Homer Glen to consider $50M bond issue Monday
BY SUSAN DEMAR LAFFERTY firstname.lastname@example.org August 4, 2012 12:16AM
Updated: September 7, 2012 6:09AM
A maximum $50 million bond issue that the Homer Glen Village Board will consider Monday night as part of its attempt to take over the water system has to be guaranteed on paper by a potential property tax, Mayor Jim Daley said Friday. But he said sales tax revenue will cover the bond payment and no property tax will be collected.
Daley said the village has to state in its ordinance that there will be a tax levy to cover the bond payment in case of a default. But the revenue the village brings in from its 1 percent home-rule sales tax is “more than enough” to avoid any chance of a default, he said.
Monday’s special meeting is scheduled for 7:30 p.m. in the village board room, 14917 S. Founders Crossing. Public comments will be allowed.
Daley said the village first will issue
$25 million in bonds for four projects, including the acquisition of the water transmission lines from American Lake Water. He declined to specify that cost, saying an offer was just made to the utility company.
The amount will be made public at Monday’s meeting, village manager Cameron Davis said.
Daley expects to use the remaining $25 million to buy the water distribution system from Illinois American Water. A study will be done to determine what that is worth, he said.
Homer Glen residents for years have complained about their water bills, and the village has joined an agency that hopes to acquire the system and lower costs.
A list of public improvements also is to be covered by the bond issue, which is not to exceed $50 million.
General obligation bonds typically are backed by property taxes, but Homer Glen has no municipal property tax. Daley said the $2.7 million in annual revenues generated by the home-rule sales tax will cover the cost even if the village loses its home-rule status.
Because the 2010 census determined that Homer Glen’s population dropped below 25,000 — the level that automatically makes a town a home-rule municipality — the decision to remain a home-rule community will be left to voters in the November election. But Daley said the home-rule sales tax would remain in effect either way for as long as it is pledged for a debt payment.
The village also plans to spend $2.5 million of the bond issue for 159th Street improvements, $7 million for extending sewer lines to unincorporated areas and $6.5 million to complete streets, sidewalks and detention areas in several subdivisions.
All costs are based on engineering estimates since no projects have been bid yet.
The exact cost of taking over the water system also can’t be determined yet. Water company officials have said the system is not for sale, which may force the village and its partners to try to acquire it by eminent domain or condemnation — which involves a lengthy legal process.
Homer Glen would share the cost of acquiring the transmission lines with four other communities in the Northern Will County Water Agency, contributing 20.6 percent. Bolingbrook’s share is more than 70 percent, while Romeoville, Woodridge and Lemont would share less than 10 percent of the cost, based on the number of customers, Daley said.
Homer Glen would act on its own, however, in acquiring the distribution system because other towns already own parts of their systems, Daley said.
“We are not taking over a normal business. We are taking over a monopoly that is gouging the living heck out of us,” the mayor said.
Mike Smyth, senior manager of field service and production for Illinois American Water, said governments typically “grossly underestimate” the costs of the systems.
“No one knows how much the pipeline will cost. There is a tremendous risk involved,” he said, predicting that the debt payment and the cost of two condemnation proceedings could end up on property tax bills to the tune of $760 per year.
Daley wrote in a May 2010 village newsletter that the water agency would use revenue bonds, not general obligation bonds, for the project and stated emphatically that there would be “no creation of a property tax.”
Smyth also claimed there has been no transparency in meetings among officials for the five towns, who only recently officially created the Northern Will County Water Agency.
The agency is subject to the Open Meetings Act, and its first official meeting will be in September.
Daley said acquisition of the water system is the No. 1 project his residents want, and that if sales tax revenue does decline, the village would hold off on some of the other projects.