McHenry County Blog

On January 6, 2013, right on the top of the Sunday Chicago Tribune, there was an expose that should send warning flares up about the alternative revenue bonds that the majority of the McHenry County College Board seem set to issue.

The January 6, 2013, article by Joe Mahr and Joseph Ryan about small suburbs like Lakewood having made a decision that backfired on property taxpayers.

Alternative revenue bonds are ones ostensibly to be repaid by identified sources of revenue, for example in MCC’s case, an increase in student fees of $8 per hour, increased tuition from more enrollment and health club fees among other sources…

But, just in case, don’t you know, to be paid by property taxes if the projected revenues from the other non-real estate sources don’t bring in enough money.

The Tribune doesn’t look at junior colleges in its article. As the headline implies, it looks at “Small suburbs [that have] exploit[ed} tax loophole."

The sub-headline on the front page reads,

"Even in places where residents might expect tighter oversight, Illinois borrowing rules let towns sidestep voters, make decisions that can backfire on taxpayers"

McHenry County College taxpayers managed

• not to step in the Briar Patch when the Board wanted to borrow, without asking voters at the ballot box, $25 million to finance a minor league baseball stadium,
• but are facing a similar entangling long-term obligation in current Board members' desired to borrow, without voter approval, $45 million to build a health club and new classrooms (even while only using the classrooms 45% of the time).

Lakewood’s Red Tail Golf Course, purchased with revenue bonds which could not be repaid without forcing real estate taxes up.

The story describes alternative revenue bonds as a

“device that lets towns borrow in a way that sidesteps voters and property tax caps.

• The catch for towns:  They must be able to foresee paying off the loans without raising property taxes.
• The catch for residents:  If towns’ projections are wrong, taxes are automatically hiked to make the loan payments.

= = = = =

More tomorrow.

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.”

A ress release from the Village of Lakewood:

Christmas Light Recycling

Don’t throw away your tangled, frayed or burned-out Christmas lights this year!

In support of the Strategic Plan goal to be “green” mindful and sustainable, the Village will offer recycling of Christmas tree lights and extension cords.

A receptacle will be available inside Village Hall at 2500 Lake Avenue through January 31, 2013. Items may be dropped off during business hours, Monday through Friday, 8:30 a.m. to 4:30 p.m.

Acceptable items are:

• Mini-lights (also known as Italian lights)
• C7 lights
• C9 lights
• Rope lights,
• LED lights
• Extension cords

Special thanks to Elgin Recycling for partnering with the Village to promote sustainability in the community. For further information contact Village Hall at (815) 459-3025.

Erin Smith

Incumbent Lakewood Village President Erin Smith and two incumbent trustees filed for re-election on the first day of filing.

The two incumbent Trustees are

Gene Furey

Jeff Iden

• Gene Furey
• Jeff Iden

For the third open Board seat, Beverly Thomas has filed.

Filing is open until the close of business on December 26th.

Those thinking about running need to file a Statement of Economic Interest with the County Clerk and attach it with a staple to one’s petitions and Statement of Candidacy. And, be sure to number the pages.

The final part of Lakewood Village President Ern Smith’s winter newsletter follows:

Electrical Aggregation

Despite “Vote No” signs in the area opposing the bulk buying of electricity supervised by municipal governments, Lakewood and Crystal Lake residents voted in favor.

In the spring of 2012, our residents approved a referendum [results for all such referendums at link] by the widest margin in McHenry County to implement a municipal aggregation program for electricity.

Our results were better than hoped for, as we were able to secure some of the lowest electrical generation rates in the state of Illinois at less than half of the rate from ComEd.

We estimated that this program would save our residents between $300 and $350 annually.

However, the Illinois Commerce Commission (ICC) has initiated rulemaking that will negatively impact current and future municipal aggregation programs.

The ICC has chosen to undertake this process even though the General Assembly made it clear when it passed the enabling legislation that the ICC has no authority to regulate municipal aggregation programs.

