McHenry County Blog

Not only does the McHenry area have a ten cents per $100 of assessed value referendum on the ballot to create a new countywide taxing district the $9 million proceeds (first year’s estimate tax take) of which will go to help developmentally disadvantaged individuals, but there’s a $2.2 million bond issue, too.

Here’s the referendum question that McHenry High School District voters will face.

In its February newsletter, the District explains,

“This opportunity would provide the district the ability to reinvest $2.2 million in interest savings. The savings generated will be spent on technology and necessary capital improvements, in particular, additional safety and security measures.”

Further,

“None of the money will be used for school administrator or teacher salaries. All of the money generated will be used for technology and capital improvements which include safety and security.

“If the question is unsuccessful, taxpayers who own a $200,000 home will see an average refund of $14.00 per year in the bond and interest portion of their tax bill over the next eight‐year payback period.

“If the question is successful, taxpayers will see no increase in the bond and interest portion of their tax bill.”

Details on planned expenditures can be found here.

Eight of the nine candidates for the McHenry County Board showed up to face a small fraction of the public at the MCC auditorium Monday night.

From left to right are Scott Alford, Chris Jenner, Carol Larson, Erik Sivertsen, Mike Smith, Molly Walsh, Arne Waltmire and Tom Wilbeck.

There were

• Scott Alford
• Chris Jenner
• Carol Larson
• Erik Sivertsen
• Mike Smith
• Molly Walsh
• Arne Waltmire
• Tom Wilbeck

Missing was long-time incumbent Barbara Walters.

From left to right are Scott Alford, Chris Jenner, Carol Larson, Erik Sivertsen, Mike Smith, Molly Walsh, Arne Waltmire and Tom Wilbeck.

There was really only one question I wanted answered and that was whether the candidates would borrow tens of millions of dollars without asking permission in a referendum.

There was good news. All but incumbent Larson seems to say they would not. And, of course, there was no answer from Walters.

Here’s what was said in answer to a question asking whether they would favor such a referendum:

• Alford – “The taxpayers need to make the decision.”
• Jenner – “I would require the permission of taxpayers to raise taxes.
• Larson – “I would not be for a referendum now. Referendums are expensive and they don’t usually pass.”
• Sivertsen – I think it’s important [to hold a referendum] before the college issues bonds.”
• Smith – “I would.”
• Walsh – “Yes, any expansion plan should be community supported.”
• Waltmire – “If there’s a need to build, the Board should take [it} out to the community.”
• Wilbeck – “Absolutely. 61% comes from the taxpayers. The use of alternative revenue bonds is not really a good funding source.”

For $35 you can meet and mingle with those who support Lakewood’s Tom Wilbeck for McHenry County College Board.

On his invitation, Wilbeck stresses,

“Tom is opposed to MCC issuing bonds for expansion without voter approval.”

The event will be held at the London Club, which is across the street from 1776, on March 14th.

Details are below:

The top of the Jan. 30th Tribune article.

David McSweeney knows how to pick ‘em.

And Jack Franks has been a master of gaining publicity for virtually his entire 14-year legislative career.

McSweeney came up with the idea to reform the alternative revenue bond process and had a bill drafted.

The changes he proposes and Franks buys into would give the taxpayer s of McHenry County College a change at defeating ill-conceived projects like the minor league baseball stadium and the proposed health club at the ballot box, rather than paying higher taxes for a couple of decades if the revenue stream identified to pay off non-referendum bonds turns into a trickle.

For those who don’t dip into McHenry County Blog that often, alternative bonds are a method approved by a previous state legislature that allow government entities, such as Lakewood with its early 1990′s golf course purchase, to borrow money for projects without going to referendum.

The premise in Lakewood’s case was that golf course revenues would pay off the bonds.

And who came up with the projections?

It was a golf course management company with no skin in the game.

I feel so personally involved because I and other Lakewood homeowners paid 53% of the cost of an amenity which I have never used.

The alternative bond document forced subsequent village trustees to flay repayments off the hides of us taxpayers.

McHenry County College is now trying to do this in order to build a health club and classrooms.

