Bill would tighten rules for certain bonds
The locally sponsored legislation could affect MCC plans
Legislation filed this week in Springfield could make it harder for McHenry County College to fund its proposed expansion.
Sponsored by state Rep. David McSweeney, R-Barrington Hills, and co-sponsored by state Rep. Jack Franks, D-Marengo, HB983 would make it more difficult for taxing bodies to issue alternate revenue bonds to pay for projects.
Alternate revenue bonds typically are issued by taxing districts to pay for projects with the understanding that the money is backed by an identified revenue stream tied to the project. For example, a municipality could issue alternate revenue bonds for a water treatment plant and use revenue from water bills to repay the bond.
However, if the projections don’t add up, taxpayers are on the hook to repay the loan, which could mean an increase in property taxes.
Alternate revenue bonds were used to subsidize Lakewood’s RedTail Golf Course. When it turned out the golf course was not taking in enough to pay off the debt, taxpayers were left footing the bill – regardless of whether the residents played the course.
“Lakewood was a disaster, and I don’t want that to happen with McHenry County College,” McSweeney said.
MCC is in the middle of a feasibility study, the second stage in its proposed expansion.
The college is considering more classrooms and lab space for health and wellness curriculum, plus a fitness center and health clinic. Alternate revenue bonds are being looked at as one way to pay for the estimated $42 million project.
Franks says neither Lakewood nor MCC’s project motivated him to sign on with HB983. He called it a “common-sense piece of legislation,” and said he’s seen ways governments have sidestepped voters under current law.
“Too many times decisions are made without public input,” Franks said. “This is an additional check and balance that the taxpayers would have. ... Whenever taxes are being raised, taxpayers ought to have a voice in whether or not that should occur.”
Under the McSweeney-Franks bill, it would be easier for voters to have a say on issuing these bonds. The bill would decrease the number of signatures required to initiate a referendum.
Their bill also would require that revenue from projects financed with alternate revenue bonds be able to pay 150 percent of the debt, an increase from 100 percent in the current law. Any surplus would be refunded to property owners.
“These are not foolproof,” McSweeney said. “It gives a cushion to the system.”
The legislation also provides that a chief procurement officer oversees such projects, rather than local analysts. The current law requires an “independent accountant or feasibility analyst” who determines whether the taxing unit has sufficient revenues to back the bonds.
“I don’t like the idea of local consultants doing these studies,” McSweeney said. “Let’s make it a fair and nonpartisan person looking into these.”
For its study, MCC hired Addison-based Power Wellness. Critics of the college’s plan have said Power Wellness presents a conflict of interest because the firm potentially could be a financial partner.
MCC officials maintain there is no impropriety because Power Wellness has never signed on to finance the project. It’s too early in the process for financial partners to be identified, MCC trustees said.