Lisle Sales Tax Revenue Down 42% Since 2001

No words needed.

Ref: Village of Lisle Comprehensive Annual Financial Reports 

Village of Lisle Borrowing Money for Private Athletic Facilities

(updated Aug 17, 2016 - originally published Feb 1, 2016)


Bad Public Policy

The $11 Million investment of public funds by Village of Lisle to build a college stadium will be sold to BU in 2029 for ONE DOLLAR.

$11 Million = total principal and interest paid from 2004-2033.
$1 = contract sales price transfer 100% ownership to BU 2029.

In 2004, the Village of Lisle decided to borrow $6.42 Million to finance the construction of athletic facilities at a private university - namely, the Benedictine University Athletic Center.

The bonds were issued as "General Obligation Bond, Series 2004 (Alternative Revenue Source)."

The new alternative revenue source to pay the bond payments was a new 2% tax on Lisle hotels.

When/if the alternative revenue falls short, these bonds are backed by the property tax payers of the Village of Lisle - General Obligation Bonds.

The Village of Lisle taxpayers have no long-term ownership interest in the facility even though we are all on the hook financially backing the bonds with our property taxes if the hotel tax revenues fall short. The Village of Lisle taxpayers own the publicly-financed "improvements" until 2029 when we sell it, under an agreement approved in 2004, for ONE DOLLAR.

And hotel tax revenues are falling short. Very short.
The hotel outlook in Lisle is very concerning.

Back in 2004 when the Village Board approved borrowing millions for construction of these athletic facilities at a private university, it was billed as a "win-win" for Lisle. It would "PAY FOR ITSELF."

The project was sold as a public investment in a private facility that would generate a significant increase in tourism, hotel stays and spending in the Village.

That did not happen - hotel revenue is down and sales tax revenue is down.

Individual Lisle residents and taxpayers can't use these private facilities.

BU entered into agreements with the Village and Lisle School District 202 to make the facilities available for their use.

"The project essentially can pay for itself through naming rights and other revenues created by the stadium," - IL Sen Michael Connelly.

BU Athletic Complex Original Bond Payment Schedule

General Obligation Bond, Series 2004 (Alternate Revenue Source), payments are due in variable annual installments of $130,000 to $2,350,000 each January 1, with interest payable semiannually each January 1 and July 1 at 4.00% to 5.105% through January 1, 2024.



Projections Vs. Reality 
Hotel tax revenues fall short

Hotel tax revenues to pay the annual 2004 BU Stadium Bond payments have fallen significantly short of the initial projections.  Recent annual bond payments have been made by drawing down from the fund balance that accumulated back when hotel revenues exceeded the annual bond payment. The plan back in 2004 was to accumulate excess hotel tax revenue, invest it, and this would provide the funds necessary for the final balloon payment.

The following are the remaining bond payments
(Ref: Village of Lisle CAFR, FY ending April 30 2015):

Total remaining principal and interest = $6,483,320.
Bonds issued in 2004 = $6,420,000.

Principal Balance as of April 30, 2016 = $4,570,000  (4,815,000 - 245,000)
2016 Bond Issue (re-financed) = $3,700,000

2016 Pay-down of Principal prior to Re-financing = $4,570,000 - $3,700,000 = $870,000.
 (paid from bond fund sinking fund)

BU pays no Property Tax

Under Illinois Property Tax Code, property that is "exclusively" used for charitable, educational or religious use is exempt from payment of property tax. BU has been leasing out the athletic facilities to for-profit professional teams - a use that is not charitable, educational or religious. Why local taxing bodies have not filed tax objections with the assessor and the state tax review board is mind-boggling.


Re-Financed Bonds

Unable to make the remaining bond payment, the Village of Lisle Board of Trustees reissued (re-financed) the remaining bond payments. The re-fi will significantly lower the annual payments of principal and interest and will extend the number of years of repayment to 2032.

