First reported 2/24/2010 4:59 p.m.

Despite public pleas to back off, Oak Park and River Forest High School District 200 is sticking to its guns in suing village hall in a dispute over $3.3 million.

The suit has surfaced long- papered over frustrations between Oak Park's three largest taxing bodies - District 200 Oak Park and River Forest High School, District 97 Oak Park elementary schools and the Village of Oak Park. The current contretemps involves the long controversial downtown TIF district with the high school claiming the village has failed to make legally obligated payments. District 97 has sided with the village in saying a lawsuit is unnecessary and an unwarranted expense to taxpayers. The village and high school have traded barbs for years over who should be responsible for the costly operation of a parking garage the village built at the high school. And no longer beneath the surface is intense frustration on the part of the cash-strapped village hall and elementary school district over the size of the financial reserves accumulated through property taxes in recent years by the high school.

District 200 says village hall has delayed paying money promised in a 2003 agreement between the village and the two local school districts. Under that agreement, village hall was to "carve out" properties in Oak Park's downtown tax increment financing district, or TIF, and funnel money back to other taxing bodies. But that hasn't been done, the high school alleges.

Oak Park Village Manager Tom Barwin said he was blindsided by the suit and thought the two parties had been working toward a resolution.

"We're in a deep recession. It's a challenge to work through it," Barwin said of the dispute. "This would run up legal bills to decide how to shift around taxpayers' dollars."

Barwin and others have asked the high school to withdraw the complaint since it was filed Feb. 19, but Ralph Lee, District 200 board president, says his board isn't currently considering that option. The high school board felt a resolution of the dispute was going nowhere and that they had to ask a judge to resolve it.

"We haven't gotten the feeling that anything is changing by talking about it," Lee said. "The village has not been appropriately responsive. It is time for a court to weigh in with an objective decision."

Village urges other remedies

At Monday night's village board meeting, Village President David Pope read a letter he had sent to Lee urging direct discussions and also acknowledging that despite the village's dismal finances that its obligations to the school districts were legitimate.

Village trustees "believe strongly that it is the clear and appropriate expectation of the public that we work together to resolve these issues without resorting to costly and protracted litigation. I have every confidence that we can do that," Pope wrote.

However, in an executive session last Thursday, Lee said the high school board maintained its determination to press the lawsuit. Some people involved in the meeting suggested withdrawing the suit, but the board "did not consider" that suggestion, according to Lee. At the same meeting, Lee's board also appointed its attorney, Paul Keller, and chief financial officer, Cheryl Witham, as representatives in any discussions with the village.

The dispute has largely played out in behind-closed-doors meetings and tersely worded letters sent by lawyers over the past six months.

OPRF's law firm - Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer - sent a memo to the village in August, laying out the school's position and hinting that a lawsuit was being considered.

Barwin sent a letter in response Dec. 10, explaining village hall's position and saying that he expected to send $1.32 million to the high school and $1.39 million to District 97, with the carveouts occurring by the end of April. Barwin claims to have not heard "a peep" from OPRF since that letter. The high school, meanwhile, said it was waiting for a call from the village to set up a meeting after the Dec. 10 letter.

Officials from both the District 97 elementary schools and village hall have been meeting recently, trying to calculate exactly how much is owed, said Peter Traczyk, board president for District 97. After the parties figured out where things were going, they had planned to reach out to OPRF, but by then the high school was already setting up to sue the village, he said.

Village hall acknowledges that it owes money, but the sides have disagreed on two "footnotes" in the 2003 agreement, items Traczyk called "ridiculously complicated" and "the big elephant in the room." Traczyk wants all parties to get together to come up with a transparent way of figuring out formulas and calculating how much is owed. He says the village and District 97 are getting close to a resolution. He disputed the notion that OPRF could have independently figured out a concrete number to hang its hat on.

"If anyone tells you that, 'Oh, what is owed is obvious and known,' I don't buy that," he said. "Not up to this point."

Traczyk was frustrated by the inability of the parties to get together and resolve their differences, so he had reached out to the village to work things out. He echoed Pope's comments about keeping the dispute out of court.

"I think we as elected officials can sit down, with legal counsel, and work this out," he said, "but I don't think we need to do this in court where legal expenses are significantly higher, and the outcome is going to be one where someone loses."

A little background

Oak Park started its downtown tax increment financing district in 1983. The TIF is a fund created by freezing property taxes at a certain level and using future tax revenues above that amount for development and infrastructure projects in a designated area.

With the TIF set to expire in 2006, the village worked in the early years of the last decade to create an agreement with the schools and other local governing bodies to extend the TIF for another 12 years. Under the agreement, the village was to "carve out" certain properties from the TIF each year, funneling tax dollars back to the schools and other taxing bodies - the library, the township and the park district.

And if certain properties weren't ready to be "carved out" when the village expected - as has been the case for some large developments, such as the Whiteco building on Harlem just north of Lake - then the village is supposed to pay an amount to the taxing bodies equal to the assessed value of land not yet ready to be carved out, OPRF asserts in its lawsuit.

The high school alleges that village hall has "failed and refused" to make these alternative payments to OPRF. The village currently owes the school about $1.3 million in such payments, according to the complaint, filed Feb. 19 in the chancery division of Cook County Circuit Court.

OPRF is also looking for $1.5 million in excess equalized assessed valuation, and another $527,895 of tax revenue, resulting from a property tax rate increase authorized by a 2002 District 200 referendum, which the school board alleges should be calculated into the funding total.

Altogether, the high school is seeking about $3.3 million from the village. They also claim that village hall has "failed and refused" to participate in annual meetings with OPRF to approve the amounts of TIF money owed each year.

In a demand that has village officials frustrated, the high school is asking a judge to require a detailed accounting of funds deposited into and spent by the TIF district since its founding 27 years ago. The suit asks the court to forbid the village from spending TIF dollars above what it owes to other taxing bodies, and pay the $3.3 million said to be owed. Or, as an alternative to those three requests, OPRF is asking for the termination of the TIF and distribution of any surplus dollars currently in the account.

In a Feb. 19 letter to Barwin, the District 200 board asserted that a lawsuit was the last resort. The school feels the village has inadequately addressed questions about when and if village hall plans to pay back dollars owed.

When asked about the village's request to work things out without a lawsuit, Lee said of his board, "I couldn't predict the response. We've made the decision to do it, and that's where we are right now. Our board decided we couldn't afford to accept the status quo."

District 200 Superintendent Attila Weninger declined to comment.

The village board also met in closed session on Monday to talk about the lawsuit, according to Barwin. Village hall hadn't yet been formally served with the complaint as of late Monday.

Barwin anticipates that the village will have to spend between $25,000 and $50,000 for its TIF lawyer in the first 30 days as Oak Park works on a response to the lawsuit. A request for the costs of OPRF's legal fees was not returned by late Tuesday morning.

The village is close to finalizing a deal with a Chicago developer to partner up and build a 20-story hotel and garage complex at Lake and Forest. The board is scheduled to give the proposal final approval on March 8, with Oak Park committing to spend $9.8 million for a new garage, possibly using TIF money. Barwin said the lawsuit won't stop that project from moving forward.

"I don' think we could just stop everything we're doing because somebody at District 200 has convinced their board to behave irrationally and sue the village," Barwin said.