That addition space will cost a lot more than the now-re-named RedTail Golf Course, although the price per homeowner, if muscled through by the MCC Board and the revenue projected by the health club operator company Power Wellness don’t pan out, would probably be far less than the $500 a year that I remember paying.

There is currently a way that taxpayers can force a referendum when a taxing district like McHenry County College decides to borrow money without asking voters for permission, but the number of signatures needed on a petition is virtually impossible to gather.

In MCC’s case, state law now says that signatures of 7.5% of the registered voters must sign the petition.

That’s 7.5% of 182,766 voters.

Multiply that out.

My hand multiplication tells me that’s 13,709 signatures.

A bit more than the 500 that Jack Franks had to gather to put the County Executive referendum on the ballot, so he can certainly understand the statutory hurdle of those wishing to stop their tax bill from going up because of alternative revenue bonds.

The McSweeney-Franks bill would lower the petition signature number to 5% of the voters or 500 signatures, whichever is less.

The legislative proposal would also increase the length of time to gather those signatures from 30 to 90 days.

That would at least give the taxpayers a chance if the junior college decides it wants to borrow over $40 million without asking voters’ permission.

Besides the Tribune article on Wednesday and mine on Tuesday, the Northwest Herald has one today.

While the Tribune did not make the McHenry County College connection, the NWH did in its first sentence:

“Legislation filed this week in Springfield could make it harder for McHenry County College to fund its proposed expansion.”

And, the sub-headline reads, “The locally sponsored legislation could affect MCC plans.”

The article even mentions RedTail Golf Course.

The Crystal Lake Park District regularly sells bonds without a referendum. That’s how the West Beach House was financed. There are two seats on the Park Board which have no candidates. Two write-ins could win, but candidates have to register their intention to run. Email me if you are interested.

And a commenter under the article “Patrick F” of Cary points out that the Cary Park District was planning to buy a golf course (its second) with bonds not approved by voters.  (I believe he is mixing up the power that all park districts and other local tax districts that had non-referendum bonding in 1994–may be a year off.  State legislation I actively opposed allowed those with unpaid non-referendum bonds to forever use the amount being paid back in the year in question to finance new borrowing without voter approval.  That is how the Crystal Lake Park District is financing its new West Beach House.)

See articles summary of Tribune articles about what happened to Lakewood homeowners here:

• Lakewood Red(Ink)Tail Golf Club Alternative Revenue Bond Failure Featured in Chicago Tribune – Part 1
• Lakewood Red(Ink)Tail Golf Club Alternative Revenue Bond Failure Featured in Chicago Tribune – Part 2

Tuesday’s McHenry County Blog article (“McSweeney and Franks Send Shot Across McHenry County College’s Bow) about newly-introduced House Bill 983 can be found here.

On January 7th, the Northwest Herald headline read, “MCC: No need to tap taxpayers,” The sub-headline read, “College says it won’t go to referendum for proposed expansion.”

Interpret this press release as you wish, but I think the bill is aimed at McHenry County College.

It could be aimed at abuses in Lakewood from over twenty years ago when the Village Board sold alternative revenue bonds to buy a golf course.

That abuse, in which Lakewood sold bonds backed by golf course revenues which fell 53% short of paying back the borrowed money, was featured, along with other similar, non-Home Rule municipal abuses in which villages made an end-run around taxpayers was featured in the Sunday Chicago Tribune on January 6th.

January 6th was one day before the Northwest Herald ran an article on its front page reassuring readers that tax dollars wold not be needed to pay for the proposed more than $40-plus million health club, et al.

In any event, here is the joint press release:

McSweeney-Franks Aim to End Alternate Revenue Bond Abuses

McHenry County –State Representative David McSweeney (R-Barrington Hills) and State Representative Jack Franks (D-Marengo) have filed HB983; a bipartisan effort to ensure greater fiscal accountability.

Recent press reports have exposed how the current alternate revenue bond law has facilitated risky deals that have resulted in increased local taxes.

