When I was on vacation a couple of weeks ago, I took some time out of my day to walk around downtown, visit the library, browse around the Illinois Antique Center, and, in a moment of whimsy, visit the Public Building Commission of Peoria.

The PBC office is located in a well-appointed suite on the 19th floor of the Associated Bank building. I talked to the secretary/accountant (one of two employees of the PBC) who was very kind, took my contact information, and promised to relay my request for information to her boss the next day. Her boss is James Thornton, the Executive Secretary of the PBC, and he called me the next day as promised.

We had a nice chat about the PBC’s relationship to the school district, and he offered to send me a standard letter about the PBC, which I’d like to share with my readers. It may answer some questions (though not all, by any means) that have been asked in the comments section of other posts. It’s titled, “Public Building Commissions: A Means of Attaining Necessary Public Building Construction And/or Maintenance.”

Because of conditions that existed in many counties in the State of Illinois as related to the decrepit conditions of governmental buildings throughout the state, the Legislature of the State of Illinois in 1955, enacted a law known as The Public Building Commission Act.

The reason for the Act was to make possible the construction, acquisition, or enlargement of buildings to be made available for use by governmental agencies with the intent of centralizing the activities of the different branches of governmental and eradicating inefficient buildings no longer adequate to meet the needs of a growing population.

Even though Public Building Commissions have been in existence in the State of Illinois for more than fifty years, there seems to be, in the eyes of the general public, a certain air of mystery and misconception about these municipal corporations which have been created in various counties of Illinois under the provisions of the Public Building Commission Act of 1955, for the designated purpose of providing necessary public buildings in this state.

In general it can be stated that Public Building Commissions perform a dual function:

1. They provide financing for building construction and
2. Provide the expertise necessary to administer and supervise a construction project; and if desired, administer maintenance and operation after completion of construction.

It should be emphasized, however, that a Public Building Commission has no taxing powers whatsoever. For a Public Building Commission (PBC) to become involved in a construction project, it is necessary that a municipal corporation with taxing powers and within the territorial jurisdiction defined in the Act request the assistance of the PBC in the construction of facilities necessary or desirable for the proper operation and functioning of that particular public body. If the PBC believes the project is feasible, it may agree to assume the responsibilities of the proposed construction. Four things must then occur to initiate the project.

1. The PBC must select the site and acquire title to the land on which the improvement is to be constructed.
2. The PBC then issues bonds in an amount sufficient to cover the construction costs or as much of the cost as is requested.
3. The PBC then leases back the premises to the public body involved, who in turn agrees to pay an annual rental to the PBC in an amount sufficient to pay interest on the bonds; retire bonds, provide adequate reserve funds during the life of the bond issue, and if desired, to maintain and operate the building during the term of the lease.
4. The public body that is leasing the building then levies a special tax sufficient to pay annual rentals required throughout the term of the lease. This levy shall be in addition to all other taxes levied by the Lessee Corporation and shall not be included within any statutory limitation of the rate or amount for that public body. After the bonds have been paid off, legal title to the property may then revert back to the public body concerned if it so desires, along with any remaining monetary funds.

The following are some pertinent observations, which may answer some questions that sometime arise concerning Public Buliding Commissions and their function.

1. A Public Building Commission on its own cannot engage in any building project. It can only work in conjunction with and at the request of the duly elected representatives of a qualifying municipal corporation. In other words, all provisions of a construction project including land conveyance, lease provisions, and tax levy must be adopted by elected officials.
2. Public Building Commissions cannot have outstanding bonds that exceed five (5) percent of the assessed valuation of the county seat.
3. Numerous counties in Illinois in addition to Peoria County — Dupage, Kane, Cook, Winnebage, Whiteside, Stephenson, Lee, McLean, St. Clair, Vermilion, and Sangamon, to name a few, have created Public Building Commissions and have used them to construct much needed public facilities in their respective areas. Projects have included courthouses, jails, law enforcement buildings, educational facilities, nursing homes, and recreational facilities. These projects have all been well received and accepted by the public in their respective counties.

Some additional items that the Public Building Commission requires:

1. They approve or select the site and hold the title for the length of the bonds.
2. The PBC selects the architect.
3. They bid and approve all construction documents.
4. They will approve and pay all construction payments.
5. PBC will approve all change orders.
6. PBC will sell the required bonds and make all payments for the sale from the bonds. The PBC will hire the bond Counsel and company to sell bonds.
7. PBC will establish all payment schedules.

The Peoria Public Building Commission has currently spent over ninety-five million dollars building public facilities in the Peoria area.

