Scott Coffey’s Thoughts on LITH Sanitary District Bond Implications

Here are some more thoughts on the Lake in the Hills Sanitary District consolidation question from Cary Grade School Board member Scott Coffey:

Lake in the Hills Sanitary District treatment facility.

Since my comment has been elevated to its own post, I’d thought I’d delve a little deeper into the topic.

Piggybacking onto the issue of changing the revenue model to usage-based only, the other potential issue is the potential inequity in revenue burden to be borne by residential customers versus commercial/industrial customers.

With the proposed elimination of the levy, commercial/industrial properties that currently carry a larger burden due to the higher EAV’s of their properties would probably see a substantial net savings under the new proposal with residential customers making up the shortfall.

I don’t know if that is a bug or a feature of the proposal or an unintended consequence.

One would have to run the numbers to determine this impact.

Next, I believe the Sanitary District currently has about $4.8 million in outstanding debt.

Debt service payments stretch out through 2039.

I’d highly recommend contacting bond counsel in order to navigate through the process of legally dissolving the Sanitary District, which is the statutory authority that issued these outstanding bonds.

As it relates to the plan to eliminate the levy, the following from the Bond disclosure statement may need to be considered:

“The Bonds are general obligations of the District, for which its full faith and credit has been irrevocably pledged, and are payable from ad valorem taxes levied upon all the taxable property in the District without limitation as to rate or amount (the “Pledged Taxes”), all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similiar laws relating to the enforcement of creditors’ rights and subject to the exercise of judicial discretion.”

Once again, the advice of Bond Counsel may prove useful in order to prevent against potentially violating the Security covenant by eliminating the levy which produces the “Pledged Taxes” to make the debt service payments, as required in the Bond Statement.

Lastly, the proposed dissolution of the Sanitary District into the Village of LITH basically disenfranchises the current Sanitary District voters that live in Crystal Lake and Huntley.

Today they have elected representatives to represent their interests related to matters pertaining to the Sanitary District operations.

[The LITH Sanitary District Trustees are appointed.]

Under the proposal, the Sanitary District operations will be controlled by officials elected only by the voters of LITH.

Decisions regarding rate increases, fees, capital projects, service, etc. would put Crystal Lake and Huntley residents at the mercy of officials elected by someone else.

Whether that is important to anybody (or not) would require one to ask the people potentially impacted.


Comments

Scott Coffey’s Thoughts on LITH Sanitary District Bond Implications — 2 Comments

  1. Village of Lake in the Hills

    Committee of the Whole meeting

    February 21, 2017

    Board Agenda Packet

    – pdf page 79 contains a one page memo dated February 21, 2017 stating on February 9, 2017 the Village President proposed dissolution of the Lake in the Hills Sanitary District.

    – pdf pages 80 – 84 contain a staff report from the village administrator to the village president regarding consolidation of the sanitary district into the village.

    +++++++++++++++

    Village of Lake in the Hills

    Committee of the Whole meeting

    February 21, 2017

    Board Minutes

    – pdf pages 6 and 7 contain minutes about the proposed consolidation of the sanitary district into the village.

    ++++++++++

    The board agenda packet and minutes for that meeting are located here:

    http://www.lith.org/bot/page/committee-whole-meeting-200

  2. The Lake in the Hills water department has had so much turn over with employees being fired because of falsifying records, getting arrested while on duty, etc.

    This is not the case study that Jack Franks should be pushing in order to create a positive example for consolidation.

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