D86 Board Approves Borrowing $18 Million for Air Conditioning, Other Projects
Board members Barrett and Skoda opposed the plan, which would also upgrade electrical infrastructure at both district high schools and address entry circulation problems.
Monday evening was unseasonably warm for mid-December, but the temperature inside Hinsdale South High School for the District 86 School Board meeting was cool. That was probably a good thing, since a discussion about air conditioning generated quite a bit of heat, not only among board members, but also in the audience.
The meeting began with audience member George Logan delivering a lengthy analysis of district finances to argue against borrowing $17.96 million to complete the air conditioning of all classroom space at Hinsdale Central and Hinsdale South. Logan said district expenditures are trending up while revenues are trending down.
“We’d be taking a risk to borrow anything,” he said. “It just seems like it’s flying against all the trends.”
Board members Dianne Barrett and Richard Skoda took advantage of every opportunity during the meeting to express their opposition to the plan, which also calls for upgrades to the electrical infrastructure at both schools and various improvements designed to alleviate circulation problems at school entry points. The cost for the air conditioning portion of the project is estimated at roughly $13 million.
During a presentation of the district’s annual financial report by CPA Jason Coyle of the accounting firm of Baker Tilly Virchow Krause, LLP, Barrett pointed to language in the report that she said called for the district to investigate alternate funding sources.
“The board hasn’t discussed how we’re going to fund the extra expenses related to increased electricity needs on the building,” Barrett said. “The auditor … in this report, identifies that is going to be an issue.”
“I don’t recall saying that ma’am, I’m sorry,” Coyle said.
“You didn’t call it an issue,” Barrett said. “I’m calling it an issue.”
Skoda pointed out that the district has $7 million available in its working cash fund and Barrett said that the district has sizeable cash reserves across all funds.
“We could do the project without going out and selling bonds,” she said. “I would recommend to the board to reconsider going out and increasing people’s taxes unnecessarily, especially in this economy.”
Tax increase for three years
Bill Hofherr, senior vice president with the Kansas City investment banking firm of George K. Baum & Company, told board members that the first-year payments for the project would increase the tax burden for the owner of a $900,000 home by about $30 and by about $10 for the owner of a $300,000 home. That figure would decline during the next two years. By the fourth year of the 19-year payment schedule, the tax burden would return to its present level.
With interest, the project would cost the district $26.37 million, according to Hofherr.
“That’s ridiculous,” Barrett said. “That’s a lot of money for this board to consider for air conditioning.”
In arguing against using cash on hand to pay for the project, Board President Dennis Brennan brought up the district’s triple-A credit rating, noting that decreasing cash reserves could lower that rating.
“You will weaken your financial position,” Hofherr said, agreeing with Brennan.
The board approved the bond resolution on a 5-2 vote, with Barrett and Skoda voting against it.
Hiring of construction manager questioned
Barrett and Skoda also objected to the hiring of Gilbane Building Company to serve as construction manager for the projects the bonds will finance, suggesting that according to state statutes, the contract should have gone out for bids.
James Petrungaro, of the law firm of Scariano, Himes and Petrarca, indicated Barrett and Skoda’s interpretation of the applicable statute was incorrect.
“It does not need to be bid out,” Petrungaro said. “There’s case law addressing the specific issue of construction managers for school construction projects.”
Skoda said the process “almost sounds like the kind of stuff that goes on in Springfield.”
Superintendent Dr. Nicholas Wahl said such a comment was "offensive."
“Has there been any favoritism to any board member or anybody in administration?” Barrett asked Doug Lim, district manager for Gilbane.
“Absolutely not,” Lim responded.
The motion to approve the hiring of Gilbane to provide construction management services for the project passed on a 5-2 vote, with Barrett and Skoda again casting the dissenting votes.