Saturday, September 18, 2010

City Looks to Borrow $24,000,000

In the midst of a recession, the City of Crest Hill is looking to borrow $24 million.  The purpose for this is to rebuild the east sewer treatment plant.  This is a huge amount of new debt for our water and sewer system to be taking on, especially since it is for re-building an existing treatment plant and not for system expansion. And it is of great concern that the Mayor is not releasing information on how borrowing all of this money will affect our water and sewer rates.

The city has posted notice that they want to issue $24 million in revenue bonds, which means that the bonds would be paid out of the revenues of the water and sewer system and would have no impact on taxes.  However, the city has posted notice that they are also seeking to issue alternate bonds that would be general obligation bonds.  This means that if the sewer system did not raise enough money to make payments, the city taxpayers would be on the hook for paying the money back.  This is a concern because if only the revenues of the sewer system can be used then the users pay in proportion to how much they use, if general obligation bonds are used then taxpayers could be forced to pay it back based on property value and not on what they use.  The real reason why this is a problem is that our largest user pays no taxes.  Stateville is our largest user, but pays no taxes.  This would only be a problem if revenues are not sufficient to cover the bonds, but is still worth remembering.  One way to think of it is that a revenue bond is a loan to a business that may have to raise what they charge you so they can pay off the loan.  Sure your price goes up, but we each can decide how much you want to buy.  A general obligation bond is a mortgage taken out on all of our homes. 

We also should all be asking why the city has not set aside money for the eventual replacement of their sewer treatment plant.  They should have been setting aside funds for depreciation all of these years.  Where are those funds?  Why was a proper amount not set aside?  How much more are we going to have to borrow in the future when the city fails to set aside funds for future maintenance and replacements?

The biggest question most people will have is how will this loan affect our water and sewer rates?  At a previous work session this was discussed and it has been thought that an increase may not be needed since the city recently raised rates beyond the rate of inflation.  This is just a tentative answer since the financial analysis for the past fiscal year is not yet available.  Previously a large increase was going to be needed based on previous analysis.  The city should not be moving forward until this question can be answered with certainty and not just guessed at with hopefulness.

I urge every resident of Crest Hill to show up at City Hall on Monday, September 20th, at 7pm for the public hearing on borrowing this money.  We need to find out why the city is mortgaging our homes to pay for work they failed to save for.  We need to find out why they want to borrow before they know how much more they will need to ask us for, instead of just hoping our rates are high enough.  The City Council has refused to reach out to the voters to approve this loan, so we need to at least make our voices heard.

Monday, July 19, 2010

New Library Location Proposed

At the July 12th City Council work session the location for the new Crest Hill branch of the Des Plaines Valley Public Library was announced.  The library board is preparing to buy a parcel of land just north of the Menards along Kubinski Dr. several hundred feet east of Weber Rd.  The library is looking to buy this land as soon as zoning issues can be resolved and then hope to begin construction so that the new library opens in May or June of 2012.

This proposed location has a number of weaknesses and does not appear to be the best site for the new library.  At a minimum a number of issues need to be addressed before the land is rezoned by the city and purchased by the taxpayers of the library district.

The City of Crest Hill zoning code currently allows for libraries only in areas zoned as residential, there is no provision for a library to be built in the middle of a commercial development.  This may simply be a relic of the good old days when no one conceived of a library anywhere besides a residential area.  Or it may be based on some good principles of having a community facility such as a library easily accessible to our citizens and for it to be possible for school children to get to the library without needing to take a car ride.

The library is also looking at a location that is currently planned for commercial development within a major commercial corridor.  This is a property that is meant to generate both property and sales taxes for the city in amounts greater than most other areas of the city.  The library however will generate zero tax dollars for Crest Hill and will cost the city the opportunity to get a revenue generating business into the location.

The third problem is that the library has no plans for the building that it is vacating on Theodore Street.  The City does not need another vacant building along Theodore.  And the library will be a very difficult building to reuse due to the fact that it is not handicap accessible with many steps to the entrance, has not been well maintained, and has very limited parking.

I think all of these issues need to be addressed and can be addressed before the library project moves forward.  The Plan Commission and City Council need to make sure an eager to build library and a cash starved developer do not steam-roll them into ignoring what is best for Crest Hill.

