At tonight’s 7 PM Lakewood Village Board meeting, the following is on the agenda:
Motion to Approve Ordinance 2010-(04) – An Ordinance Authorizing the Issuance of up to $8,550,000 Waterworks and Sewerage Revenue Bonds (Sales Taxes and Revenue Sharing Receipts Pledge) and Alternate Revenue Source Bonds (In Lieu of Such Revenue Bonds) of the Village of Lakewood, McHenry County, Illinois, to Finance and Refinance Waterworks and Sewerage System Improvements.
It’s difficult to tell from what’s on the agenda, but, whenever I see the words “alternative revenue (source) bonds,” my memory starts twitching.
Another item of the agenda is the reason:
Motion to Approve Ordinance 2010-(03) – An Ordinance Abating Taxes Levied to Pay Principal of and Interest on Certain General Obligation Bonds (Alternate Revenue Source) Series 1998, of the Village of Lakewood.
Those “Alternative Revenue Source” bonds cost residents in the old part of Lakewood something like $500 a year during the 1990′s. The bigger homes paid a lot more.
They were issued to buy what is now called the Red Tail Golf Course.
When I, Roger Reed and Jim Bishop attended what we thought was the significant board meeting, we brought up three points.
Former Village Trustee Reed said that he didn’t think village government should be competing with private enterprise by being in the golf club business.
Attorney Bishop pointed out that golf courses throughout the area were in financial troubles and wondered why Lakewood would want to enter such a business.
I asked, “Is this ever going to cost me a dime?”
Board members assured me it would not because the borrowing would be a revenue bond, that is, it would be repaid from the revenue from the golf course.
But, later, some swifty bond salesman told the village board members that bonds backed by property taxes, as well as greens fees would come with a lower interest rate.
Big surprise there, right?
Or, as my 12-year old would say, “Dah?”
And the village board took the bait and issued revenue bonds backed by greens fees and, just in case – don’t you know? – if the greens fees weren’t enough to pay off the bonds, higher property taxes would fill in the void.
As far as I can figure out, the quest for a lower interest rate led the more current village board to agree to a similar arrangement a couple of years ago, when the sewage treatment plant was expanded.
Now, growth has slowed to a crawl and interest rates have fallen as well.
So, the question tonight is whether to pay off the current revenue bonds, backed by property taxes, just in case there is not enough sewer and water fees to pay off the current bonds, and issue new bonds—also with a property tax backup—but at a lower interest rate and stretched out 25 years, five more than originally.
And, the 1998 alternative revenue bond abatement?
With the economy the way it is, my guess is that the golf course tax will appear within next year’s Lakewood village real estate tax bill.