Boone County saves thousands from refinancing jail bond - Rockford, IL - Rockford Register Star

Will the 1 per cent sales PSB tax end in 2018?

The $9.3 million bond was originally issued in 1999 to help pay for the county jail. It is set to expire in 2018.

Additionally, the board received an Aa2 bond rating from Moody’s Investors Service, which is the third highest bond rating offered by the agency. To receive that rating, County Administrator Ken Terrinoni met with representatives from Moody’s Investors Service, who interviewed him about the county’s finances for an hour. 

“We gave them a full picture of our finances, and they were mostly questioning the ways we got through this recent recession,” he said.

The agency said the county’s strengths included a strong and conservative management team, as well as having a healthy reserve level. One of its weaknesses included relying on sales tax revenues.

Boone County saves thousands from refinancing jail bond - Rockford, IL - Rockford Register Star

Refinancing jail bonds will save Boone County $377,000 | Belvidere Daily Republican

Written by Bob Balgemann

Refinancing $3.32 million worth of bonds, the remaining amount from the $9.3 million issuance in 1999 for jail construction and other projects, will save the county an estimated $377,000 in interest.

The repayment interest was reduced from 3.7 percent to 0.97 percent thanks to a AA bond rating …

The half-cent public safety sales tax, approved in 1999 for the jail project and others, is due to expire in 2018. It has generated more than enough money for the annual bond repayment, and sometimes elicited controversy as to how the overage should be spent.

Click on the following to read the entire article:  Refinancing jail bonds will save Boone County $377,000 | Belvidere Daily Republican

DeKalb County board votes for another budget option | Daily Chronicle

 

county administrators said a property tax increase is necessary so the fund balance doesn’t get too low. But at the full meeting, board members said they would like to see an alternative budget without a tax increase or layoffs of county employees.
Revenues for fiscal year 2010 are about $920,500 under budget, and the proposed FY11 budget relies on a tax increase and cutting expenditures to help the county

 

2.4 percent increase is just the county’s portion of property taxes, which will bring the county about $760,000 for the year.

few board members wondered how many county employees would have to be laid off to prevent a tax increase. Hanson said it would work out to about nine employees, which would be “substantial.”

board members approved placing the fiscal year 2011 budget on file for public viewing. Steve Walt, R-DeKalb, proposed two amendments: removing the 2.4 percent property tax increase and looking into a furlough program instead of laying off county employees. The board unanimously approved the amendments.
Hanson said he and county officials will create an alternative budget including those options.

County board votes for another budget option | Daily Chronicle

Analysis of 1999 Boone County Public Safety Tax

To the Boone County Board and Public

Did you know...?

The Public Safety Sales Tax of one-half percent, to be taxed on merchandise sales in Boone County FOR THE PURPOSE OF FINANCING AN EXPANSION

OF THE EXISTING JAIL FACILITY--passed April 13, 1999 by a margin of 66%

Yes, and 34% No.  It was passed for building an expansion of the jail--not for jail operations and Boone County General Fund expenditures.

The following is the use of the Public Safety Sales Tax funds since 2004 suggested by and according to Ken Terrinoni, Boone County Administrator's accounting:

Revenues (actual 2004-2009, projected 2010)

$10,583,234

Expenditures (actual 2004-2009, projected 2010)

$ 5,320,245   Bond Payments

+

          $    285,000 Transfer out, Gen. Fund allowable expenses

          $    521,725 Transfer out, Job staffing

          $ 3,934,268 Transfer out, Jail staffing

          $    376,977 Transfer out, Sheriff's equipment

          $    125,000 Transfer out, Logan Building

          $      15,000 Transfer out, Architect

          $    400,000 Transfer out, Courtroom

$    250,000 Transfer out, Courtroom, Probation, & States Attorney

$ 5,907,970   Total Transfers out

$11,228,215 Total Expenditures (Bond payments & Transfers out)

Total Expenditures minus Total Revenue

$11,228,215 - $10,583,234 = (-$704,981)  More money expended then Sales Tax revenue

$5,320,245 has been expended for voter approved Jail Expansion

$5,907,970 (more than approved for the Jail Expansion) has been expended for General Fund operations, staffing, sheriff's equipment, Logan Avenue Building, Architect, Courtroom Probation, and the State's Attorney--none part of the voter approved Jail Expansion.