The biggest drawback to being placed in the middle of a commercial development is the lack of non-vehicular accessibility.  Weber Rd. and Caton Farm Rd. have no sidewalks near this development and there are no sidewalks within the development.  Before the zoning code is changed to allow the library to be built here this accessibility issue must be solved.  While I think a library belongs near a residential area, the next best thing is to at least create access to residential areas.  The city needs to require the developer or the library to extend sidewalks or walking/bike paths from the library site to the nearest residential developments in each direction.

The loss of tax revenue from this prime commercial property can be addressed through a Payment in Lieu of Taxes being made by the library.  The lost property taxes at a minimum should be recovered for all of the taxing entities losing out due to the loss of the ability to attract a taxpaying entity to this prime development.  The sales tax loss can probably be assumed to be covered by the library being an attraction that makes people somewhat more likely to shop at nearby stores.  This affect may not even cover the sales tax loss, but it could be a compromise gesture to take sales tax off the table of the library or developer will cover the property tax loss or at least a portion of it due to this being higher than usual value property.

The library can address the Theodore St. property by making some guarantees as to its future status.  They could possibly guarantee that it will be sold to a user who will occupy it within 12-24 months of the closing of the old library.  And that if this is not able to be done because the property is no marketable with the current building, the library will remove the building and regrade the lot to make it more marketable at its own cost and deed it to the city at that time.

All of these options taken together represent a large cost that would be imposed upon the library, however they have brought most of these costs upon themselves by selecting an unconventional site.  We should not let them either impose these costs solely upon Crest Hill either directly or indirectly through the loss of an accessible library, tax revenues, and the addition of a vacant hard to utilize building. There is nothing wrong with negotiating to share these costs between the City, the Library, and the developer.  A solution that shares the benefits and the costs is appropriate.  It is now up to the Crest Hill Plan Commission and City Council to do the right thing and protect the best interests of their citizens.

Thursday, July 8, 2010

Higher Taxes Coming to Crest Hill

At the last work session concerning the City budget at the end of June, the budget as it stood after all the adjustments made during the weeks of hearings was presented.  Mayor Soliman then followed with questions of the council members regarding their opinions on various budget issues.  The final budget was approximately $300,000 in deficit even after every fix was made.

The Mayor kicked off the questions by asking each Council member individually if they would support increasing the utility tax on electricity and natural gas or the sales tax.  The City Administrator and the Mayor discussed the rates in surrounding communities to justify that Crest Hill is below average in taxes and should catch up.  The majority of Council members supported doubling the utility tax to bring in a little of $100,000 of additional revenue annually.  This will be enacted in the near future since the Mayor got the support he needed to raise it.  The Council was also open to raising the sales tax, but recognized that it would be years before any additional revenue would be seen, since the tax would need to be approved by the voters and they would need to do a long educational campaign before there would be any chance of getting it passed at referendum.

The Mayor then asked each member if they were comfortable with the budget being in deficit as it stood.  A number were comfortable with it either because they felt that it was the best that could be done under the current circumstances, felt that a great effort had been made and it was much better than it could have been, or recognized that a large part of the deficit is due to one time costs due to switching insurance.  Others were uncomfortable with it, but were challenged by the Mayor and council members who pointed out that there had already been weeks of discussion and that a budget had to get passed.  There seemed to be an attitude of this is the best that we could come up with so everyone should be comfortable with it.

The final question each alderman was asked was if they had any ideas to fix the budget.  A number of members advocated tightening on small expenses such as costs of conferences,  the purchasing coffee and disposable cups for City Hall, and the Mayor's gas and petty cash expenditures.  These items would not make a huge dent in the budget, but were looked at as every penny counts and making sure the Council was feeling some of the pain as well as the city staff.  Alderman Sternisha spoke on some of the suggestions he has made to the Council early on in the hearings regarding freezing salaries and not hiring more employees, but he did not have the whole list because the Council had not been expecting this line of questioning at this particular budget hearing.  Alderman Convery for some reason decided to attack Sternihsa's suggestion of not hiring more employees and kept asking him to be specific as to who not to hire.  Convery did not seem to grasp the idea that not hiring any additional employees did not mean to firing recently hired employees, but instead meant that from that point forward not hiring any more.  The Treasurer also spoke on some of his ideas for furlough days for city employees and creating an annual business license as opposed to the current license that is good forever.  He was pointing out that Menard's paid $25 for a business license that is good forever, while many households pay more than that each year just to get city vehicle stickers.  The City Clerk got quite upset at this since her office would have to issue the permits and she had not been consulted.

