MCC Plans to Sell $42 Million in Non-Referendum Bonds – Part 1

The consultants are named on the cover slide.

An Open Letter from Stephen Willson to the Public Concerning McHenry County College’s $42 Million Health and Wellness Program Proposal.

The images included with the Open Letter contain what I think is all the pertinent information provided the Board. When Willson filed a Freedom of Information request asking for information beyond the Power Point presentation, no more detailed information was provided.

Introduction

I am writing to you because you are a community leader.

McHenry County College plans to use a loophole to issue bonds that will raise your property taxes. If you wish to prevent an unneeded tax increase, read on.

A public-private partnership is requested.

MCC developed a $640 million expansion plan based on inaccurate historical growth rates in McHenry County.

The plans were made despite the long run trend of declining enrollment in McHenry County elementary and high schools, the system that feeds students to MCC.

The plans were made without regard to Census Bureau projections of a decline in the 18-34 year old age cohort that forms the bulk of MCC’s student.

The timeline presented in mid-September indicates the consultants want the MCC Board to approve $42 million proposal before the end of December.

MCC wants to expand despite stating publicly that they do not even know the extent to which their current facilities are under-utilized, and despite evidence that they have substantial unused capacity in their current facilities.

The consultants say these factors are driving the decision.

Now they want to finance the first installment of their $640 million plan, an unneeded $42 million health club and classroom building.

MCC claims that a “feasibility study” supports this project.

This is false.

There has been no feasibility study.

MCC paid for and received nothing more than a marketing presentation to support their pre-determined conclusion.

Feasibility studies are created by experts in finance such as McKinsey & Company, Deloitte Touche, and Ernst & Young.

Marketing presentations are made by firms that want to sell you something.

The consultants assert that the health club and classrooms will be self-sustaining. The last time a similar claim was made was when the MCC Board was trying to build a minor league baseball stadium.

The firms MCC that hired are NOT experts in municipal finance and junior college curricula.

Power Wellness’s manages “medically integrated fitness and wellness centers” while Wight & Co. is a construction company!

Feasibility studies are performed by independent parties that do not have a vested financial interest in the conclusion.

Marketing presentations are made by firms that want to sell you something.

The two firms hired by MCC have a HUGE financial interest in reaching a positive conclusion. Both firms want contracts for the “phase two” and “phase three” feasibility studies. (The $50,000 “phase two” contract has already been awarded to them.)

MCC employees and those of the two firms who would profit from the proposal are listed.

And they both want contracts if the projects is approved, one to build the project and the other to manage the health club.

The firm Power Wellness is described. Another slide show Illinois locations in Roscoe, Buffalo Grove, Maywood, Orland Park, Geneva, Palos Heights and Orland Park. The firm has also worked with Washtenaw Community College, Loyola University, University of Illinois at Chicago, Moraine Valley Community College,
Lake Erie College of Osteopathic Medicine, College of DuPage and Roosevelt University

A negative conclusion would prevent them from obtaining future business.

Consultant Wight and Company is described here. Listed on the next slide are the following “relevant experience:” City Colleges of Chicago, College of DuPage. Joliet Junior College, McHenry County College, Elmhurst College, Illinois Institute of Technology, Lewis University, Rockford College, Moraine Valley College, Sauk Valley Community College, Triton College, Trinity Christian College, University of Illinois at Chicago and theUniversity of Notre Dame.

Feasibility studies are over a hundred pages of dense text and tables filled with extensive, detailed and concrete evidence to support their financial projections, and include analyses of current capacity, demand, and competition.

Phase One steps are outlined here.

MCC’s so-called feasibility study is a 26 page PowerPoint presentation with zero supporting evidence.

More tomorrow. (The subject will be discussed at a Committee of the Whole meeting of the Board on Tuesday night.)

Part 2 is here.

Part 3 is here.


Comments

MCC Plans to Sell $42 Million in Non-Referendum Bonds – Part 1 — 13 Comments

  1. Most all of the Community College Districts in northern Illinois are carrying an inordinate amout of debt. In most cases, the public is completely unaware how much these “educational” institutions have put the public on the hook for.

    The public really needs to start pressuring the General Assembly to limit the ease with which public bodies can borrow huge sums of money.

    This won’t be easy, the banking lobby has basically controlled the Illinois Legislature for a couple of decades now.

    And just look at all of the wonderful results the bankers’ lobby has brought us fine citizens of the Prairie State.