Question:  Will the voters of Boone County trust future Boone County tax referendums as being used as proposed?

-- compiled and organized by Patrick B. Mattison, Boone County Board District 3

Plan would phase out use of Boone safety tax for jail

This should be an issue for this November’s election—will it actually happen? 

The proposal would gradually phase out the county’s use of public safety tax dollars by 2018, with jail bonds paid off and money no longer being used for jail expenses.

[County Budget…]  Departments have an Aug. 27 deadline to submit spending plans for the budget, with hearings beginning Aug. 30.

Click on the following for more details:  Plan would phase out use of Boone safety tax for jail - Rockford, IL - Rockford Register Star

Boone County Considers Refinancing –Paying the Bondsman again.

As noted by the minutes of Finance Sub-committee shown below,  the Boone County Board is considering refinancing several million dollars of bonds. [Series 2008 A & B, see paragraph 2]   The 2008 Bonds had $205,000 in underwriting cost.  Now the Board  is considering refinancing and incurring a like amount of underwriting cost?   Does this make sense?  Is the county doing this only because it cannot afford to pay the current debt schedule out of the General Fund? These projects were going to be paid out of savings and operating income, why the change?  Does refinancing really make economic sense?

Back in January 2009 I posted a length analysis regarding the high “hidden” cost” of Boone County’s borrowings for the  Administrative Center on Logan and the remodeling at the Courthouse.  See:  http://boonecountywatchdog.blogspot.com/2009/01/paying-bondsman.html.  To review those findings:  the county borrowed $5.2 million, only received $4,995,000 because of $205,000 in various underwriting cost, primarily insurance on the bonds.  Because the net proceeds to the county were  lower than the face amount of the loan the effective interest rate of the $4,995,000 borrowing was approximately 5.12%.  That rate equaled the rate for conventional home mortgage loans to a good credit.

Now the county is proposing to spend  more money to a  bond broker to find out  how much it will cost to refinance the bond?   Will the county board really consider all of the cost of refinancing? 

Click on photocopy to enlarge: 

Pat Mattison’s Comments to County Board

The following speech was delivered to the Board last evening, before they voted to make public  the FY 2010 budget.  Pat has preached to his fellow board members since December 2008 that they faced tremendous  revenue shortfalls.  His predictions in that regard varied with that of the county’s administration and proved to be closer to reality.

10/21/09

To:  Boone County Board & Public

Re:  2010 Boone County Budget

From:  Patrick B. Mattison, County Board Member District 3

My perception of revenues for the Boone County Government is they will be substantially less in the coming year than they are this year--and this year, depending upon which figures are being used--expenditures exceeded revenues from $600,000 to $900,000, not including unexpected costs like having to drill another test well ($10,000) on the landfill next to Maple Crest because of potential toxicity.  If it tests positive, the cost may substantially escalate next year.   The Boone County Board Finance Committee, in December 2008, adopted a policy of a balanced budget for each operating fund in which expenditures do not exceed current revenues.  If current revenues are less than expected or expenditures are greater than expected due to an emergency, the board will reduce other spending to maintain a balanced budget."   It passed unanimously.  Expenditures exceeded revenues from $600,000 to $900,000.

As I understand the 2010 Budget scheduled for layover tonight, there is a $275,000 deficit projection.

The projected Budget has not been reviewed by the total Boone County Board.

Substantial costs that may impact the 2010 budget, to name a few:

*  Unknown Landfill expenses

*  3 percent raises for non-union personnel

*  Selective raises for Elected officials from 3.5 percent to 5 percent

*  Purchase of vehicles for the Sheriff's department ($100,000+)

*  Replacing a Dispatcher ($35-$50,000)

*  Unknown IMRF mandated retirement costs that will impact other tax levies because of Tax Caps

Tax revenues that will be down:

*  State Income Tax ($200,000?)

*   Boone County Public Safety Building Sales Tax ($200,000?)

*  Boone County Sales Tax 1/4 Cent ($200,000?)

*  Boone County Sales Tax 1 Cent ($220,000?)

*  Business and Residential owners will seek to lower their assessed valuations, and the Boone County Property Tax will be impacted ($100,000's?)

