Public Facilities: Show Me The Money

Interesting conversations yesterday following both of my loyal readers sending me emails about the Facilities Tour.  Both boil down to “How are we going to pay for expensive facilities?” and “What happened to ‘Over my dead body’?”

The second questions the easy one: I took the time to find out about the facilities (you can too), and since I’m not a slave to dogma, my position changed.

The first question is where it gets a bit sticky…

In the 2009 budget there is 223 MUNICIPAL BUILDINGS FUND.  This fund is to account for major municipal building projects. During FY06-FY08, this fund was used for the construction of Fire Station 2, which came in under budget by $1.1 million dollars.  Some say this was because the village  intentionally over budgeted that project, but I think it’s because the project was conservatively costed out, and the manager format employed by the village worked in our favor this time.

On-time, under-budget completion of Fire Station #2 provided a balance in the fund of approximately $1.1 million. It is recommended that this amount be used in FY09 for the following purposes:

1) $350,000 in interest on the bond proceeds be transferred to the General Fund,

2) $340,000 be allocated to the replacement of the Village’s outdated  telephone system, and

3) $400,000 to fund community outreach and preliminary design work for Village Civic Center Facilities, in line with the Village’s strategic plan.

•Detailed design work for facility improvements is shown in FY10 with  construction activities beginning in FY11. A plan for facility improvements, including a funding source, is a top priority for 2009.

223-fund-debt

Click on graph for larger image.

The 2009 facilities budget projections shows a huge deficit at the end of 2013, almost $40 million.  That would be on top of the rest of our current debt, which is still over $50 million.  Add in the first three rounds of stormwater borrowing of about $75 million, and then add in the TIC on everything and yeah, I can see where there’s cause for concern.  We’re talking village debt potentially exploding to $200 million dollars.  That, my friends, is a lot of money no matter which way you parse it.  Paying interest on that sized nut robs the village of money for actual things that need doing.

To fund a $40 million borrowing over 20 years requires annual payments of about $3.1 million dollars. That will vary depending on interest rates, but total repayment will be (figure 4% interest) in the area of $58 million spread over 20 years.  If this money were spent on new facilities, you could logically expect the new buildings to be designed to last for a long time, so maybe a 30 year borrowing would be considered, lowering the annual debt payment by $900K to roughly $2.2 million annually, but increasing the overall amount repayed to about $68 million.

NOTE: You can run different financing scenarios yourself with any simple mortgage calculator.  I’ve found they cut very close to actual borrowing figures.

So how do we fund $2.2 or $3 million a year?  Raising property tax rates is not a popular option with the current council.  Departing commissioner Tully was very aggressive in forwarding the goal of a flat levy for 2009, and village staff got it done by employing a full arsenal of cost cutting, re-designating of fundings, deferrals,  jockeying employment positions; you name it, they looked at it.  2010 is already shaping up to be an even more daunting budget, as firefighters push for reinstating positions, union pay raises increase personnel costs, energy costs continue to eat a bigger chunk of money, and maintainance of existing facilities continues to rise.  There’s more, much more, but you get the idea.

So in order to fix the facilities problem the village will really have to put on the thinking caps.  What is a need versus a want?  What will provide function now and 50 years from now?  How can we build green and keep costs down?

Compounding the problem, the village has already maxed out most existing fee and tax rates to find funding for annual stormwater bond payments.

So establishing the need is the (relatively speaking) easy part. Separating and eliminating the wants from the needs is doable. Funding, which I spent part of this morning working on, seems unworkable so far.  I messed with the existing fees and previously proposed fees and gas tax revenues, and added in vehicle stickers and property tax increases and it doesn’t add up to enough.

If you add all the above in, where does the difference come from?  I keep ending up with having to raid the CBD TIF and dump that into facilities instead of the TIF district in general, and additionally extend the life of the CBD TIF to lock in that money for the village, AND pay down other debt first, and in order to pay for this.  Then I get close to $2.2 million in annual money.

If you know me and my feelings about TIF, you know how distasteful the above option is.  Although the village can’t build a golf course with TIF money, I am still not seeing where village facilities would be excluded.  The Illinois Tax Increment Association, the shills for TIF’s say on their website:

The eligible uses for TIF funds are provided in Illinois’ Tax Increment Allocation Redevelopment Act (65 ILCS 5/11-74.4-1 through 11-74.4-11): the TIF Act.  The Illinois TIF Act generally authorizes that TIF funds may be used for:

  • The administration of a TIF redevelopment project.
  • Property acquisition.
  • Rehabilitation or renovation of existing public or private buildings.
  • Construction of public works or improvements.
  • Financing costs, including interest assistance.
  • Studies, surveys and plans.
  • Professional services, such as architectural, engineering, legal, and financial planning.
  • Demolition and site preparation.

That seems to cover most of the components of a new civic center.

It remains to be seen what staff will come up with, and the biggest supporter on council for moving forward aggressively on the facilities problem is Tully, who is not returning to council.  Sandack has shown his tendency to be mindful of residents wallets, and Durkin is shaping up as the council’s fiscal hawk, paying attention to budget matters and operating expenses.  None of the rest are particularly loose talking when it comes to spending money; the whole stormwater problem has been a splash of cold water in the face, hopefully making them all more concerned about debt, deficits, and repayment structuring.

Staff has the first steps in the 2009 budget, so taxpayers will see about $400K of what they have in mind this year.

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3 Responses to “Public Facilities: Show Me The Money”

  1. John Schofield Says:

    As I wrote earlier, it sure would be good for the taxpayers if the various overlapping government units worked together on a cost-effective, SHARED facility.

  2. Publius Says:

    You forgot about red light camera revenue.


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