fiscal prudence" and was a sign that "the time is ready now to fix this issue," Wildman said.

Lubelfeld said the first phase is dedicated to providing the best possible middle school experience by improving the two facilities all of the district's students will attend.

This year's closure of Elm Place Middle School left the district with two middle schools – Northwood and Edgewood. Construction would begin with Northwood Middle School in September 2019, with students relocated to Elm Place. Edgewood construction would take place in 2021, and it has yet to be determined where its students would be relocated.

The details of the improvements will be developed with input from students, staff and administrators, according to Lubelfeld.

The superintendent also seeks to convene a citizen advisory committee for construction projects. It is expected to consist of district residents with experience in architecture, construction management, design or real estate.

The second phase of the plan will require additional funding, with K-5 and pre-K facilities needing more than $70 million.

"These can be realized via tax rate increase requests, bond issuance requests, or a combination thereof," Lubelfeld wrote in a memo to the board. Administrators plan to "complete and refine Phase I prior to embarking upon any subsequent phases," it said.

The District 112 board also adopted its 2018 property tax levy at its Nov. 27 meeting. It is being increased by the limit under the tax cap law, which is inflation in the consumer price index plus the value of new construction that may appear on the property tax rolls. Anything higher would require an additional public hearing.

For instance, the City of Highland Park has proposed a 2018 property tax levy increase of 6.1 percent. No one appeared at a Nov. 26 public hearing to speak about it. It requires an additional "truth in taxation" hearing, which has been set for Dec. 10.