Reader Asks if MCCD Has Borrowed More Than Law Allows

Susan provides the following information about what the McHenry County Conservation District has borrowed:

(MCCD) Legal Debt Margin Calculation as of March 31, 2014

Assessed valuation as of December 31, 2013: $7,189,697,681

Even those with paid mortgages continue to have to pay taxes to live in their homes.

Even those with paid mortgages continue to have to pay taxes to live in their homes.

Debt Limitation (1.725% of assessed valuation): $124,022,285

Less debt outstanding applicable to limit General Obligation Bonds: ($127,550, 000)

(Installment Contracts): ($4,800,000)

Legal Debt Margin as of March 31 2013: ($8,327,715)*

(that means MCCD has incurred debt, using all homeowners’ homes in the county as collateral, of $8,327,715 OVER the statutory legal limit of debt they are allowed to incur.)

= = = = =
If you want to express your opinion to Govenror Pat Quinn on whether he should sign or veto Senate Bill 3341 sponsored by State Senators Pam Althoff and Karen McConnaughay and State Rep. Mike Tryo, the link is below.  This is the bill that would allow the McHenry County Conservation District to borrow more money without referendum approval.

Or call 1-312-814-2121.

If Quinn does not sign or veto the bill, it will automatically become law sixty days after passage.


Reader Asks if MCCD Has Borrowed More Than Law Allows — 11 Comments

  1. The borrowing occurred while amounts were within statutory limits.

    As property value plummeted, the borrowed amount exceeded 1.72%. (Numerator rose or held steady while denominator fell).

    A statement by MCCD Treasurer  in the June 19,2014 Finance & Administrative Committee minutes:


    “Treasurer Krautstrunk stated he was concerned about the recent Moody’s downgrading of the District’s debt rating to Aa1 and especially of the assigned ‘negative outlook’ by Moody’s.

    “He stated that the ‘negative outlook’ meant that Moody’s expected another downward step for the District within their rating system at some point in the future.

    “Treasurer Krautstrunk said that this reinforces his opinion that the District should not be expending any funds for new acquisitions of land and that all available funding should be designated toward the ‘existing’ needs of the District.”

    The question is, knowing of plummeting property values, did MCCD management choose to spend funds on land purchases which might have been used instead on debt service?

  2. On 19 June 2014 MCCD voted to acquire a parcel of land.

    The vote was 5 “Aye’ and 2 “Nay’.

    The “Copy of Real Estate Sale Contract” was NOT attached as stated in the Ordinance. Without knowing terms of the deal we cannot evaluate it.

    However we would like to hear from the ‘Nay’ voters.
    (CLICK ON:)

    “Ordinance 14-883

    Authorizing the acquisition by purchase and execution of contracts for real property commonly known as Breckenridge Parcel”

  3. Regarding the unknown purchase price for the Breckenridge Parcel.

    One could submit a FOIA request for a copy of the document containing the purchase price.

    And/Or, FOIA request for the date purchased, purchase price, acreage, address(s), and description of the parcel purchased, for all properties over say a 10 year period, if possible in an electronic spreadsheet format.

    Presumably the Conservation District knows the amount, purchase date, location, and description for the property they purchased.

  4. There is a document that would be good to FOIA from the McHenry County Counservation District regarding the Althoff sponsored SB 3341.

    SB 3341 would allow MCCD to issue non-referendum bonds to obtain additional taxpayer funds.

    The document is referenced in the December 18, 2014 Senator Althoff news story / press release, “Althoff: Senate Bill 3341 gives McHenry County Conservation District more budget flexibility.”

    Althoff’s press release was in turn referenced in the December 27, 2014 McHenry County Blog article, “Althoff Defends Conservation District Tax Hike Bill.”

    Here is the sentence referencing the document in Senator Althoff’s press release / news story.

    “Recently, the McHenry County Conservation District received an opinion from the bond counsel that there needs to be clarification on the intent of the statute, which is to allow MCCD to issue non-referendum bonds up to .575%, just like every other conservation district, and then ask for voter approval to issue referendum bonds that would increase the debt limit above .575%, yet below 1.725%.”

    The document to obtain via FOIA is the opinion from the bond counsel.

    That opinion seems to be what sparked SB 3341.

  5. It is a good point that this is probably what sparked sb3341.

    It is further evidence of the contempt with which voters are treated, when the public characterization of the bill is to save taxpayers money by relaxing restrictions on refinancing.

    What was the urgency to refinance debt?

    Why couldn’t MCCD wait a year until their prediction of Higher EAV lifting their tax cap came true?

    Speculation should at least be predicated on some known data; what data support this unusually swift action ( refi, bill passage) ?

    The new late-2014 $108 million bond issue by MCCD generated $915,000 ( just under 1%, in a near zero
    Fed funds interest rate environment) in fees for legal and financial advisors? But they would get that fee no matter when the refi took place, and bond underwriting deals are available every day.

    Is there a land purchase being considered that is currently ‘prohibited’ by tax cap and refi technical language?

  6. Senate Bill 3341 (SB 3341) was signed by Pat Quinn into law as Public Act 98-1168 (PA 98-1168) on January 9th, 2015.

    The law “clarified” that McHenry County Conservation District can issue non-referendum bonds, which are bonds issued without voter approval.

