CHAMPAIGN – School board members Monday dashed hopes of a resolution to a long-running conflict between the district and the city.

At a special session, board members quickly went into closed session – removing from the agenda an agreement about a special district the city wants to create in the South Research Park area to accommodate University of Illinois expansion plans, as well as city plans for a downtown taxing district.

And an angry Mayor Jerry Schweighart, who attended the meeting, declared negotiations dead.

"We made an agreement, and now they want another agreement," Schweighart said. "They want more. If they don't bring it up tonight, I'm not sure there will be further negotiations. We agreed to put more money up front, but that was contingent on action tonight. We're past negotiating now. I'm extremely upset."

But Scott Anderson, president of the school board, said he believes there's still room for agreement and time to negotiate so the district, which needs state approval, could be approved at the fall veto session.

"We've been negotiating for years, and there are very few items left," Anderson said. "They want to include a lot of taxable property in the TIF district, and given the tax caps that limit our income, we can't support that."

In a tax increment financing district, taxes are frozen for most government bodies when the district is created. As assessments rise from improvements in the district, the new taxes – the increment – must go to a special fund that must be spent within the district. The city was planning to declare some of the increment surplus and divide it among other governments, including the school district.

The city originally wanted the tax increment district to extend three miles in all directions from the research park south of St. Mary's road, but negotiators have agreed to the district's demands that it extend one mile, Anderson said. But he said boundaries are still a key sticking point.

Anderson said the city has also agreed to district demands that the existing Motorola Building in the research park be exempted from the tax increment district. He said it doesn't make sense for the city to expect the district to agree to take existing property off the tax rolls and tax dollars out of the schools' pockets.

"For us to encourage them to put taxable properties in the TIF district, that's not an appropriate thing to do," he said. "We want to stick with the original intent and make it apply to new development."

To offset potential revenue losses, the city has agreed to pay the schools more money upfront from a separate downtown tax increment district.

"For some reason, the city has chosen to bundle the TIFs to coerce the board," Anderson said. "The first year, we'll be losing hundreds of thousands of dollars because of the property that will come off with the TIF."

Schweighart said he believes the schools' action is counterproductive because the UI can choose to build in the area and not pay taxes on the property.

"The UI can build tax-free, but it agreed to put most of the property on the tax rolls," he said. "And if the UI tears down Orchard Downs and moves that housing to Champaign, that will put a burden on the school district."

Youngsters who live in Orchard Downs graduate housing attend Urbana schools and the UI makes an annual payment to Urbana schools to educate those students, many of whom come from overseas and need expensive extra services.

"Vision is lacking here," Schweighart said of the board's stance. He also said another board move, taking the issue away from its local attorney and giving it to its Chicago law firm, created additional difficulties because the Chicago attorneys had different expectations.

"If we water this agreement down more, it won't pass the General Assembly," Schweighart said. "Tabling it without discussing it is unbelievable."

Trisha Crowley, deputy city attorney, said the tax increment district would be roughly bounded by the Neil Street railroad tracks on the west, Kirby Avenue on the north, Wright Street extended on the east and the boundary between Savoy and Champaign on the south. The area is mainly undeveloped now, but the area with the most development potential, including a hotel, restaurant and conference center, is located on the Champaign schools' section.

"The UI wants good partnerships with private industry to bring its research to market," said Crowley, who's been doing the negotiating for the city. She said another goal was to share UI revenues more equally between Champaign and Urbana schools.

"Everything's waiting for agreement by Unit 4," she said.

Greg Novak, president of the Champaign Federation of Teachers, said board members are right to proceed cautiously and not yield to pressure from other partners to the agreement.

"Ever since we passed tax caps in 1996, the school districts have found themselves hurting," Novak said. "Both cities are home rule so caps don't affect them. When the county runs out of money, it imposes a sales tax. Everyone else has alternative revenues, but the schools depend on property tax. I commend the board for walking slowly into this."