If passed, the new legislation would address the ease at which alternative revenue bonds are issued because the current process sidesteps taxpayers and property tax caps in many cases.

David McSweeney

“This is a common sense bill that allows taxpayers to more easily organize a referendum to oppose local borrowing proposals,” said McSweeney.

“We are talking about large sums of taxpayer money.

“Property taxes are skyrocketing while local governments keep borrowing for what they want and cannot afford.”

For alternate revenue bonds, HB 983 provides for measures to encourage fiscal responsibility by making the Chief Procurement officer [a state official] responsible for providing accurate information about how alternate revenue bonds would be paid off.

Local governments would no longer be able to use consultants to do this important work.

Revenues from the venture should be able to pay off 150% of the debt; this is being increased from 100%.

Finally, the bill extends the allowance for petition signatures for a backdoor referendum from 30 to 90 days and in order to initiate a referendum this bill would require the lesser of 5% (currently 7.5%) of registered voters in the governmental unit or 500 signatures of those registered voters.

The most significant change is to require only 500 signatures to initiate a backdoor referendum.

Jack Franks

“Municipalities have little oversight when it comes to borrowing millions of dollars which often times end up being a back door tax hike on residents, ” added Franks.

“Oversight needs to be put into the hands of the taxpayers. We must increase accountability for our taxing bodies and empower the taxpayers to serve as fiscal guardians.”

Rep. McSweeney is Chief Sponsor of HB983 and Rep. Franks signed on as Chief Co-Sponsor. The legislation was filed yesterday.

The Illinois Finance Authority sold tax exempt bonds for the Leaf’s Hockey Club in West Dundee in 2007.

Almost $20 million worth “with no equity at risk,” reports Crane’s Chicago Business.

In this case, the bondholders are left holding the bag and not the taxpayers.

But what if McHenry County College had sold $25 million in bonds to build a minor league baseball stadium?

You and I would have had to pay them off, the same way that Lakewood residents ended up paying off 53 percent of the cost of the golf course that village trustees assured me would not “cost me a dime.”

It is my understanding that the $45 million health club, etc., addition to McHenry County College will have no monetary investment from the health club.

No one needs to guess who will end up paying back the borrowed money, if the projections–made by a health club operator–don’t pan out.

The complex in Lake Barrington.

There’s a mention in the article of the sports complex in Lake Barrington, too:

“‘The one non-ice facility, the Lake Barrington Field House—”the largest multi-sport and fitness complex in the Midwest,’ according to its website—also is in foreclosure and has been taken over by a receiver after defaulting on $28.5 million in bonds sold in 2007, according to Wells Fargo Bank N.A., a trustee for bondholders.”

88,600 of these newsletter were printed. The Appellate Court ruled, “There is simply no evidence that these newsletters were exempted communications ‘made as part of a non-partisan activity designed to encourage individuals to vote or to register to vote.’”

Here is a press release explaining the successful conclusion–from a taxpayer’s point of view–of a suit to stop taxeating local governments from promoting their tax increase referendums.  Although it did not originate in McHenry County, it will affect school districts, for example, when they seek tax hikes.

C.O.S.T. & DISTRICT 225 SETTLE CAMPAIGN DISCLOSURE COMPLAINT

Citizens Organized to Save the Tax-cap opposed a 2006 $94 million bond referendum proposed by Glenbrook H. S. Dist 225. At the November 7, 2006, general election, out of 31,338 votes cast, the Referendum Question was approved by a margin of 216 votes.

COST filed a complaint with the Illinois State Board of Elections charging that Dist 225 had spent public funds for campaign mailers, and should register as a political committee and file disclosure of all election spending.

The ISBE dismissed COST’s Complaint. COST successfully appealed to the Illinois Appellate Court.

In May 2009, the Illinois Appellate Court reversed the Board of Elections and unanimously ruled against the District, stating:

“Nothing in the statute (Election Code) suggests that it serves to absolutely exempt government entities from the disclosure requirements contained in the remainder of the Election Code.”

[Glenbrook High School] District 225 petitioned to the Illinois Supreme Court to overturn the Appellate Court, and the District was denied leave to appeal to the Illinois Supreme Court.

