Lakewood Votes to Sell $8.5 Million in Non-Referendum Bonds, Sewer and Water Rates Still To Increase 8%
The average water and sewer bill on the west side of Lakewood is $1,200 a year.
By 4-3, the Lakewood Village Board gave first approval to issuance of up to $8.5 million in revenue bonds which the board majority clearly wants to be alternative revenue bonds instead backed by the general revenue of the village, e.g., revenue sharing, property and sales taxes.
The bonds will re-finance the newly-expanded waste water treatment plant at a lower interest rate, plus build a new 500,000 gallon water tower. Instead of being the current 15-year bond, the maturity will be stretched to 25 years.
The impetus for the action–a looming increase in water and sewer rates that were estimated at $209 year–required Village President Erin Smith to break a 3-3 tie.
Trustees John Burton, Carl Davis and Gene Furey voted in favor.
Dorothy Pfeuffer, John Pfeuffer and Ken Santowsk were opposed.
After the tie breaking vote was cast by Smith, John Pfeuffer said, “Of course.”
That would be over a 17% hike to west side ratepayers who already have higher water and sewer rates than other towns in McHenry County.
Even with the change in financing and expected lower interest rate, homeowners will see an expected 8% cost increase ($96 per year). That does not include the cost of maintenance and depreciation.
Chief among the problems seems to be that enough new home tap in fees, upon which the financing of the 2006 sewer plant expansion was based, have not materialized.
While the bonds were premised on 26 new homes being constructed per year, with the fiscal year over April 30th, only two tap on fees have been collected so far this year.
Instead of increasing water and sewer fees when the shortfall happened, the board chose to take “substantial withdrawals from cash reserves in the past two years,” a January 8th memo from Finance Director Carole Robertson reported.
The preferred alternative revenue bonds have a potential property tax hike element.
The 2006 Series Bonds that are being refunded were also “alternative revenue bonds,” which could result in higher property taxes for all Lakewood property owners, if water and sewer fees on the west side of town are not raised.
The proposed Series 2010 “alternative revenue bonds” are expected to decrease the annual bond payments, thereby reducing the increase required in west side water and sewer fees. They would also fund the construction of a replacement water tower.
Passage of alternative revenue bonds is what happened when the village board purchased the Red Tail Golf Course with non-referendum bonds right before the Property Tax Cap took effect in the early 1990′s.
The failure of greens fees to provide enough money to pay off the 20-year bonds led to levies against all property in Lakewood. Our home’s tax bill was hiked some $500 a year for most of the 1990′s.
Residents who wish to take the issuance of alternative revenue bonds to referendum may do so by gathering something over 200 signatures within thirty days. Petitions may be obtained at the Lakewood Village Hall.
In encouraging news, it was revealed that Humana was willing to provide employee health coverage for 25% less than the current carrier. That amounts to $60,000.
“This is amazing to me,” said Village President Smith, whose day job includes employee benefit work for Motorola.
The program has no cost to employees, a point Trustee John Pfeuffer suggested be reconsidered, but does have a $1,500 deductible.