By DEBORAH GERTZ HUSAR

Herald-Whig Staff Writer

PITTSFIELD, Ill. -- The Pikeland School Board has adopted an intergovernmental agreement tied to the city's tax increment financing district and has moved forward with plans to refinance building bonds.

Board members, after a closed session Wednesday, agreed to work with Stifel Nicolaus as underwriters for bond refinancing.

The board will finalize the paperwork in August, and Stifel Nicolaus "will begin watching the bond market for us, to let us know when it's favorable for us to refinance the bonds if and when it becomes in our favor to refinance," Superintendent Paula Hawley said. "It's not a guarantee we'll do it. We have to come ahead moneywise."

The district has $4.5 million in outstanding bonds issued in 1998 to build Pikeland Community School. The bonds become "callable" in December, which means the district can look into refinancing at a better annual interest rate.

The district could refinance now and get a savings of 1.5 percentage points, but Hawley said underwriters don't recommend taking the action unless there's a savings of 2 percentage points or more.

Refinancing would cost about $40,000.

"If we did it right now, the saving would be about $40,000 on top of that. We'd like to see a bigger spread there," Hawley said. "If we decide not to refinance, there's no fee charged by (Stifel Nicolaus). We're not out anything."

Refinancing would not extend the repayment schedule of the bonds, due to be paid off Dec. 1, 2013.

The intergovernmental agreement basically ensures the district will not lose money because the city established a TIF district earlier this month.

"Without it, I'd be kicking and screaming," Hawley said.

TIF districts set a "base value" for property in their boundaries, then any incremental increase in property taxes based on a rise in value above that base from improvements goes into a separate fund for up to 23 years to provide incentives for more improvement projects or local match money for grants.

The state aid formula makes up part of the difference for the property taxes that would normally go to the school district. Under the intergovernmental agreement, the rest will come through the TIF fund -- up to 25 percent of the total value of the fund.

"It won't be a huge amount of money," Hawley said.

The district must tell the city how it plans to spend the money, but it can be used for nearly everything but salaries.

In other action, board members:

* Learned the district is moving forward to correct items highlighted in a safety inspection by the insurance carrier. Most are small items, such as new signs, but a science lab chemical storage area will be reorganized.

* Approved a support staff handbook over the objections of board member Al Brokaw. He said the handbook was "a little over the top" with its 41 specific "thou shalt not" listings and could lay the groundwork for establishing a third union in the district. Hawley said the handbook, recommended by the insurance carrier, pulls together existing school policy.

* Gave first reading approval to an administrative vacation day policy that requires administrators to take all vacation days within a year or lose them effective July 1. Accumulated vacation days before July 1 will not be lost.

* Asked the Building and Grounds/Transportation Committee to develop specifications for a new tractor to replace one bought in 1998.

-- dhusar@whig.com/221-3379