COST’s Complaint was then remanded to the ISBE for Public Hearing on the charges.

As the Complaint sought transparency and disclosure of Dist 225’s referendum election spending of public funds and public resources, the parties have reached a settlement which contains that disclosure and provides that the District will publish that disclosure.

Settlement of the Complaint by District 225 and COST was approved by the State Board of Elections today.

Lawrence T. Miller, Chairman of COST said,

“Our objective in filing the Complaint, and in the appeal to the Illinois Appellate Court, was to establish that all districts using taxpayers’ money and resources for electioneering ought to be required to file spending reports just as any other group in an election campaign would.

“We think it is wrong for a government entity to spend taxpayers’ money to pass a referendum that half of those very same taxpayers opposed.”

“The School District discloses in this Settlement Agreement that they spent over $60,000 in district funds, property, and employees’ time in connection with the 2006 referendum. That’s nearly three times what the Political Committee (V.O.T.E.) supporting the Referendum spent,” said Miller.

Click on the image to see what Northfield Township High School District admitted spending on its 2006 bond referendum that barely passed.

The Settlement Proposal appears on the ISBE agenda for its August 24, 2012 meeting. The Settlement agreement, without exhibits, appears at pages 110 to 123 of the ISBE agenda.

http://www.elections.state.il.us/DocDisplay.aspx?Doc=Downloads/AboutTheBoard/PDF/08_24_12Agenda.pdf

= = = = =

You can read the settlement here.

The Board of Education members at the time were Donna Rose Torf, Skip Shein, Wayne B. Berzon, Robert A. Boron, Steve G. Hammer, William Jeffrey and Elias Metsakis.

The COST complaint alleges “that since at least September of 2006 and through the November 7, 2006, election, the District carried out a planned campaign prepared by William Blair Co.”

The entrance to the Island Lake Village Hall.

Taxpayers in Island Lake are passing petitions to force a vote on whether the Village Board can sell bonds to build a new village hall,

One of them is Jot Ptak, who ran unsuccessfully ran for the Village Board in 2011 and is known nationwide for forcing the League of Women Voters to allow the Pledge of Allegiance at the debate between Joe Walsh and Melissa Bea.

Ptak told McHenry County Blog,

“Many of us are collecting more than enough petition signatures necessary to put this NO NEW VILLAGE HALL  referendum on the ballot in November.”

The required number of registered voter signatures for referendum in Island Lake is 78.

The petition will be filed Monday.

The proposed entrance to the minor league baseball stadium that struck out.

As the McHenry County College Board and a majority of the Crystal Lake City Council learned, most people don’t think their tax dollars should be used to prop up those wanting to build sports stadiums.

Now, Crain’s Chicago Business has popped for a 600-person survey on the subject.

Aimed at the efforts of the owners of Wrigley Field and the United Center to secure government subsidies, the survey, of course, does not mention the efforts of the MCC Board to force taxpayers to be the backup source to pay off millions and millions of dollars of bonds, if the proposed minor leage baseball team went belly up.

But, I imagine there would be similar results if MCC taxpayers or Woodstock taxpayers were asked if they wanted to shell out tax dollars to help pay for a sports stadium.

Quoting from the story:

“A whopping 80 percent — the majorities were overwhelming in Chicago, the suburbs and elsewhere — are opposed, agreeing that teams ‘as companies should pay their full tax no matter what.’”

That dropped to 50% against when the Cubs and United Center proposals were outlined, a bit lower in the suburbs (where, I would note, there would not be a cost for the proposed Chicago tax breaks for the stadium owners).

The McHenry County College Board is planning to refinance $2.2 million of bonds and, thank goodness, they are not for the minor league baseball stadium the Board and President Walt Packard were pushing.

McHenry County College has $2.2 million in outstanding bonds, issued apparently without a referendum, for which interest higher than market rate is being paid.

The Board is scheduled to refinance them at Thursday’s meeting and save 2.5 percentage points, as I read the Board packet.

If my reading is correct, the college will save about $55,000.