Logan County Board wrestles through funding $5M courthouse repairs

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[July 25, 2019] 


On Tuesday, July 23, the Logan County Board held a special meeting to discuss revenue sources for courthouse repairs.

David Pistorius talked to the board about bonds and went over a report with them. Pistorius is a Senior Vice President at First Midstate, an investment banking firm in Bloomington that specializes in municipal bond issuance. He said alternative revenue bonds are bonds where you pledge existing revenue to pay the debt back. These bonds do not increase estate taxes, so there is not a tax levy.

Pistorius said there are three steps in the process of issuing these bonds. First, you need to adopt an ‘Ordinance of Intent’ stating what the money will be used for, how many bonds you want to bond for, and what revenue will be pledged to make the payments for the debt. Real estate taxes act as a back up to the pledged revenue.

Once the ordinance is adopted by the county board, Pistorius said it would be published in the paper and go through a thirty-day petition period with the petition asking people to vote on it in the next available referendum. During this time, seven and a half percent of the registered voters in the county could sign a petition to stop the ordinance from moving forward. If you get through a petition period successfully, you have the authority to issue bonds for the next three years.

Second, all non-referendum bonds require a public hearing with a notice posted in the paper a week before. The hearing would allow anyone in the community to visit with the board about the specifics of a project and could be done at the same meeting where the Ordinance of Intent is adopted or done the following month.

Third is the adoption of the bond ordinance with bonds sold five to 10 days before the bond ordinance meeting. Counties get bond proceeds in their entirety three weeks after that. Pistorius said the whole process is about three to four months before you have bonds on hand.

Pistorius said existing revenues can also be used at a higher interest rate than an Alternate Revenue Bond. For debt services of $1 million a year, the money pledged up front would have to be $1,250,000. If a county’s population is decreasing due to people moving away, real estate taxes can act as a backup and make up losses, but Pistorius has never seen that happen.

Board member Chuck Ruben said the county abates property taxes every year. They are available to be increased if the county cannot meet their obligation, so they are (presently) not levied.

The county already has two Alternative Revenue Bonds outstanding. Pistorius said the one from 2005 has a debt service of $50,000 a year for the county and the one from 2012 is $45,000 to $47,000 annually, which is being abated.

The bond from 2005 has an increasing interest rate and is at six and one-half percent interest, and Ruben said the county could probably do better than that in today’s bond market. He said this one could be paid off by rolling it over.

With Tax Law changes, Pistorius said the “call feature” when bonds can be prepaid off has been reduced to five or six years and during this time the bond can be restructured or paid off with no penalty.

Pistorius said a Public Safety Tax already in place generates about $940,000 annually for the county. The last referendum request to increase that sales tax failed, but would have doubled that income amount.

Looking at different years and different rates can help with decisions. Pistorius said running interest rates between three and five percent for 10, 15 or 20 years shows how many bonds you could issue based on those factors.

The Public Safety Tax can be raised by 25 cent increments. Pistorius said if the increased amount is 25 cents, that would cut bonds and revenue in half.

Public Safety Tax vs County Facility Sales Tax

One option a county can vote on is a Public Safety Tax, but Pistorius said a county could also vote on a County Facility Sales Tax in the same kind of increments. Both would generate the same kind of money.

The recent Public Safety Tax referendum said “to pay for public safety purposes shall the county of Logan Illinois be authorized to impose an increase on its share of local sales taxes by .5 percent,” which Pistorius said meant the consumer would pay an additional fifty cents in sales tax for every hundred dollars spent on tangible personal property.

Board member David Hepler asked if that was the only language that could be used, and Pistorius said the legal language on the ballot cannot really be adjusted or simplified due to statute requirements.

With the Facility Sales Tax, a county can state what the money would be used for, so Pistorius said it could say what percentage would be used for courthouse repairs.

Pistorius said there is plenty of time to draft the question since it needs to be done by December 30 and filed with the County Clerk by January 9, 2020 to be on the ballot for March 17.

A sunset provision of 15 or 20 years could be put on the bonding. Pistorius said the provision would depend on the amount of time the county would want the money to be available.

When looking for grant money, Pistorius said a county needs to have “skin in the game” to show it is participating in and committed to the process.