Over the past 12 years, Benedictine University has contributed no net operating revenue to the bond fund. The Village chose not to audit BU Athletic operations to verify, on behalf of Lisle taxpayers, that the athletic facility financial losses were accurately reported.

With hotel tax revenues failing to recover from the 2008 recession and no other revenue source available, the Village was in a bind. Rather than publicly admit the failure of the BU Athletic Stadium Project, the Village spin is that this is all somehow "saving" taxpayers money.

How stupid do they think we are?


Reference Documents: 

2004 Bond Payment Schedule: 

Lisle 2% Pledged Hotel Tax Revenue - Actual vs. Projected

Lisle Sales Tax History:

Oct 16, 2015 FOIA for BU Bond Re-payment Plan

Transfer to BU for ONE DOLLAR:

Emergency Medical Services Fees Increase for Lisle Residents

Some new 2016 Resident EMS fees are nearly 5X the 2007 fees. 

Lisle-Woodridge Fire District Board unanimously approved significant increases to RESIDENT EMS fees at their Board meeting yesterday.  Link to Ordinance 16-09 HERE.

Here is a recap of EMS Resident fees from 2007-2016:

BLS Emergency w/transport

• 2007 = $350
• 2015 = $500
• 2016 = $1,650 (4.71x)

ALS 1 Emergency w/transport

• 2007 = $550
• 2015 = $700
• 2016 = $1,650 (3x)

ALS 2 Emergency w/transport

• 2007 = $750
• 2015 = $900
• 2016 = $1,650 (2.2x)

ALS Treat/Non-transport

• 2007 = $100
• 2015 = $100
• 2016 = $200 (2x)

RESIDENT FEE COMPARISON:

BLS w/Transport 

• 2016 Wheaton = $444
• 2016 Downers Grove = $523
• 2016 Oak Brook = $550
• 2016 Roselle = $800
• 2016 Hanover Park = $800
• 2016 Chicago = $900
• 2016 Lisle = $1,650

ALS 2 w/transport 

• 2016 Downers Grove = $753
• 2016 Wheaton = $763
• 2016 Oak Brook = $800
• 2016 Roselle = $1,200
• 2016 Hanover Park = $1,200
• 2016 Chicago = $1,200
• 2016 Lisle = $1,650

1999 Freightliner FL60/LifeLine
Advanced Life Support Ambulance

Station 54 - 2505 Green Trails Dr. Lisle IL

Broda's Backroom Deal Exposed

Typically, when an elected trustee resigns from a Village office, there is an open, public process to fill the vacant seat. An open process builds public trust and confidence and ensures that the most qualified person is selected to fill a vacant seat. 

Unless, the vacancy is in Lisle.

Once again, we see that Lisle Mayor Broda chooses the backroom, closed process over the open, transparent public process - this includes the process of appointing a person to fill a vacancy in an elected public office.  

Here's the Broda backroom process... 

Lisle Watchdogs received several tips a few weeks ago that a Lisle resident was announcing to friends and neighbors that she was going to be appointed to the Village Board. We received several tips - but only verbal accounts - no records. 

There was no vacancy in a public office. 

On June 16, the Village of Lisle posted an agenda for the June 20 Board meeting that included a closed meeting to select a person to fill a public office. As of June 16, there was no vacancy in a publi office in Lisle. We received several more tips informing us about the person that Broda had already selected to fill an unannounced vacancy in a public office. 

On the morning of June 20 - still no effective vacancy in a public office. 

At the June 20 Board meeting, a letter from Trustee Getz was read, but there was no public announcement seeking letters of interest/resumes from Lisle residents interested in filling a vacancy in a public office. The following day we submitted a FOIA. 

TIMELINE of Broda's Backroom Deal

- Thurs June 9, 2016 - Christy McGovern, former Green Trails HOA member, former public school teacher, and now a stay-home mom for the past 12 years submits her letter and resume addressed to the entire "Lisle Board of Trustees." (Did her letter actually get delivered to the entire Board of Trustees on June 9?) 