The figures given me from the administration office indicate the reserve balance  at the beginning of Fiscal year 2009 was $3,557,078.  On October 10, 2009, the reserve balance was $2,910,933.  If we are to maintain a reserve of 2 to 3 months for emergency, with a $13.1 million budget we are at our reserve limits now.

As Mitch Daniels, Governor of Indiana has written,  relative to the economy, "We ain't seen nothin' yet. What we are being hit by isn't a tropical storm that will come and go, with sunshine soon to follow.  It's much more likely we're facing a near permanent reduction in state tax revenues that will require  us to reduce the size and scope of our state governments."

Reducing the size and scope of the Boone County government should be our debate and on the table.  We will not be able to sustain raises!  We will not be able to sustain full work weeks!  We will not be able to fund vehicles for every deputy in Boone County and have extra Pool cars.  We need to explore managing for efficiency, rather than spending.  We should explore using facility on a 2 shift basis.  We should explore outsourcing in every area possible (maintenance, copying, plowing).

My suggestion is we go back to the table and work until we balance the budget based on conservative and realistic projections!

Press release 9-16-2009: Quinn finds probation money

It still seems that Probation Officers will not be funded up to FY 2009 levels.

earlier this year the General Assembly funded the Illinois Supreme Court's budget for operational expenses and grants at only 56 percent of the Court's request.  Governor Quinn is using his lump sum appropriation authority to increase the Court's funding level to 82 percent of its fiscal year 2009 appropriation.

Click on the following for the rest of the story:  The Dome - Press release: Quinn finds probation money

Public hearing on DeKalb’s countywide recovery zone set for Wed. | Daily Chronicle

Where is Boone County with its recovery zone bonds?  McHenry County and Stephenson Counties have passed their resolutions to start their programs.  I have contacted Mayor Brereton who obtained information that Boone County’s allocation is $1,863,000, but no one is certain if county government has started the process.

 

The decision is before the DeKalb County Board because the county was allocated $15 million in Recovery Zone Bonds. Part of the federal stimulus legislation, the borrowed money would serve as a means to finance both governmental and privately-owned building projects at a low interest rate, with the federal government paying 45 percent of the interest.

Click on the following for more details on  DeKalb County proposal:  Public hearing on countywide recovery zone set for Wed. | Daily Chronicle

For details on McHenry County’s Program:  http://www.nwherald.com/articles/2009/08/11/r_migk8hyjsy2z1vnk_tug/index.xml

http://www.nwherald.com/articles/2009/06/17/r_bxepvehdskw4niafe6_irw/index.xml

For details on Stephenson County’s Program:  http://boonecountywatchdog.blogspot.com/2009/08/tools-for-development-stephenson-county.html

Northwest Herald | Cary road bonds move forward

Here is a stimulus program which officials in Boone County know nothing about.  I previously report this on June 10, 2009 at:  http://boonecountywatchdog.blogspot.com/2009/06/northwest-herald-recovery-bonds-clear.html  I talked to numerous Boone County board members and still no one knows the details.  Well maybe taxpayers in McHenry County get something for their high taxes—elected officials with knowledge of the stimulus plan.

– The village of Cary is set to receive $5 million of McHenry County Board economic stimulus bonding power to repave and repair its roads.

The federal government has given the County Board up to $45.8 million in bonding authority to jump-start “shovel-ready” government and private projects.

The federally-backed bonds do not count against the county’s debt limit or leave the county liable if a borrower defaults.

Investors who buy the bonds are entitled to receive a 45 percent refund of the federal taxes payable on them

Illinois received $1.67 billion in bonding authority under the Act, which was divided among all 102 counties and six cities. McHenry County received the sixth largest piece, behind Chicago and Cook, DuPage, Lake and Will counties.

Click on the following for more details:  Northwest Herald | Cary road bonds move forward

Boone County seeks bids on 36 acres of land for development

The following bid notification has recently been publish on the Boone County Government web site:  http://www.boonecountyil.org/  The property is at Illinois Rte 76 and Woodstock Roads, an area immediately adjacent to the southern boundary of Poplar Grove.

As of yet I have seen no advertizing of the property in the papers.  If someone see it,  please advise me.

 

Northwest Herald | County gets $45.8M in bonding power

So what are the elected officials in Boone County or Growth Dimensions doing regarding this “recovery program” ?