The Public Safety Tax would allow the county to issue bonds, but Pistorius said a county cannot move forward and issue bonds unless there is a successful referendum. A successful referendum would allow the county to tell legislators and others we have skin in the game and authority for a certain number of bonds.

Ruben asked if the county could say we would go out for bonds in the amount of roughly $12 M if the tax is passed or morph in with a lesser amount pledging the bond we already have.


Pistorius said the county would need to pledge another revenue, such as the sales tax.

Board member Steve Jenness asked what it would cost to the county to go through the process for the Alternate Bond Revenues. Pistorius said the initial cost is the two published notices.

Pistorius’ company just gets money if the bonds are sold. Then there could be rating costs, insurance costs, bond and disclosure counsel fees, and a few other miscellaneous fees. These costs are three to four percent of the total cost of issue of the bond. These bonds are sold at a premium or above face value.

Looking at sample ballots, board member Dave Blankenship asked about whether a Facility Tax Referendum could mention both the courthouse repairs and safety complex improvements.

With the Facility Tax Referendum, Ruben said, the problem is you cannot issue bonds before it is passed.

If the referendum does not pass, Ruben said he wants an estimate of what happens if the county just reissues the bond, and asked if the county could get $400,000 or $450,000.

Pistorius said it takes work to educate the public about these referendums and what they are for, if they are to be successful.

Newly appointed board member Cameron Halpin asked about adding a sunset clause to the bonds and whether they could do a partial sunset clause.

Adding a sunset clause sets limited parameters of time and purpose.

It is an all or none thing, Pistorius said, once the sunset ends the county would have to go back to the voters again. If there is no clause, Pistorius said the board could go back and reduce the amount.

Board members Annette Welch and Bob Sanders were more in favor of the Public Safety Tax because it shows the intent sooner, but Sanders wants to leave options open.

Facility Tax Referendum explored further

Since the Public Safety Tax Referendum already failed twice, Blankenship said he doubts it will pass with the language used; however the language for both facilities could be used in the Facility Tax Referendum.

Though he likes the sunset clause, Blankenship said he wants the board to find revenue for a future means of sustainability to maintain the facilities.

Hepler said he wants to include both the safety complex and courthouse on the referendum because it stands a better chance of passing.

No matter what, Sanders said the board needs to help promote the referendum through social media in addition to town hall meetings. If educating people correctly, he said people would know the referendum is for both facilities.

Board member Annette Welch said she wants a sunset clause, but putting a pledge up front limits the board to getting the funds in March.

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Senator Bill Brady and Representative Tim Butler told Blankenship it would be acceptable to have the funding in the works. Blankenship said he does not want to commit or pledge just $200,000 to $400,000 to a project this size. He has been told that would be like committing $8,000 to an $8 M project.

Without a revenue source, Ruben said the county cannot do anything.

Blankenship asked if the alternative would be closing down the second floor of the courthouse. Other facilities are not large enough to house the courthouse staff and are not ADA compliant. Blankenship does not see alternatives other than making appropriate cuts.

Hepler said the county could pledge up to $5 M against matching grant funds. But Ruben said the board cannot make enough cuts to come up with $1 M let alone $5 M.

The county has a budget that is negative $500,000 this year and Ruben said no wind farm permit money is coming in next year.

Blankenship asked about the deficit because he said the audit showed the county in much better shape.

Ruben said the audit showed the county as being $322,000 in the hole instead of $500,000, but the $322,000 was added into the original budget last year.

Blankenship asked whether there was a 13 percent cut out of county departments years ago.

There were 13 percent cuts at one point, Ruben said, but in good conscience he would not ever agree to that again because it is not fair to certain departments due to the way their employees are paid.

Though Blankenship said 13 percent seems too aggressive. He also said the board needs to take action and do something to show it has the intent and means to complete the project, and the Public Safety Tax could be used to get the ball rolling. He also wants to look into the Facility Tax to show we are sustainable, and have as many funding sources as we can. The hope is to get as high of matching funds as possible.

Sanders said he did not feel the county has a choice. When people have a major project on their house they either get a loan, cut their budget or start selling assets.

There was discussion of how to word the various motions before two motions were finally brought forward.

Welch motioned to move forward with a Public Safety Tax option with a 20-year sunset clause.

The motion passed with 11 yeses.

Scott Schaffenacker voted no.

