Is Fox River Grove Really Debt Free?

Last week the Village of Fox River Grove issued a press release claiming to be “debt free.”

Commenter Mark took a look and found the following:

The Village of Fox River Grove press release ignores their own FY 2019 Annual Financial Report which states long term debt includes the IMRF pension unfunded liability of $439,821 (94% funded).

In other words rather than being debt free after taking “…action to eliminate all of the village’s outstanding debt, $3,262,746.25 to be exact…” the village has $439,821 in pension debt remaining.

The village would better serve its residents by explaining all forms of long term debt rather than cherry picking and proclaiming itself debt free by ignoring its own AFR

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Here is one definition of unfunded liabilities.

“Unfunded liabilities are debt obligations that do not have sufficient funds set aside to pay the debt.”

http://www.thebalance.com/unfunded-liabilities-definition-and-examples-4159564

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Separate from Village government, but still a future tax burden on Fox River Grove propeety owners is the pension deficit for the Fox River Grove Fire Protection District. Its unfunded liability is $5,972,582 (36% funded).

36% funded is below average for a Downstate Fire pension fund and awful by any measure.


Comments

Is Fox River Grove Really Debt Free? — 5 Comments

  1. Answer to Post: Of Course it isn’t.

    FRG is way overstaffed.

    I should know.

    I live here!!!!!!!!

  2. The municipal tax monkeys think the taxpayers are there to be milked.

    People are moving.

    But Fox River Grove homes aren’t moving on the realty market.

    Who in their right mind would move there?

  3. The Village of Fox River Grove is not debt free.

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    The village has two forms of pension debt known as an unfunded pension liability (net pension liability).

    IMRF debt of $439,821.

    Downstate Police debt of $5,972,582.

    Total IMRF & Downstate Police debt: $6,412,403.

    ++++++++++

    In addition the Village has an OPEB liability of $365,940.

    This from the Village’s FY 2019 CAFR, pdf page 75 of 127:

    “Retirees and their dependents are responsible for the FULL COST OF COVERAGE and may continue coverage past Medicare eligibility.” –

    One would have to confirm with the Village what that means.

    Does it mean the Village is not contributing a dime to the cost of the RBP plan, that it is entirely funded by retirees.

    Or is the Village and thus taxpayers responsible for all or a portion of the OPEB liability.

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    OBEP = Other Post Employment Benefits, aka retiree healthcare.

    The village calls it’s OBEP plan the Retiree Benefits Plan (RBP).

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    To make the Village’s debt meaningful to the average taxpayer, one can express the debt as a percentage of EAV, and ballpark that as a percentage of market value, defining market value as 3x EAV.

    Local property taxpayers are responsible for the IMRF and Downstate Police pension debt.

    IMRF and Downstate Police are not state responsibilities.

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    In addition to that, it’s not possible for the average person to cross reference the village’s press release with it’s AFR.

    This from the December 4, 2019 Village of Fox River Grove press release.

    “At its December 3rd meeting, the Village Board took action to eliminate all of the Village’s outstanding debt, $3,262,746.25 to be exact, a move that will yield the Village approximately $280,000 in net interest savings over the next ten years.”

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    This from the Village’s FY 2019 CAFR:

    General Obligation Bonds: $630,000 (plus interest of $132,451)

    Debt Certificates: $2,540,000 (plus interest of $1,019,054)

    Notes Payable: $1,500,000

    Total: $4,670,000

    There could be various reasons for the discrepancy.

    So the Village would better serve its residents being more specific about the General Obligation Bonds, Debt Certificates, and Notes Payable that were retired, and if any of that debt remains.

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    Looking further into the Village’s FY 2019 AFR we find this, which further clarifies the debt in the CAFR:

    Tax Increment Financing Notes Payble of 2004 – Due from incremental real estate taxes, when available, with an interest rate of 7.50%: $1,500,000.

    General Obligation (Alternate Revenue Source) Bonds of 2010A – Due in annual installments of $68,000 to $120,000 plus interest at 3.60% to 5.80% through December 15, 2024: $630,000.

    Debt Certificates of 2010 – Due in annual installments of $150,000 to $305,000 plus interest at 4.20% to 6.30% through December 15, 2029: $2,540,000.

    Total: $4,670,000.

  4. $4,670,000 – $3,262,746 = $1,407,254.

    $1,407,254 is roughly the amount of the $1,500 TIF Note Payable of 2004 which is due from incremental real estate taxes, when available, with an interest rate of 7.5%.

    Apparently the Village borrowed $1,500,000, and accrues 7.5% interest on that debt, and pays back the principal and interest as incremental real estate taxes are generated over and above the frozen amount.

    And apparently that 2004 TIF Note Payable has not been fully retired.

    How much if any has been retired?

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    Anyways there is $6,412,403 pension debt at the Fox River Grove property taxing district.

    The pension debt being the unfunded pension liability (net pension liability) for IMRF & Downstate Police pensions.

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    Now let’s try to equate the pension debt to the owner of a $300,000 house.

    This is a ballpark estimate as various factors come into play.

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    The majority of Fox River Grove is in McHenry County (Algonquin Township), and the remainder is in Lake County (Cuba Township).

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    McHenry County Clerk 2018 Tax Year Tax Computation Report (available on the county clerk website).

    pdf page 285 of 310 contains the Taxing District VCFG – Fox River Grove Village.

    The “Overlap” figures include the Lake County portion of the Village of Fox River Grove.

    The Total + Overlap (includes Lake County portion), Rate Setting EAV (excludes TIFs) is $138,419,493.

    EAV is about 1/3 of market value.

    So ballpark the market value of property in VCFG at $138,319,493 x 3 = $419,958,479.

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    The pension debt (IMRF + Downstate Police unfunded liability aka net pension liability) is $6,412,403.

    $6,412,403 / $419,958,479 = 1.526913568%.

    Fox River Grove pension debt is roughly 1.53% of the market value of the property in Fox River Grove.

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    1.526913568% x property market value = pension debt owed by property owners in Fox River Grove, to the Village of Fox River Grove.

    Calculating the pension debt owed to the Village of Fox River Grove on a property valued at $300,000.

    $300,000 house x .01526913568 = $4,581 pension debt owed to to the Village of Fox River Grove by the owner of a $300,000 property.

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    One can do the same for all the property taxing districts on their property tax bill.

    Depending on where one lives in Fox River Grove that varies.

    Commonly included are:

    – McHenry County

    – McHenry County Conservation District

    – McHenry County College

    – Fox River Grove Elementary School

    – CHSD 155 (high school district that includes Cary Grove High School)

    – Fox River Grove Fire Protection District

    – Fox River Grove Library District

    – Algonquin Township

    – Algonquin Township Road and Bridge

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    Other configurations may include:

    – Harper Community College instead of McHenry County College

    – Barrington CUSD 220 instead of Fox River Grove Elementary School & CHSD 155

    – Barrington Library District instead of Fox River Grove Library District

    – Barrington Hills Park District

    – Fox River Grove Gardner Terrace SSA (special service area)

    – Fox River Grove TIF (tax increment finance)

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    Common types of local government debt:

    – unfunded pensions (net pension liability)

    – bonds and other borrowing instruments (certificates, notes, etc.)

    – Retiree healthcare aka OPEB aka Other Post Employment Benefits

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