- Thurs June 16, 2016 - Village of Lisle posts agenda for the June 20 Board Meeting with closed session item to discuss appointment of a person to fill a vacancy in a public office.... but at the time there was no effective vacancy.

 - Friday June 17, 2016 - The Village of Lisle posts the packet for the June 20 Board meeting - no information on a vacancy in a public office is included in the packet. 

- Monday June 20, 2016 (2:26PM) - Trustee Rob Getz submits a resignation letter via email (not notarized as required by statute) to Broda and Village Manager Sprecher. Because the letter is not notarized, there is still no effective "vacancy" on the Board. (Ref: 65 ILCS 5/3.1-10-50 - see below) 

 - Monday June 20, 2016  - (7:30 PM) The public is informed of Getz's resignation as his letter is read aloud. The letter would not be made available to the public for 7 days. The Board goes into a closed meeting on June 20 to discuss appointment of a person to fill a vacancy in a public office. Broda presents the McGovern letter/resume. There was no effective vacancy as of June 20 because Getz's letter was not notarized. 

- Tues June 21, 2016 - Lisle Watchdogs submit FOIA for the Getz resignation letter and the McGovern resume and letter of interest in the appointment.

- Monday June 27, 2016 - Village of Lisle posts info on Getz resignation on website. Broda is still not seeking letters of interest from Lisle registered voters.  "Mayor Broda will propose a replacement to the Village Board for their approval"

- Tues June 28, 2016 - 10 AM. Village of Lisle responds to our FOIA and provides copies of the requested public  records. (see below) 

McGovern Photo: Facebook.

Getz photo: Village of Lisle website

CLICK to enlarge public records (redacted by Village of Lisle)

 McGovern's June 9 Letter to "Lisle Board of Trustees" - obtained by FOIA

McGovern's resume - obtained by FOIA

 Getz's June 20 Email to Broda and Sprecher - obtained by FOIA

                       Getz's June 20 Resignation Letter to Broda - obtained by FOIA

June 28, 2016 - Getz's seat as a Village Trustee is still not effectively vacated because he did not submit a notarized letter as required by State Statute (this will likely change after the VOL reads this blog):

Illinois Municipal Code:  (65 ILCS 5/3.1-10-50) 

Sec. 3.1-10-50. Events upon which an elective office becomes vacant in municipality with population under 500,000.
(a) Vacancy by resignation. A resignation is not effective unless it is in writing, signed by the person holding the elective office, and notarized.

Village of Lisle Board Fails to Audit BU Stadium for 7 Years

Lisle citizens who attended a Special Meeting of the Village of Lisle Board of Trustees on May 31, 2016 were surprised to learn that the Village of Lisle failed to conduct independent annual audits of the financial statements of operations of the Village of Lisle - Benedictine Stadium Complex from 2010- 2016. 

The "informal" reports that Benedictine University submits to the Village of Lisle show $2.6 Million in total losses since the Stadium Complex opened in 2004. 

In 2004, the Village issued $6.4 Million in General Obligation (Alternate Revenue Source) Bonds payable from the facility revenue and from hotel taxes. Hotel tax revenue for FY 2015-16 remains 39% below its high in 2007. 

The Village does not have sufficient revenue to make the remaining bond payments, including a $2.3 Million balloon payment in 2024. There has been much controversy on the the options for refinancing the debt and the desire for a ballot referendum. 

The Village of Lisle is refusing to voluntarily place the question of bond refinancing on the ballot. 

Why? Perhaps because the Village Board knows that voters would reject the proposed refinancing plan that extends payments out to 2033 and permanently removes Benedictine University's obligation to contribute net operating revenues to the bonds fund? OR perhaps the Village Board knows that voters would reject the proposed refinancing plan because it would limit Village of Lisle public use of public-private sports complex to 5% or about $15,000 of use events per year? 