The Mayor gave everyone an insight into his thinking just in the order of the questions and how he presented them.  His first thought was to raise taxes, then to gauge comfort with being in deficit, and lastly to looking for other solutions.  This city needs leadership who put finding solutions and alternatives first and put raising taxes as last resort.  Unfortunately, Mayor Soliman looks to our pocketbooks first and makes it clear that higher taxes come before all else.

Thursday, June 24, 2010

Looking to the Future

The Crest Hill City Council has still not balanced the current budget, however that has not stopped them from committing to spending money out of future budgets.  They apparently feel that it is better to try to bust future budgets instead of fixing the current one. 

This is topped off by the fact that the expenditure was for landscaping the medians at the intersection of Weber and Renwick roads at at cost of $20,000 - 30,000.  Both of these are county roads, but the county has the sense not to pay such a high cost for landscaping in the middle of a roadway.  Romeoville is paying a similar amount to landscape their half of the intersection though and a number of Crest Hill officials did not want our half to not match theirs.  So the taxpayers will be stuck paying to keep up with our neighboring community and rejecting the county's offer to pave the median like they have elsewhere around the county.

The only council member to question this expenditure was Alderman Sternisha, who was quickly shot down by another alderman who saw no problem spending future year's money since it did not impact the budget they were currently looking at.  Alderman Convery also brought up the need to beautify this gateway to the city.  However, if we are looking to beautify I can think of many other places to do work at a lower cost.  For example, a number of commercial property owners in this city have decided that mowing is unnecessary.  It would cost the city far less to enforce its weed ordinance and would go a long way to make our commercial properties attractive to developers and businesses. 

If we really want to make this an attractive community; lets balance our budget, have property owners along our main thoroughfares clean up their properties, look for less expensive ways to enhance all of our entrances, and not commit future funds unless future revenue sources have been identified. 

I am all for planning for tomorrow, but those plans should not be how to create future deficits to add to the one we are currently facing.

Wednesday, June 2, 2010

Crest Hill Budget Hearings Update

The budget hearings these past two nights have been pretty routine, with the tough discussions being put on hold until Tuesday, June 8th.  So far most of the presentations have focused on numbers that are being held pretty close to last year's budget with only a few notable exceptions.  The real excitement was at the end of Wednesday night's meeting as the Mayor brought up issues related to the city website.

The only two areas of the budget to see large increases have been Health and Life Insurance Costs and Legal Fees.  The insurance costs are understandable in this environment, however there has been virtually no discussion related to these significant cost increases or ways to address and manage them.  The increase in legal fees in related to the upcoming contract negotiations with the various city unions.  The city is expecting these negotiations to be potentially costly.

The lack of any increases in salaries and wages in most departments is also of note.  It is not yet clear if they city is actually expecting to freeze all salaries and wages for the coming year or if this is just a starting point.  Whenever these matters come up during the hearings, the Council has been asked to save the discussion until Tuesday, June 8th.  It would seem that this is going to be a major issue since the budget is almost a half million dollars in a deficit with these items frozen, so any increases would only worsen the problem.  It appears that the only department with an increase in wages or salaries budgeted is Economic Development.

The first two hearings were very informative, however I was the only person in the audience both nights.  I would strongly encourage others to show up, especially as the hearings move into the Council having to make hard choices and further discuss how to resolve our financial situation.  The City Administrator has been very gracious to provide me with a copy of the budget to follow along with the presentations, so this year's hearings have been much easier to understand than in previous years.  Also, the Mayor has a history of asking for opinions and thoughts from the audience.  So if you would like the chance to possibly be heard or to at least better understand the City's finances, come at 7 PM on Tuesday, June 8th to City Hall.

While the budget itself may not always be the most interesting topic, the Council has been having updates and discussion on other matters as well at the end of each meeting.  These discussions have been quite heated and show the divide between the Mayor, Council members, and other elected officials.  While the topics may not be of the greatest importance, it is a valuable opportunity to see how the Council works together and how they act when not on camera.

