From a square-mileage perspective, the Kaneland School District is among the largest in the state of Illinois. Included in its boundaries are all or parts of eight different municipalities, and each have their own, unique set of circumstances and challenges.
For example, Maple Park is seeking a way to provide additional water treatment capacity. Elburn is seeking a way to fill out its partially empty commercial districts. Kaneville is seeking a way to protect its rural nature from potential future growth. Sugar Grove is seeking new commercial and industrial growth to strengthen its economic tax base that is largely reliant on residential property taxes.
Each have a unique challenge, and each are exploring unique ways to meet them.
One thing they hold in common is the Kaneland School District. As far as the district is concerned, it does not matter in which community a student resides. It costs the same to educate him or her. That is why the School District has, for years, worked with each municipality to create an across-the-board schedule of impact and land-cash fees for new development. The set of fees is based on the cost of educating an estimated number of students that would reside in each type of new home.
These fees, which can only be assessed and collected by a municipality and then turned over to the district, are designed to help off-set the financial gap that exists between when a new resident moves in to a newly constructed home and when their full-scale property taxes make it through the system.
The district has long held the belief that having a pre-determined set of fees throughout the entire district would prevent those fees from being used as bargaining chips between the municipalities and potential developers. The fear has been that a potential developer could play one municipality against another to obtain the most lucrative enticement for their development—with a reduction in impact fees being among those enticements.
The across-the-board schedule of fees has existed in the form of an intergovernmental agreement (IGA) between the School District and each of the municipalities, with the idea that if one party pulls out, the entire agreement falls apart.
The most recent version of the IGA is set to expire Jan. 1, 2012, and Sugar Grove recently informed the School District that it would not agree to extend the agreement any further. This decision means that for all intents and purposes, the IGA is dead.
This move opens to the door to competitive bidding among the municipalities to draw in developers. The impact of this change may not be seen in the immediate future, since the economy remains fragile and development is expected to remain stagnant for at least the short-term future. However, there will come a time when the economic uncertainty lifts and developers begin to explore opportunities, and that is when each municipality in the Kaneland School District will have the ability to use the district’s finances as a bargaining chip.
Each municipality, facing its own set of circumstances and challenges, will be free to dangle impact fee reductions as a way to increase the attention from developers, in the hopes that the development plan will help solve their respective challenges.
While that may result in a “win” for an individual municipality, it will result in a direct “loss” for the School District, as well as indirect losses for all the municipalities. The direct loss would be in the form of an even more challenging financial picture for the School District, and the indirect losses would be in the form of each municipality being faced with a financially struggling school district on top of their already-existing challenges.
Add to that a general breakdown in the collaborative spirit necessary to successfully navigate through these challenging times together, and it becomes clear that Sugar Grove’s decision to end the IGA will likely create significant and long-term damage to the broader Kaneland community.
Maybe the fee schedule needs to be adjusted, and maybe there are other elements in the agreement that should be reconsidered. That being said, the worst of all outcomes is to have no agreement at all.
We urge the leaders in Sugar Grove, Kaneland and the rest of the School District municipalities to change course and find a solution that will take School District finances off the table as a bargaining chip for developers.