Wednesday, July 11, 2018 || By Michael Romain || @maywoodnews
Featured image: Broadview board members during a July 2 public hearing. | Screenshot
Village of Broadview officials are seeking to issue up to $12 million in bonds in order to pay for various renovations at village hall, the construction of a new 911 emergency dispatch center and new equipment for the public works department.
During a public hearing held July 2, Thomas Reedy, an assistant vice president with George K. Baum & Company — the underwriter for the proposed bond issuance — said that the village is contemplating general obligation alternate revenue source bonds.
Under state law, Reedy said, the village must identify two alternate revenue sources that it would use to pay back the bonds. Since Broadview isn’t a home rule municipality, the village can’t tax or issue bonds without going to referendum. By identifying already existing revenue sources, the village can raise funds within those non-home rule constraints.
To pay for the proposed bond issue, Reedy said, the village identified rollover bonds and sales tax revenue.
The rollover bonds, he said, amount to just over $1 million in general obligation limited tax bonds that are issued each year, most of which is used to pay down outstanding debt.
“The final payment from those bonds is in 2022, so the idea is that in 2022, when those bonds are paid off, we will continue with that practice with this 2018 issue,” Reedy said. “So, the new issue will be paid from that existing revenue source.”
Reedy said that, “just a couple years ago,” the village paid off a 2005 bond issue that entailed paying down around $475,000 a year from sales tax revenue.
“So, with the paying off of that old series of bonds, there’s plenty of room within sales tax revenue to make up for debt service with this new issue,” he said.
During the July 2 hearing, some trustees voiced concerns about the size of the bond issue and what they considered to be the dearth of information justifying why the village would take on so much debt.
Timothy Hicks, Broadview’s finance director, said that taking on the debt is reasonable considering the extent of the village’s capital needs.
“There’s a lot of renovation that needs to be done at village hall and it makes sense at this one time to take one bite out of the apple, as they say,” Hicks said. “We had a lot of capital needs for the village that needed to happen and so this is the perfect time.”
Hicks said that the bond issuance will fund $3.5 million required to pay for the new 911 center that Broadview is building and will eventually share with the village of Maywood. Broadview will realize all of the revenue generated from the center and will own the facility while Maywood will be responsible for half of the $3.5 million upfront cost.
Broadview officials said that they’ve met with Maywood officials to ensure that the money the village receives from Maywood is protected. That money will go into an escrow account, Broadview officials said.
“The money we’re getting from Maywood [should be used] to offset that bond when it’s time to pay it back,” said Broadview Trustee Verina Horne. “Don’t let nobody use that for nothing else.”
Hicks said that another $6.5 million will be used to pay for critical repairs at village hall and to purchase roughly $500,000 in much-needed public works equipment.
“There’s been deferred maintenance on this building [village hall] that accumulated over the years up to $6.5 million,” Hicks said. “We need to address that before those deferred maintenance charges become even greater.”
Paul Kurtzner, the village’s administrative supervisor, said that the 911 center construction and repairs to village hall will take place in multiple phases. He said that the electrical and fire suppression systems at village hall need to be updated, among critical other maintenance needs.
Kurtzner and Hicks said that the village is seeking $12 million — or $1.5 million more than the $10.5 million that has been budgeted — in order to have money to pay for contingency costs related to construction and to give the village some leeway while paying down its existing debt.
Trustees Sherman Jones and Judy Brown-Marino had issues with the possibility of the village taking on more debt. Jones asked if Broadview is financing Maywood’s $1.75 million share of the 911 center costs.
He also pointed out that, if the two alternate revenue sources that Hicks and Reedy mentioned are insufficient to pay back the $12 million bond issue, the village would be exposed to the possibility of having to go to referendum to raise new taxes.
Reedy and other village officials said that the chances of those two revenue sources being insufficient to fund the new debt load, or of Maywood not paying its fair share of the 911 center costs, are minimal.
“We put Maywood’s [share of the costs] into escrow, so we’re guaranteed to get the money when it’s time to draw down,” said Mayor Katrina Thompson.
Brown-Marino also said that she didn’t receive adequate information that explained the village’s capital needs or that laid out a sufficient financial rationale for issuing $12 million in bonds.
“I’ve got real concerns,” Brown-Marino said. “We’ve never seen a breakdown in what kind of maintenance we’re talking about … for $6.5 million, we can be talking about old doorknobs.It just seems insane.”
Thompson said that the trustees were emailed documents with much of the capital improvement information that Brown-Marino was seeking during in February.
Reedy explained that the July 2 hearing was a preliminary meeting designed to announce the potential bond sale, hear concerns and to present information, such as alternate revenue sources and the potential use of the bond proceeds, about the proposed bond issuance.
The board’s 4-0 vote on June 18 authorizing the issuance of the bonds was a required first step to continue the process, he said.
The board still needs to finalize the issuance by voting on what’s called a parameters ordinance. Reedy said that more detailed financial information about the bond issuance is forthcoming. Broadview board members are scheduled to make a final vote in the coming weeks. VFP
Watch the full July 2 public hearing and regular meeting below:
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