    Voters do not get a direct vote on whether or not they would like such bonds to be issued.

    But once issued, property taxpayers are forced to pay the bonds through property taxes.

    The seven trustees of the the McHenry County Conservation District are furthermore not elected.

    So voters cannot vote the trustees out of office who approve the non-referendum bonds.

    McHenry County Conservation District (MCCD) trustees are currently appointed by the Chairman of the County Board, with the consent of the County Board, to serve a five year term.

    Furthermore, the MCCD trustees do not videotape or audiotape board meetings and place them on the district’s website.

    And as stated above, the Conservation District was over its legal debt limit, before the law “clarifying” the Conservation District can issue non-referendum bonds.

    The Illinois State Comptroller Data Ware house website shows the Conservation District debt limit as of 2014.

    The Comptroller’s ID for MCCD is 063/010/20.

    Total Legal Debt Limitation $124,022,285

    Total Debt Applicable to the Limit $132,350,000.

    Legal Debt Margin ($8,327,715) – that’s negative $8,327,715.

    Legal Debt Margin (%) (6.71%) – that’s negative 6.71%.

    The future bond payments as of that time paint the picture for future taxpayer bond payments via property taxes.

    Add any non-referendum bonds issued after the 2014 filing to the below figures.

    Future Debt Service Requirements for Bond Debt listed above

    Years Ending — Principal —– Interest ——– Total
    2015 ——— $05,940,000 – $06,351,604 – $12,291,604
    2016 ——— $06,510,000 – $06,050,779 – $12,560,779
    2017 ——— $07,110,000 – $05,721,254 – $12,831,254
    2018 ——— $07,690,000 – $05,421,082 – $13,111,082
    2019 ——— $08,370,000 – $05,031,119 – $13,401,119
    2020-2024 —- $52,765,000 – $18,137,093 – $70,902,093
    2025-2029 —- $39,165,000 – $04,031,355 – $43,196,355

  7. McHenry County Conservation District Board of Trustee Meeting
    January 15, 2015.
    Board Minutes

    Trustees Present: David Brandt, President
    Kent Krautstrunk, Vice President
    Bona Heinsohn, Treasurer
    Brandon Thomas, Secretary
    Stephen Barrett
    David Kranz
    Trustees Absent: Pete Merkel

    “12.0 Trustees’ Reports

    Vice President Krautstrunk stated that he knew he had been quoted in the newspaper regarding a downgrading of the District’s Moody’s rating and wanted to clarify for the record that his comment was made prior to the passage of SB3341 /PA98-1168 and the implementation of PA98-1088 and the revised Moody’s
    outlook rating which is no longer negative.

    If he was to vote on the same acquisition issue on the date of this meeting, he would now vote in favor.”

    Takeaway: Taxing Districts whom “clarify” through state legislation they can issue non-referendum bonds receive (in this instance) a bond rating upgrade.

    Good deal for bondholders, not such a good deal for taxpayers.

  8. McHenry County Conservation District Board of Trustee Meetint
    February 19, 2015.
    Board Minutes

    Trustees Present:
    David Brandt, President
    Kent Krautstrunk, Vice President
    Bona Heinsohn, Treasurer
    Brandon Thomas, Secretary
    David Kranz

    Trustees Absent:
    Stephen Barrett
    Pete Merkel

    Senator Althoff received the Legislator of the Year Award from the Illinois Association of Park Districts.

    FY 2016 Tentative Budget & Appropriation Ordinance
    “The District has not increased the General Fund’s corporate levy for the last three years and the amount levied in 2014 is the same amount levied in 2011.

    The District is no longer at the maximum of the statutory rate cap due to a change in the Illinois Property Tax Code during the 98th Illinois General Assembly.

    The FY 2016 budget reflects the District’s continued commitment to provide McHenry County residents with the best the county has to offer while acknowledging a focus on alternative non-tax revenue, reducing
    expenditures and working with the existing resources available.

    Expenditure highlights were covered including the reduction in department operating budgets since FY 2010, wages, reduction in workforce by 3.5 FTE, increase in employee’s cost share for health insurance, and capital expenditures.” > About > Board of Trustees > Meetings > February 19, 2015 > Minutes

  9. McHenry County Conservation District Board of Trustee Meeting
    March 26, 2015
    Board Minutes

    Trustees Present:
    David Brandt, President
    Kent Krautstrunk, Vice President
    Bona Heinsohn, Treasurer
    Brandon Thomas, Secretary
    David Kranz
    Pete Merkel
    Stephen Barrett

    Presentation by McHenry County Conservation Foundation, the Land Conservancy of McHenry County, and Grand Victoria Foundation.

    President Brad Semel of the McHenry County Conservation Foundation reported on the recent purchase of 59 acres through the Land Conservancy of McHenry County which used a recent purchase by the District as a match for acquiring a grant from the Grand Victoria Foundation.

    He then presented a $60,000 check to the District to cover the purchase of the Breckenridge Parcel which is part of the Glacial Park Conservation Area.”

Leave a Reply

Your email address will not be published. Required fields are marked *