Wednesday, April 28, 2010

City Treasurer Delays Protecting City Money

At Monday night's work session  of the Crest Hill City Council, the city's bond counsel and another financial advisor presented an analysis of the city's finances and recommendations of actions to be taken or considered.  Most of the presentation was focused on issuing bonds to pay for upgrades to the sanitary sewer system, but some general issues were also addressed.  One recommendation was that the city needs an investment policy that requires all deposits in excess of FDIC insurance to be fully collateralized with either US Treasury or US Agency securities, that those securities be held by a third party, and that the value of those securities be marked to market monthly to determine actual value.  This is to ensure that the city's money is backed by good securities, that those securities have not been pledged to other depositors as has been done by some banks, and to ensure that the value of those securities has not dropped below the amount being collateralized.

City Treasurer, Joe Bobikiewicz, responded that the auditors made the same recommendation back in September of 2009 and he has been working on it with the City Attorney.  When pressed as to when a policy would be ready, he responded that it would be a few months, but that he would poke the Attorney at the next council meeting and let him know to get working on it again.  He stated that he plans to have it in place before the next audit so that the City does not get dinged again. 

This is a shocking and dangerous attitude that he is taking.  He refuses to make protecting the city's money a priority.  Instead of waiting for the next meeting, he should pick up a phone and call the City Attorney.  In fact, he should have taken care of this at least 7 months ago when the issue was raised by the city's auditors.  He was even aware of this issue before then since I had brought questions regarding the collateralization of city deposits to his attention in March of 2009.  

This is not a policy to be put on the back burner, this is not something that can wait, this is something that needs to be done now and implemented now.  This is not about the Treasurer not getting dinged on an audit.  This is about one day finding out that the city has millions of dollars of deposits that were improperly collateralized with toxic assets, bonds pledged to multiple cities, or long term securities that have to be sold at below face value in order to access our money.  These are real threats and we need to demand that the City and the City Treasurer better protect our money.

Saturday, October 24, 2009

Quality and Cost of Police Improvements

At the October 19 City Council meeting there was quite a bit of discussion of the quality and cost of our police department during the public comments portion of the meeting.  It began with a citizen questioning the need for two Deputy Chiefs in Crest Hill when Joliet manages a much larger police force with only one.  While the resident definitely presented himself poorly through his combative attitude, his point was a valid one that deserved a better response.  The following citizens who addressed Council spoke well of the quality of the police force.  Alderman Oberlin and Mayor Soliman used these examples to show that the police department is headed in the right direction.  However this is not the right way to determine if the right moves are being made to improve the police force.  Quality and cost must be looked at together.

Too often we look at public services and desire only the best and do not care what it costs because we each only pay a small share of the cost.  There is also the other side that looks only at costs regardless of quality because they do not want to spend another cent on taxes.  In our personal lives we do not act these ways, we find a balance between cost and quality.  We seek the best value.  Sure the BMW would be a better quality car and a used Datsun would mean spending a lot less, but most of us find something in between that will not bankrupt us but will get us where we are going reliably.  Why can our elected officials and citizens not have this view more often?

A good example of this is the promotion of two Deputy Chiefs.  City officials pointed out that these were not new employees, but two Lieutenants who were promoted and that their old positions were vacated.  Of course, they were given pay raises because they were promoted.  What was not addressed was why they needed to be promoted.  What do they do that they could not do as Lieutenants?  What special abilities and skills did they gain the day that they were promoted that they did not have the day before?  Are they actually worth a cent more than they were previously?  These two officers are better off with new titles and larger paychecks, but how are the citizens of Crest Hill any better off than if we had given them new duties without new titles and raises?

The Mayor and City Council owe the citizens an explanation of the costs and results they are aiming for as they improve the police department.  How much are we planning to spend each of the next 5 years with raises, promotions, and new hires?  This extra cost will translate into how many additional hours of patrol time?  How many additional school visits?  What our our goals for response times?  What are our goals as far as crime rate reductions and successful investigations?  What are the results if the Chief and his officers do not meet these standards if and when our Council takes the responsibility to set them?  Do we just keep giving raises and continuing to employ them regardless of quality or do we make their employment and raises contingent on results?

If you want to see a higher quality police department without breaking the bank, you need to control costs.  The best way to control costs is to make sure that each dollar gets the best value.  It is not about spending as few dollars as possible, but spending each dollar as wisely as possible.  A City Council that spends wisely will get far better results than one that either spends lavishly for quality or cuts to the bone to limit taxes.