    Tutty

  2. Can Stephen Willson post the PowerPoint on Google Docs or somewhere for everyone to read.

    MCC Board Meeting September 18, 2012, 6:30PM
    http://www.mchenry.edu/board/12_13/091812cotw.asp
    Item 9, Health Education Facility, Public Private Partnership, Findings Phase 1 Feasibility, Mr. Ken Gorman, Power Wellness.
    Maybe Stephen wants to FOIA the findings.

    MCC Board Meeting September 27, 2012, 6:30PM
    http://www.mchenry.edu/board/12_13/minutes/092712.pdf
    Mr. Ken Gorman and Mr. Brian Hummert of Power Wellness gave a presentation on a public private partnership with MCC to build a health science education facility.
    Is this the same presentation Stephen referred to above?

    MCC Board Meeting October 25, 2012, 6:30PM
    http://www.mchenry.edu/board/12_13/packets/102512.pdf
    The Feasibility Study Agreement for $50,000 with Power Wellness Management of Addison is on pages 16 – 22.

    Many more companies than Power Wellness and Wight will benefit from a bond issuance and construction. Company that manages the issuance of the bonds, bond counsel, Architect, etc.

    To determine the debt of any institution locate their debt service schedule, which is typically located in their audit report, or FOIA it.

    The newspapers don’t have the expertise or resources to monitor this stuff.

  3. Here’s the org chart of leaders who would be impacted by or involved with a new Health and Wellness Center.
    http://www.mchenry.edu/finance/FY2012CAFR.pdf

    Lena Kalemba – Director of Health and Wellness

    Angelina Castillo – Asst VP of Human Resources

    Larry West – VP for Administration Services

    Becky Smith – President

    Board of Trustees

    Dennis Adams, Vice Chair, McHenry, Term ends 2013
    Cynthia Kisser, Wonder Lake, Term ends 2017
    Carol Larson, Harvard, Term ends 2013
    Linda Liddell, Crystal Lake, Term ends 2017
    Mary Miller, Chair, Crystal Lake, Term ends 2015
    Ronald Parrish, Woodstock, Term ends 2015
    Barbara Walters, Secretary, McHenry, Term ends 2013
    Paola Rueda, Student Trustee, Term ends April 2013
    http://www.mchenry.edu/board/boardoftrustees.asp
    If you are getting stonewalled in your FOIA, let your elected official know that.

  4. Keep reading over the next couple of days, Mark.

    The first key point is that MCC is trying to disguise a marketing proposal by firms with a conflict of interest as a “feasibility study.” The conflict of interest makes any conclusions the firms reach inadmissible.

    The second key point is that the building is about 2/3 classroom and 1/3 health club. But the program they want to expand is a nonstarter and they have a huge amount of unused classroom space now. So the whole project is ill considered.

    The third key point is that MCC is trying to get around a referendum and sell these bonds without the voters’ permission.

  5. All of the pertinent power point slides will be in the articles published today through Tuesday.

  6. The Power Wellness PowerPoint presentation we are discussing is dated September 18, 2012?

    The $50,000 feasibility study was approved by the MCC Board October 25, 2012.

    In which case the PowerPoint predates the approval of the feasibility study?

    Maybe MCC doesn’t have the results of the feasibility study yet?

    When does Power Wellness present the results of the October 25, 2012 feasibility study to the MCC Board?
    Tuesday Dec 12th?

    At the very least the Power Wellness PowerPoint should be easy to find on the MCC website…can’t locate it at all on the MCC website…lousy transparency on MCC’s part.

    Chelsea McDougall of the The Northwest Herald has written a few articles on the subject.

    MCC envisions partners for health sciences facility
    http://www.nwherald.com/mobile/article.xml/articles/2012/10/17/r_dl1mohctrrgoxrsw85dfwa/index.xml
    “MCC authorizes expansion study” Fri Oct 26, 2012.
    http://www.nwherald.com/mobile/article.xml/articles/2012/10/26/r_xjmbvtqhrinbdn99pm9mq/index.xml

    Elena Ferrarin of the Daily Herald wrote an article Oct 26th.
    MCC to study $42 million health sciences center
    http://www.dailyherald.com/article/20121026/news/710269693/

    In the Daily Herald article, debt certificates are mentioned as a possible funding source.

    Debt certificates.

    What exactly is a debt certificate?

    A bond?

    The Village of Lakewood is also talking about “debt certificates” and “public private partnerships”.
    http://mchenrycountyblog.com/2012/12/05/lakewood-village-president-lays-out-need-for-new-village-hall/

    Is this some sort of trend to obtain taxpayer financing.

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