The Village of Lakewood has chosen to work with 83 other communities as a part of a coalition to maintain our existing municipal aggregation program and fight the overreach of the ICC.

You can help us by contacting the following officials to express your support for the existing municipal aggregation program that you chose via a referendum:

• ICC Chairman Doug Scott at (800) 524-0795
• State Senator Pamela Althoff at (815) 455-8284
• State Representative Michael Tryon at (815) 455-8284

New Business

I am very pleased to announce the opening of our newest business at Lakewood Commons – Tres Chic Boutique. It is a full service salon that will offer a wide range of services in a beautiful setting. The opening is tentatively scheduled for February 1, so please check our website regularly as the date approaches and be prepared to help support our newest business.

With this upcoming opening, only four of the original thirteen units at Lakewood Commons remain vacant. The owner is in the midst of installing a new sign that will help identify businesses, which is one of the most frequent requests we hear. In addition, a successful entrepreneur (who currently has two businesses) would like to open a Mexican restaurant in two of the remaining four units. However, much of his capital is tied up in his existing businesses, so he is seeking opportunities for investors or other loan programs. Please contact Village Manager Catherine Peterson directly for further information. Remember – our residents are our greatest resource!

As always, I encourage you to contact me or any of our officials with questions regarding any of the projects highlighted in the newsletter or that you might read about elsewhere.

Sincerely,

Erin

Erin Smith

This in a continuation of the the winter newsletter from Lakewood Village President Erin Smith.

Bicycle Path for Lakewood Road and Lake Avenue

Our residents have consistently identified the construction of bicycle paths along major arterial streets as a priority for our community.

This is a significant financial challenge, because the cost to retrofit an existing roadway with bicycle paths is much higher than to build them simultaneously.

Staff was successful in obtaining a nearly $425,000 grant to build the path along Huntley Road, and it has been very well received by residents.

Lakewood Road runs north-south through the village.

After having three grant requests for a Lakewood Road bicycle path rejected by several agencies, I am very pleased to report that staff has successfully secured a grant in an amount of approximately $1.4M that will pay for the repaving of Lakewood Road from Haligus Road to Ackman Road, along with the installation of bicycle paths (similar to those installed along Huntley Road) along the roadway.

Bike paths like this are on both sides of Huntley Road.  In the future, similar paths will be built on Lake Avenue from Huntley Road to the Crystal Lake-Lakewood Village limits, plus on both sides of Lakewood Road.

In addition, staff secured an additional grant in an amount of approximately $400,000 to pay for repaving of Lake Avenue from Huntley Road to our western boundary at Village Hall, along with the installation of bicycle paths.

This new path will connect to the recently completed Huntley Road bicycle path.

In total, staff obtained approximately in $1.8M in grant funds that will both repave existing roads and install bicycle paths along major arterial streets. Construction cannot begin until 2016, but the engineering work will be budgeted in the upcoming fiscal year. This is a significant achievement for a small community with an annual roadway budget of approximately $250,000.

More tomorrow.

Erin Smith

Following is the winter newsletter from Lakewood Village President Erin Smith:

From the President

Dear Neighbors:

On behalf of the Board of Trustees, we want to extend our very best wishes for a joyous holiday season to each of you and your families.

There are a number of issues and projects which merit mention, and these are summarized below:

Village Hall

Lakewood Village Hall

Several months ago, the Village was approached by a consortium of firms which work to create efficiencies via public – private partnerships. They proposed such a partnership to build a new Village Hall/Police Station. All of the work proposed in the initial phase of evaluation was to be performed at no cost and no risk or obligation to the Village, so we chose to proceed. There were five basic components to this evaluation, including:

Demonstrate Need – While there was anecdotal evidence that a new Village Hall and Police Station is needed, this analysis revealed

• the full extent of non-compliance. Issues range from non-compliance with building codes and the Americans with Disabilities Act;
• no secured or confidential location for information or meetings; and
• a lack of a meeting space for the Board of Trustees.

