Soccer, politics and land swaps

If there was a Facebook page for District 428’s proposed land swap with ShoDeen Construction the relationship status would read “it’s complicated.”

The District and all other taxing bodies need new construction EAV revenue. Residential new construction brings more immediate cash flow to the school district than does commercial or industrial because of incentives and subsidies. New construction homes drive up the value of existing homes — if there are customers. Residential new construction provides opportunity for more tradesmen to enter and rise in the middle class. Ancillary white collar jobs increase in engineering, legal and professional services, retail, supply manufacturing and logistics. The economy is never hotter nor more inclusive than when the hammers are swinging.

ShoDeen Construction has made a major investment in District 428’s taxing boundaries. He (Kent ShoDeen) bought land for a major residential development on the north side of town. He bought land on the east side of town. He bought land in a TIF district in the center of town. While plans are for large-scale mixed used developments on those two parcels he does not have the approval process completed and/or the customers to start digging dirt and swinging hammers. He has other impressive plans in other communities including Sycamore, Elgin, Batavia, Geneva and Elburn but he does not appear to have the customers to begin any of his DeKalb projects.

District 428 like most Illinois school districts is experiencing declining EAV which translates into higher tax rates even if not straddled by $110 million (principal only) in debt bond obligations. Because of that obligation those tax rates could mushroom. The pre-referendum proforma to maintain an affordable tax rate called for $20 million in new construction EAV for the term of the debt bonds. And if not for the lack of accountability by the State of Illinois in it’s school construction grant program the District would not have a $20-some-million rainy day fund to “balance the budget” for operations.

The land siting the new high school was purchased by the school district from Macom Development Corporation near the time of the referendum. Instead of paying $40,000 in cash per acre for the land the district and Macom agreed to a lower cash deal in exchange for an impact fee credit. The two parties then agreed that if the land was not at some level of development by 2013 the district would then pay for the $1.05 million credit at a rate of 4 percent ($42,000) per year starting in 2013. When ShoDeen bought the Irongates property from Macom the credits came with it.

During a failed referendum attempt in Dr. Brian Ali’s tenure as District 428 superintendent the school district purchased land surrounding the old high school on South Fourth Street from the DeKalb Park District who bought it from Fairview Park Cemetery. The plan then was to expand the old high school. Those plans changed when the $110 million referendum passed. The new high school was built at its Dresser Road location and the old high school is now Huntley Middle School.

DeKalb AYSO uses the land as soccer fields. Kiwanis Park is a busy community gathering place on soccer Saturdays. The park district maintains the property. The school district owns it.

Because the school district owns the Kiwanis Park land the EAV multiplyer is zero. Should the swap actually take place the 42 acres of property it owns near Huntley Middle School will become taxable and if developed as residential AND the property is NOT in a TIF district the school district would benefit upon development from a needed revenue source. Of course, the undeveloped 34 acres currently owned by Shodeen near the new DeKalb High School would be taken off of the tax rolls.

The new high school was built with core facilities to accomodate 2,500 students with classroom space for an enrollment of 3,000. Here’s the background for those numbers.

In early 2008 some members of the Facilities Planning Committee (FPC) pushed for a revised demographics report as the pre-referendum version appeared to be projecting enrollment increases from subdivisions already built out. Staff was projecting the “conservative” new construction EAV of $20 million a year to help repay the debt bonds. There were signs, including an ominous growing sheet of new foreclosures in DeKalb, that indicated the housing market was crashing.

A new demographics report was approved. It projected much lower enrollment trends and it showed DeKalb’s high school enrollment dropping under 1,700 next year. But in a wild if not improper 13-5 vote the FPC voted to recommend the new high school construction not be adjusted to reflect the revised projections. Proponents of an “optimistic view of DeKalb’s future in terms of growth” also had studies that indicated the new high school be built on 75 acres. The site purchased for the high school was about 40 acres. The land swap, if ever approved, would give the school district the acreage footprint those experts recommended.

Enrollment at the high school at that time was 1,800. According to the 2011 Illinois State Report Card DeKalb High School’s enrollment was 1,750. It is estimated for a media report that this year’s enrollment is 1,800.

Clearly this swap has much more to do with the $1.05 million impact fee credit issued to Macom now owned by Shodeen and coming due in 2013. Shodeen will also pay the school district $654,511 as reimbursements for the public improvements made when DHS was built if the swap is approved. The district is facing a $2.3 million deficit this school year that doesn’t include the credit but does include aid from a state that can’t pay its bills.

The district was awarded and did receive the $21 million construction grant that came with conditions on how it could be spent. If misused as a rainy day fund for operations that construction grant money will wither in short order. If the grant proceeds are not used to address capital improvements needed in the other school buildings in the district then it may be more prudent to protect taxpayers against the falling EAV and use the money to pay down the referendum debt.

The land swap would then make more sense for the district and the taxpayers to the chagrin of many AYSO participants. But the school district and its taxpayers must keep they’re eyes on the TIF ball. If customers were to be found for an infill subdivision on the south side of DeKalb the school district would need the revenue as soon as it is generated.

Part of the deal includes a waiver of impact fees until the district gets 600 students from Shodeen’s Fairview or Irongate (north side) communities or in seven years, whichever comes first. That short changes the other developments desperately trying to find customers for their approved but not developed lots. The school district should request that the City of DeKalb apply the lower EAV numbers and the lower student projections to the impact fee formula. That would rightfully, legally and fairly lower impact fees for all new construction home buyers and lower their cash-in-hand requirement at closing.

The Board of Education will likely approve this land swap — perhaps rightfully so. But then the political football is passed to the DeKalb city council where the deal will face stiff opposition from AYSO participants, open space advocates and anti-growth sentiments.

The crystal ball is cloudy on this one.

[success]Recommended reading: DeKalb’s Population Illusions on City Barbs.[/success]