Water system expansion bonds paid off early, reaping tax savings for Lake Villa, Lindenhurst residents; ‘This was such a unique arrangement’
Expanding Lake Michigan water access to northern Lake County municipalities was a feat of intergovernmental collaboration, leaders said. On Tuesday, the County Board approved paying off part of the bonds for the water system expansion a full 15 years early, saving millions of dollars for taxpayers.
Residents of Lake Villa, Lindenhurst and nearby unincorporated areas of the township that were connected to the Lake Michigan water supply will see tax levy savings through 2037 due to the early payoff.
Because no further work is required for the water access project, excess funding was available to pay the outstanding balance of $4.75 million from the first $7 million general obligation bond, which will result in taxpayer savings of $3,565,500 in interest, according to the county’s Finance and Administrative Services Department.
After the general obligation bond is paid off early, residents are expected to garner tax levy savings of $428 per $100,000 market value through 2037. For a $250,000 home, the cumulative taxpayer’s savings will be about $1,070 between fiscal years 2023 and 2037, according to estimates from the county finance office.
Paying the bonds earlier was a unique and first-time experience for Lake County’s finance director Patrice Sutton.
“We had to be very careful, because the only way to have this type of collaboration was through a special service area arrangement,” Sutton said. “I would say in this particular case, we were a little bit more conservative than we normally would have been because this was such a unique arrangement.”
Austin McFarlane, who was appointed Tuesday to the position of director for the Lake County Public Works Department after serving as the interim director, agreed with Sutton’s assessment of the surplus.
“The last thing we wanted to do was go back to the residents for shortfalls,” McFarlane said. “The conservative approach was certainly the right approach to take.”
Due to the uncertainty of the future water supply, the county, Lake Villa and Lindenhurst entered into an agreement with the Central Lake County Joint Action Water Agency in 2013 to purchase Lake Michigan water. Under the agreement, the county and villages agreed to pay for necessary water system improvements.
To expand Lake Michigan water access to northern Lake County municipalities in 2013, the county estimated the construction would cost as much as $40 million — and took out loans accordingly.
A $7 million Series 2013 bond provided capital for the design, land acquisition and other initial engineering costs.
Additional low-interest loans from the Illinois Environmental Protection Agency’s water revolving fund for the water system totaling $32 million were acquired for the project and are expected to be paid off by 2038.
Lake Villa Village Administrator Michael Strong said the need to find an alternative water source became critical as the community was experiencing rapid growth.
“There are a lot of communities that are still trying to figure out what they are going to do (about future water access), but we’re fortunate that the county was able to facilitate a mechanism for us to fund the infrastructure we needed to put these pipes in and provide means to pay for those improvements,” Strong said.