Benedictine University can purchase the $6.4 Million in publicly-funded improvements in 2029 for $1.00. 

Lisle-Woodridge Fire District Outsources Finance Dept.

The Lisle-Woodridge Fire District has terminated their entire finance department and outsourced all financial work to Governmental Accounting, Inc of Inverness, IL. The move will save the district money - eventually.  Its questionable if taxpayers will ever see the savings.

It will take 9 months to recover the costs of the severance and release payouts for the 3 LWFD employees who were terminated.

The LWFD Board of Trustees approved the severance agreements on March 22, 2016. There was no public disclosure prior to Board approval - a blatant violation of the IL Open Meetings Act.  It took Lisle Watchdogs 3 weeks to get the District to release the Board-approved severance documents with multiple communications to the LWFD FOIA officer, James Weaver, and correspondence to the IL Attorney General.  Under the IL Freedom of Information Act these records were required to be provided in 5-days.

Better late than a lawsuit.

$123, 300 Severance to Terminate Three Employees

The District terminated the Finance Director, the Finance Assistant, and the Accounting Specialist.
Each was given a separate severance agreement. The total of all three severance packages is $123,319. The three employees had a combined total annual salary of $198,015 and a combined total compensation package of $295,631. We are waiting to hear when the severance payments were made to see if they were structured to provide a pension spike.

Barbara Beshears, the Finance Director received a severance package of $73,983.07.
Her annual salary was $97,619 and her total compensation package was $133,402.

Cathy Hojak, the Finance Assistant, received a severance package of $28,814.88
Her annual salary was $66,452 and her total compensation package was $102,311.

Randi Wobrock, the Accounting Specialist, received a severance package of $20,521.11.
Her annual salary was $33,944 and her total compensation package was $58,918..

$107.640 Annually to Outsource Finance Dept. 

All of the work done by the Finance Dept - including budgets, purchasing, annual financial reports - has been outsourced for an annual cost of $107,640.

Net savings to the District - and hopefully to the taxpayers - is significant.

After the first nine months it takes to recoup the cost of the severance packages, the District will see an annual savings of $187,991.

Governmental Accounting, Inc. proposes to do the work of 3 full-time district employees working a combined 120 hours per week with only 2 part-time employees working a combined 28 hours per week - a reduction of  77% in work hours. Some work will be done on-site and some work will be done remotely.

WILL THE $187,991 ANNUAL SAVINGS BE PASSED ON TO TAXPAYERS?

Not likely.

Don't get your hopes up that this will result in a tax cut to taxpayers. Far more likely, the so-called "savings" from outsourcing will shift more money into the District's underfunded pensions.

Nothing more than moving money from one pocket to the other. We have to ask, why wasn't this done years ago? Why aren't other governmental entities outsourcing their finance work?

See Also:

Lisle Woodridge Fire District Quietly Approves Major Reorganization.
 - March 2015 Job Cuts Hit Lisle-Woodridge Fire District

Alarm Sounds, Lisle -Woodridge Fire District Fails to Respond.
 - Oct 2014 - LWFD Fails to respond to Finacial Alarm 2 years Later.

  

DuPage County Questions Conflict of Interest in Lisle.
 - July 2015 - Tom Althoff Appointed to LWFD Board conflict with Village of Lisle.

Moody's Downgrades Lisle-Woodridge Fire District
 -June 2014 The Aa3 issuer rating reflects a recent trend of underfunding annual pension payments, highlighting the financial risk stemming from the district's elevated pension liabilities and statutory requirements that require the district to fully fund its employer contributions.

We are Still working on it...
 - Oct 2015  - 3 1/2 years after the May 2012 Crowe Horwath Report, LWFD was still working on a financial plan to address the underfunded pensions.


Reference:

   All of the severance agreements and the outsourcing contract approved on March 22, 2016 are now available (as of yesterday) on the LWFD website.


FOIA Documents

 - FOIA 3/25/2016 

 - FOIA Correspondence

 - FOIA Response