Ruben made a motion to take out a bond with a $50,000 pay limit from the sales tax line items of the county to pay off and supplement the 2005 bond, which was unanimously approved.

Ruben also motioned to go out for a bond referendum in the next election in the amount of 50 cents per $100 to be used for courthouse restoration and jail upgrades subject to drafting and required language.

Ruben’s motion was unanimously approved.

Though Blankenship said he would support the bond referendum, he said good luck passing it since they have already tried to pass it twice.

Blankenship said the county needs to make a video on the courthouse and safety complex showing the statute and prison reform mandate to get information out to the public at large.

Board Chairman Emily Davenport then asked restoration specialist Bill Walter to explain the tax credit.

Walter said he was impressed by the dialogue and the county researching everything possible and focusing on seeing what is available.

The tax credit is multi-tiered, but Walter is getting encouraging responses that there is something that can help this project. Walter may also examine what is available for the jail from a tax credit standpoint. He believes in “asking for the moon” to see what is available and said he has substantial reason to be encouraged.

Walter’s goal is to make one big shot the best shot.

When Blankenship asked if the Bushnell Building [in Springfield, Ohio] used tax credits, Walter said yes, and it was very successful when he went through that process three years ago.

Ruben asked Walter if he had a rough figure for the courthouse project.

The figure Walter gave is just under $8 M with a three to five percent cushion built in on each item, though he said any figure could fluctuate between 10 and 15 percent as the work scope is defined. He will review each item with board members, and they will put the list together.

Walter said he has generated this figure prematurely, but the impetus is get a figure for Brady and Butler because the Capital Bill will happen quickly.

Ruben asked if there was anything in there about the interior dome.

For the interior, Walter said he would address the fireproofing and steel condition plus make recommendations to erect proper access to the cupola and clocks. They will also build a structure around the stained-glass dome for access, maintenance and safety, and then reassemble the stained glass back into the dome.

The center cupola is all that has been repaired, so Ruben said the stained glass will need to be re-leaded and cleaned before being put back in. It is in storage for now.

Board member Jim Wessbecher asked about tax credit figure.

When he did a $3.5 M project, Walter said there was a tax credit of $750,000 or 25 percent.

Blankenship said it has also been suggested by state representatives that the county choose a single private foundation to get funding, and said one senator wants to make a donation. He asked State’s Attorney Brad Hauge about the language for recognizing the foundation to make sure the term private foundation does not confuse people.

After these discussions, Hepler motioned to pledge a $5 M match, but Ruben said he is not sure how the county could match it. By using the word pledge, Ruben said that means you intend to come up with the money.

For Hepler, a pledge is not much different than someone making an offer to purchase a home subject to contingencies of financing and inspection. Hepler said there is a one-time opportunity in the next few weeks to get some of this money and he would hate to lose out on several million dollars.

Logan County Board Administrative Assistant Brenda Clark said her understanding is that the Capital Bill will be a match to what the county puts up, so if the county would put in $200,000, she would not expect more than a $200,000 match.

If putting in $5 M anticipated, Clark said Brady and Butler may match it or still come back with $200,000. Clark is not sure there has to be a match for the Capital Bill, but just seeing what we can put forward will help Brady and Butler decide what they will put forth.

Blankenship said he sees it as more of a good faith projection. His understanding is there are member initiative funds for each county and Logan County could potentially get funds from Senator Brady, Representative Butler and even Governor Pritzker. A sizeable projection would get attention and show we are “setting the mark.”

If the referendum fails, Blankenship asked whether the board would give up their commitment to seeing the project through and put everyone in tents, or whether the board would still be committed to doing due diligence as public servants and seeing that the work gets completed one way or the other.

Welch asked whether there is a range under $5 M that would be appropriate and get the county what it needs.

Walter said the question is difficult, but you are most successful when you reach for the tallest apple. You can figure that what you reach for, you may not attain, but if you reach for low hanging fruit, you will get less. If not harmed by asking, Walter’s response is to go for it, but if it would harm you that is whole different story. Walter has not heard where it would harm.

Ruben asked the State’s Attorney for the verbiage.

Hauge said they should say the $5 M is subject to passing the referendum.

Hepler made a motion using the language Hauge suggested and it was unanimously approved.

[Angela Reiners]

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