Most importantly, however, the existing building does not maintain the necessary separation between the two critical government functions – Administration and Police – which creates an unsafe environment for residents and staff. Within the Police Department, there are not separate holding rooms for adults and juveniles; there is no separate waiting area for victims; the evidence room is not compliant; etc.

There is agreement among the Board of Trustees that a new Village Hall/Police Station is needed.

Existing Site – The existing site is simply not large enough to support an expansion of the current facility. This begs the question – what should be done with the existing site? Four possible scenarios have been discussed at a very preliminary level:

• open space;
• two single family lots of approximately ½ acre each;
• a small multi unit condo building; and
• a restaurant.

If the Board of Trustees chooses to move forward, a market analysis or sounding would be conducted by the consortium to help determine the feasibility of each of these uses as well as the highest and best use from a financial perspective.

Simply stated, the current site is too valuable for a municipal building.

Any proceeds from the sale or lease of the land would be used to offset a portion of the costs of a new facility.

New Site– Two sites were evaluated for the new location of a Village Hall/Police Station.

First cut of a site plan for a new Village Hall at Haligus Road south of the sewage treatment plant.

• The first was a privately held parcel off Huntley Road, with the idea of creating a mixed use town center. For a variety of reasons – acquisition costs, site development costs as a result of wetlands, and market forces— this site was taken out of consideration.
• Attention was then directed towards the site on Haligus Road currently owned by the Village (just south of the wastewater treatment plant). Since it is already owned by the Village, there are no acquisition costs. In addition, its topography is conducive to site development and has ample space for the creation of a future gathering place. For these reasons, the Board of Trustees is agreed that Haligus Road is the preferred site for a new Village Hall/Police Station.

New Facility – The architectural firm affiliated with the consortium has a strong background in public safety buildings and, after a series of meetings with staff, the consortium has determined that a Village Hall/Police Station would need to be approximately 9,000 sq feet and have a total cost of approximately $3.7M.

Financing – Given the Village’s AAA bond rating, the consultants estimate that the Village could issue debt certificates at an interest rate of between 2.5% and 3.0%. Debt certificates are different than General Obligation or Alternative Revenue bonds because taxes cannot be levied to pay for them.  [Revenue bonds were sold to finance the purchase of the golf club.  However, the Board at the time decided to guarantee payment with increased property taxes.  That led to approximately a $500 annual surcharge on Lakewood homes for twenty years.  The bonds were paid off last year and Lakewood taxes went down a lot this year.]

The Board of Trustees is absolutely committed to insuring that no new taxes will ever be imposed to pay for a new Village Hall/Police Station.

The decision currently before the Board of Trustees is whether to enter into an agreement to spend no less than $30,000 and no more than $50,000 to perform the studies needed to further refine the high level analysis conducted during the first phase. These studies would include such information as a topographical survey for the existing site (no such record currently exists), an environmental assessment of the Haligus Road site, soil borings, etc. All of this data would become the property of the Village of Lakewood. Detailed renderings of the facility would also be completed but would remain the property of the consortium unless the Village chooses to move forward with the project.

Prior to expending any funds, the Board of Trustees has directed the staff to conduct an analysis of existing revenue streams to identify the sources of funding for the annual payment needed to pay for such a facility. This report is expected to be completed after the New Year and will be discussed publicly at an upcoming meeting. Please review the meetings agendas that are posted online prior to a meeting or call Village Hall to determine the timing. As always, we are interested in feedback you have regarding any aspect of this project.

More tomorrow.

The man-eating plant in the movie “The Little Shop of Horrors” is only slightly less dangerous than Illinois tax districts at tax levy time.

This is the season that taxpayers should be attending municipal meetings.

It’s when village trustees, city councilmen and aldermen decide how much to raise your taxes next year.

I almost added “if any” to the above sentence, but raising taxes is the nature of the beast called tax district.

“Feed me! Feed me!” one can almost hear the various types of school districts howling.

Just like in the “Little Shop of Horrors.”

Last Tuesday night I attended the Lakewood Village Board meeting.