In addition to this info, I was also sent a complete list of properties held by the PBC that are being leased by District 150:

• Richwoods High School
• Lincoln Middle School
• Valeska Hinton Early Childhood Education Center
• Blaine Sumner School
• Sterling School
• Washington School
• Tyng School
• White School
• Loucks School
• Von Steuben School
• Columbia School
• Thomas Jefferson School

Obviously several of these schools are older than the PBC itself; several of the older schools had additions built and modifications done that were financed through the PBC. The last nine schools I listed are the ones that will be paid in full within the next few months (I don’t have an exact date on that).

Once those are paid off, District 150 will not be able to ask for that money in their property tax levy anymore. That means the property tax rate for District 150 will go down, and that means you will pay less in taxes….

…that is, unless the state legislature decides to override the Governor’s veto on SB2477. If that bill is made law in its original form, District 150 will have another five years to get money from the PBC without having to get the voters’ permission via referendum. And believe you me, the school district can spend a lot of your money in five years.

There’s one more observation I’d like to make about District 150’s tax levy, and that involves the second-largest expenditure behind Education: the Public Building Commission (PBC).

Since 1993, the school board has been unable to tap the PBC for bonds due to a state law prohibiting it (we’re paying for pre-1993 bonds on our tax bills today). Sen. Shadid and Rep. Schock would like to see that change and passed legislation that would allow the school board to again get funding for construction through the PBC, but it was vetoed by Gov. Blagojevich. It was an amendatory veto that allowed funding to come from the PBC, but would require a public referendum to do so. Now Shadid wants to work on overriding that veto.

The school board has consistently promised that receiving these funds through the PBC would not raise taxes; i.e. the tax rate would remain the same. (Of course, we all know a tax rate that stays the same when it’s supposed to go down is a tax increase by any definition but the school board’s, but that’s their claim.) They even took action to cap its tax rate for the payment of leases with the Public Building Commission, and this was the basis of Shadid’s support for overriding the governor’s veto.

There are two problems (for taxpayers) with this little scheme.

First, the school district capped the tax rate at .60%. And, as you can see from Part 1 of this post, the current rate is .5578%. So, even by their own definition it will be a tax increase — an increase of .0422%. And, of course, since this supposed “cap” is only set by the school board and not state law, it could easily be repealed at any time.

Second, since the PBC’s part of the levy is not listed separately on your tax bill, how would you ever know if the rate changed, anyway? Only if you took the time to go down to the county clerk’s office and get a copy of the tax computation worksheet, which is unlikely for 99.99% of Peorians. I asked how one can go about listing the PBC’s part of the levy separately like they currently do for District 150 pensions. According to the county clerk’s office, it would have to be required by state law. I don’t expect our local lawmakers would want to see that, do you?

If Shadid, Schock, et. al., are successful in overriding the governor’s veto, make no mistake about it — they will have just voted to circumvent safeguards for voters (the referendum process) and allow District 150 to raise your taxes without your consent.

You’ve all seen the levy on your property tax bills. It’s the biggest levy of all — Peoria Public School District 150. Total rate for 2005: 4.49151%. But what really goes into that rate? How is the sausage made, so to speak?

Well, that information is available from the County Clerk in the form of a “Tax Computation Report.” I got a copy of it, and your levy from District 150 breaks down like this:

Although there’s not enough room in my blog layout to show this in the above table, there is some additional information on the tax computation worksheet.

First, the way it works is this: the district requests a specific amount of money (levy request) for each category. Based on the equalized assessed value (EAV) of property in the school’s taxing district, the county calculates the rate they’d have to charge to collect that much money. If the calculated rate is higher than the maximum rate, they obvioiusly can only charge the maximum.

So, for example, in 2005 the school district requested $27,951,565 for the Education fund. Based on the rate-setting EAV for the taxing district of $1,235,731,719, the county would have to impose a rate of 2.261944%. However, the maximum allowable rate is 2.18%, so that’s what they charged, resulting in an estimated $26,938,951.47 in revenue for the Education fund, or about $1,012,613.53 less than the district requested.

Notice that the district is at the maximum rate for every category that has a maximum rate.

Secondly, something interesting to note is the impact tax increment financing (TIF) districts have on District 150. You may have noticed that I earlier referred to the “rate-setting EAV.” That’s to distinguish it from the “Total EAV.” The difference between the two is this: the rate setting EAV has any property within TIF districts taken out. That’s a big difference. The total EAV for District 150’s taxing district is $1,293,403,719, which means the rate setting EAV is $57,672,000 less than the total EAV.

So, how does that translate to District 150 income? It means District 150 lost out on $2,590,343.64. Per fund, that works out this way:

Now, the argument is, of course, that if there were no TIF there would have been no development/property improvement, and thus the school district wouldn’t have seen that $2.5+ million anyway. Still, I think it’s good to see what the impact of our TIF policies are on the school district; it could lead to adjustments to how the city implements TIFs in the future. For example, would we get the same economic development benefit, while mitigating the impact on schools, if TIFs were only implemented for a shorter time period?

I’ll save my last observation for the next post so it doesn’t get lost in this one.