All 102 Illinois counties and eight cities divided up $1.67 billion in federal bonding power. McHenry County received the sixth largest chunk, behind Chicago and Cook, DuPage, Lake and Will counties, according to IRS figures. Cities and counties nationwide have until Dec. 31, 2010, to issue the bonds.

The Internal Revenue Service informed [McHenry] county last week that it could issue up to $18.3 million for government projects and $27.5 million for private projects. The bonds can be used for capital projects or equipment purchases, Munaretto said.

Click on the following for more details:  Northwest Herald | County gets $45.8M in bonding power

Northwest Herald | Recovery bonds clear committee hurdle

I don’t know if this is a good or bad program—but where is Boone County’s application for this part of the Recovery Act?

The new bonds authorized in the massive $789 billion American Reinvestment and Recovery Act will allow the county to issue bonds for capital projects for itself and the county’s municipalities, or economic development facility bonds for businesses that want to locate in the county or expand.

But the county first must designate itself as a “recovery zone” to be allowed to allocate the funds, said chairman Marc Munaretto, R-Algonquin.

Investors are entitled to receive a 45 percent refund of the federal taxes payable on them

Internal Revenue Service still is working out the formula to determine how much each recovery zone will get

Click on the following for the rest of the story:  Northwest Herald | Recovery bonds clear committee hurdle

Boone County Taxpayers Association questions budget makers.

Click on the photocopy to enlarge.

Barney Frank's Double Indemnity - WSJ.comOne

 

One thing to remember ,  when Boone County borrowed  $5 million for its administrative buildings a cool $200,000 had to be paid for insurance on those bonds.  Perhaps this legislation would curtail those costs.

FDIC-like federal insurance program for municipal bonds.

 

Read more by clicking on the following:  Barney Frank's Double Indemnity - WSJ.com

Income Reports from County Government

Just received the actual numbers being reported to Boone County Finance Committee regarding its monthly revenue.  I hope to use these monthly reports to keep everyone aware of county finances in this troubled time.

There are five main sources of taxation.  Each of the five sheets will enlarge if you click on it.  As of now the county is down $33,188.78 or 4.27% of December/January projected revenue.

Here is the calculation from these sheets:  

Shortfall/Overages:   -3251.30+-6151.92+6814.54+-1448.53+-29151.57=-33,188.78

Actual Revenues:  175875.70+167542.81+293002.26+24246.63+84119.31= 744765.71

Projected Revenue=744765.71+33188.78=777954.49

Shortage is 33188.78/777954.49= 4.27%

 

 

Analysis of the trends in these various accounts is still quite difficult.  Of most concern is the State Income Tax (immediately above) it is down 25.7%.  State Income Tax is 31.2% of the total $6,053,704  of tax revenue, however figures are only for December.  One Cent Sales Tax is down 1.8%, 1/4 Cent Sales Tax is down 3.5%, Public Safety Sales Tax down 2.4%, Personal Property Replacement Tax down 5.6%. Most of these taxes are collected by the state in a prior month therefore further decreases may be possible based upon the continued downturn in the economy.

Paying the Bondsman--corrected

I just received a correction on this section--Boone County borrowed $5,200,000 ( before I stated  just under $5,000,000) for the courthouse and administrative building remodel and construction. The county only netted $4,995,000 for the bonds;  the rest paid for underwriting cost, primarily insurance on the bonds.  Thus those cost were $205,000/$4,995,000 or 4.1%.  That seems high perhaps someone else can comment.  I am quite amazed because before the actual sale of bonds, the county administrator’s cash flow projections was using the entire $5,200,000 as the projected cash flow for the building project.

Using a present valuation of principle and interest payments,  I calculated the effective interest as 5.12% because only $4,995,000 actual cash was received.  If no insurance had been paid the rate would only have been 4.62%.  The difference is 0.5 %.  My calculations are below:

 

Repayment will be from the Quarter Cent sales taxes which the county receives.  These funds also are a revenue source for the county’s general fund.  If there is inadequate sales tax revenue,  will the county board increase our county real estate taxes?

 

 

Here are some of the numbers which I currently have:  First is the Quarter cent sales tax, note that it is running way below budget.  It is short approximately $26,000 ; it is only 87% of the budgeted amount as of the end of October.  Hopefully I can receive some updates in regard to the current months and see if there is any improvement.