After the group seeking a public-private partnership to build a new Village Hall left disappointed after Village Board members wanted more assurance that the estimated $3 million to be borrowed (out of about a $4 million total cost), the Board moved onto the tax levy.

Village President Erin Smith laid out three options:

1. “Captur[ing] the tax we are able to tax (that is, taking as much as possible)
2. “a ‘we never get that money back option’
3. “the Woodstock option–defer [the final decision] until we have more information option”

The third option would allow for an abatement of some or all of the tax increase on current taxpayers.

The Property Tax Cap, which Board members referred to by the initials of the statute’s name, PTELL, allows every tax district to pry 3% more out of taxpayers’ collective pockets next spring than this year.

In addition, tax districts are allowed to “capture” new growth.

That is estimated to be 26/100 of 1%.

One can certainly make an argument that tax revenue from newly-built or re-modeled properties, such as those along Route 14 in Crystal Lake, should contribute tax revenues.

If the amount requested next year were the same as this year, the new assessed valuation would actually bring about a tax cut for existing taxpayers.

But the nature of government is to grow, so that rarely happens.

In any event, to get maximum taxes from the new growth, a tax district must basically guess what it will be.  The actual number is not known until after all the assessment appeals have been complete.

Recommended to the Lakewood Board was the third option.

Pass what is called a “balloon” levy now which asks for the 3% increase in the Consumer Price Index, plus the County’s estimate of “new growth” and, then, when the final assessment appeal numbers are in, take another look to see if the Board wants to cut back the amount it is requesting.

Trustee Carl Davis argued, “Go for the maximum PTELL will allow.”

He pointed out that property taxes are not the only source of revenue the Village has, but it is “the only source deductible from Federal income taxes.”

Davis pointed out that vehicle stickers are not deductible and suggested eliminating that $65,000 revenue source instead of cutting property taxes.

Needless to say, I made a pitch from the taxpayers’ point of view.

The Board voted 6-0 to levy the maximum amount of taxes allowed by law with the understanding its members would re-visit the issue once the final assessment numbers are known.

A consortium led by Draper and Kramer make another presentation to the Lakewood Village Board Tuesday night.

Draper & Kramer consortium members who are seeking to build a Lakewood Village Hall.  Front row from left: Nancy Kiernan – FCL Builders ,Rick Ehlert – BKV Group (architects); middle left: Spencer Skinner – BKV Group,Larry DiVito – Draper and Kramer and the construction manager whose name I did not catch; and back row: Wayne Pierce – Stern Brothers & Co and Nicholas Marrocco – Gateway Development Partners.

They were seeking approval to spend $30-50,000 to develop preliminary plans for a village hall and police station on ten acres owned by the Village on Haligus Road.

An estimated cost for the 9,000 to 10,000 square foot building was just under $3.8 million. The $30-50,000 Phase 1 expenditure would be out-of-pocket costs for preliminary plans for the Village Hall, evaluation of the site’s suitability, etc.

I have to admit I thought the Board had agreed in August to have a public meeting to explain the need for a new Village Hall, but it became obvious that my expectations for more citizen involvement didn’t materialize Tuesday night. I had hoped for an emailed notice to Village residents, but notice seems to have been limited to the agenda that I would not have looked at if I had not been given a “heads up” by a fellow resident.

The decision on approving the Phase 1 was put off pending an analysis of how the Village could pay off the approximately $200,000 per year. Village Administrator Catherine Peterson said she could not have it ready by the next Board meeting, but would sometime thereafter.

She thinks the Village will have to borrow about $3 million, counting on the Crystal Lake frontage where the current Village Hall sits to provide a million dollars.

These townhouses on North Harrison Street in Algonquin overlook the Fox River. Would something similar maximize the value of the land where the current Lakewood Village Hall is located?

It could either be bought by the Park District for open space, sold for residential use, even for townhouses as can be seen on North Harrison Street in Algonquin or used as a restaurant which would be the only one overlooking Crystal Lake.

