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.

Still Waiting for a Plan

The City has begun some improvements to the water and sewer systems.  Smoke testing of the sewers has been done and further analysis is scheduled.  Cora Street is under construction and other improvements have been begun.  What has not happened however is a plan has not been presented.  Over a year after our water and sewer rates were increased, there is still no detailed Capital Improvements Plan for the water and sewer system improvements.

This plan should include lists of projects to be completed each year for the next 10 to 20 years, both new infrastructure as well as major improvements to existing infrastructure.  Also the source of funding for these projects should be identified for each year.  This type of plan allows the city to balance its expected revenue against its expected needs and then plan the work over a longer time frame.  Major maintenance items are budgeted for so that they are not surprise costs when things break down from age and potential shortfalls are known about years in advance.   

Most cities have these types of plans for all capital spending, such as roads, buildings, water systems, storm and sanitary sewers, and even vehicles. They are valuable tools for ensuring the long term financial health of a city and the most efficient use of city funds through planning.  I do not expect that Crest Hill implement Capital Improvement Plans for all aspects of the city immediately, although it would be a good thing and should have been in place already.  I do feel though that after putting in place steep rate increases on top of automatic annual increases, that exceed inflation, they should have such a plan for the water and sewer systems.  Continuing to use pay-as-you-go does not serve the best interests of the citizens of Crest Hill.  

We deserve better, we deserve well planned improvements to bring our water and sewer systems, we deserve to have our money used wisely and efficiently.  I just want to know when we will get what we deserve.  I want a plan that is more than just raising our rates.  I want a plan that is fixing our problems and letting everyone know what our money is being used for.