As shown below the cash flow needs for the bonds is a little less than 50% of the total cash flow of the Quarter Cent tax.   The total bond interest and principle due for FY 2009 is $437,366.26.

The Quarter Cent sales tax is not the only revenue source which is below budget.   Is the county watching the numbers?

Where is the county going with its 2020 plan?

The Boone County Journal in the editorial on December 12, 2008 stated that --

“If 100 people outside the county courthouse were
asked how the building would be expanded to provide
more space, we doubt if anyone could state with accuracy
what will occur.”

Well I think we should make certain a few of us understand the county’s plan.  Whether the plan is good or bad , I am indifferent.  I just want to do what the county administration and elected officials don’t have time to do—explain what their plan is. First of all—they call their building program the 2020 Plan.

I am using the documents supplied to me by Mr. Terrinoni when I asked my representatives about the 2020 Plan.  The latest update was in November 2008.

 

We need to understand what exactly is being built, remodeled and purchased.  There are three major items on the 2020 plan:  (a) purchase of approximately 5 acres next to the Logan Ave Building,  (b)  adding 12,100 square feet and remodeling 4000 square of office space at the Logan Ave Building  and  (c)  remodeling the Courthouse for the circuit clerk, courts and probation. A thumbnail of the August 5, 2008 Space Plan is below. Please note the financing plans in item #5 changed and $4,995,000 was provided by bonds.

Click on it for a larger view.

 

Below is the Design Development Cost Estimates for the 2020 Plan.  Going first for the totals.  $5,203,954 is the projected cost of the land purchase ($850,000), building construction costs ($3,985,046), profession fees ($298,909), building permits ($30,000) and furnishing allowance ($40,000). The profession fees are actually $51,203 higher because of previously paid architectural fees.   There is a “Probation Additive Alternate”  for $576,184 however that appears not be being pursued at this time.

It is difficult from the figures supplied to exactly split the cost at the Logan Ave facilities from the courthouse complex.  Logan Ave probably will receive the bulk of the landscaping, site work and site lighting which total  $352,480. The cost of the new space construction  at Logan is $ $2,204,179 ($182 per square foot) and remodeled space $328,545 ($82 per square foot).   Based upon construction costs and square footage 80% of the professional fees($239,000)  appear to be due to Logan.  Adding these figures to the $850,000 land cost, the total for Logan is just under $4 million ($3,974,204). From the figures supplied, 16,100 square foot of additional space will be provided.  Thus the square footage cost for this space is $3,974,204/16100 or $246.85 per square foot.  Granted the land maybe large enough for future expansion, nonetheless the figure appear very high to me; especially since 4000 square feet of the 16100 square foot project is remodeling.

With the exception of the County Board’s current conference room which is already used as a court room, nearly all of the old administrative offices have some cost associated with the court’s reuse of the facilities.  An additional 16,654 square feet will be used for court related activities.  There are no cost associated with 2331 square feet, $5 per square foot cost on 5499 square feet ($27,495), $80 per square foot cost on remodeling 624 square feet of the entrance ($49,920),$80 square foot cost relocation for law library ($33,760), $68.34 per square foot cost on converting 4,818 square feet in the old Treasurer’s and County Clerk’s offices to the Circuit Clerk’s Office($329,479), finally a courtroom/Jury and Judge’s chambers construction, $148 per square foot for 2960 square feet($439,188).   I have estimated that 20% of the professional fees ($59,909) for the courthouse complex.  The total building cost for the courthouse is estimated at $940,000, (actual figure is $939,751).  The square footage cost of additional court space is $936,751/16,654, $56.43 per square foot.

Costs which I was unable to allocate to either building were $100,000 in shelving , $120,000 in contingent heating , $30,000 in permits (total: $250,000).  Plus a $40,000 furnishing allowance.

 

Here are some additional handouts regarding the County’s big construction project.  The first is the sequence of the events that will be occurring:

Next are some of the cash flow projections for repaying the bonds:

If we have questions, I think we ought to gather them together and ask that the county board provide us a formal response.  If you have a question use either the comment section of the blog or email me at:  boonecountywatchdog@gmail.com.