Smith told the Board that there had been “preliminary inquires for a restaurant.” Such a use would providing not only real estate tax but sales tax revenue.

“We have to come up with $200,000 per year. Where are we going to get $200,000 a year?” Trustee Gene Furey wanted to know.

Gary Sexson, another Trustee, said, “I definitely understand the needs. They’re huge.

“I’m concerned that this [consortium] is the only game in town. I don’t want to approve it tonight. We need more discussion among ourselves…I need to chew on it.”

Proposed Lakewood Village site plan.  Not all of this conceptual plan for the ten acres the Village of Lakewood owns next to its Fire Station is included in the $4 million plan proposed Tuesday night. The amphitheater and gazebo at the back of the property are just to show what could be developed later. Click to enlarge.

Retiring Trustee John Burton wanted to know if the Red Tail Golf Course land had been considered.

It was not, Smith told him, because she didn’t think that residential area was and an “appropriate” location for a police station. [One would not that the current police station is in a residential neighborhood.]

“We directed them to look at two sites,” Smith said. The other was at an unidentified lot on Huntley Road.

“Three million dollars is well within the Village’s [ability to pay}," Burton observed.

Perhaps complicating the analysis is the uncertainty of the cost of fire protection in the future.

Peterson said the next agreement faced "very challenging discussions" with the Woodstock Fire Protection District.

Partially because of the purchase of a farm on the west side of Route 47 and the north-south jag of Route 176, the twenty years of payments would be lower in the beginning and increase when that purchase is completed.

The financial advisor from Stern Brothers estimated the interest rate would be from 2.5 to 3%. Lakewood has a Triple A bond rating.

Village President Erin Smith framed the issue like this:

"If you believe we need a new Village Hall, [do you think it would be useful to have this background information]? If you think we don’t need one, are we a real grown up town or not?”

She pointed out that the current Village Hall does not have a place for juveniles. In one instance a family who had been victimized by teen walked right past him in the lobby of the Village Hall. A violation of state law is involved.

Separating victims of domestic violence from those accused thereof is also a problem caused by the lack of space.

Trustee Carl Davis asked where the $30-50,000 would come from.

Administrator Peterson said it could be obtained either from reserves or even from the current budget, whose current revenue is running higher than expected.

“We have to talk about how much we want to spend,” Trustee Jeff Iden said. “We haven’t been given any number of what we can afford.”

Specific questions were made of the various line items in the tentative budget.

“We have a duty to squeeze your margins,” Smith told the members of the consortium.

Haligus Road was selected as a way to start a “Town Center” of the future, as Lakewood grows to the west.

A “We are here in the Village of Lakewood and things are going on here” approach.

A letter arrived in the mail today from Erin Smith.

She is the Village President of Lakewood, where I live.

I wondered if she was announcing she is running for re-election, thinking that I hadn’t written a story about that and all of the incumbent trustees but John Burton’s decision to do the same.

But, not.

It was an endorsement letter for McHenry County Board candidate and Chairman Ken Koehler.

Koehler worked with Lakewood on the SportsPlex, so the endorsement didn’t surprise me.

You can see the letter below:

The endorsement letter of Ken Koehler from Lakewood Village President Erin Smith.

Smith relates how Koehler has worked closely with Lakewood “on a variety of issues. She notes the county’s sound financial standing as opposed to those of state government.

I found the following interesting:

“As some people criticize Ken’s influence at the county, state and federal level, it is important to keep in mind that his influence has grown based on trust and credibility. And there is only one way to establish credibility–you do what you said you were going to to. Ken established credibility with his fellow board members and other elected officials by accomplishing the things we defined as priorities.”

Interesting to see how Koehler is viewed by an elected official who has worked with him.

Here’s the palm card that was inside the envelope:

The Ken Koehler palm card that was enclosed in Erin Smith’s envelope.

Here’s the back of the Koehler palm card:

Click to enlarge so you can read the small print on the back of Ken Koehler’s palm card.