The Freeport City Council's Piggy Bank

At Tuesday night's regular meeting of the Freeport City Council's Committee of the Whole there will be a discussion regarding the agenda item, "Costs of Demeter Bridge Replacement".

The Demeter Street bridge has been closed to vehicular traffic for a decade, those in the vicinity have continued to use the old bridge for pedestrian traffic.

What caught Tutty's attention regarding the issue now in front of the City Council is the "Cost Differential" which was apparently developed by Freeport City Manager Lowell Crow.

This document states that the "initial construction estimate of $1.3 million" has now grown to nearly $2 million.  Financing is broke down as coming from a grant from the State of Illinois of nearly $400,000 leaving Freeport taxpayers on the hook for the remaining $1.5 million.

This is where it becomes interesting, the balance of the costs, according to what was provided with agenda states, "Cost covered through MFT and Water And Sewer CIP fund." Here is a photo of what the City Manager has included with the agenda:

What?  Tutty can understand MFT (motor fuel taxes) but using the Water and Sewer Capital Improvement fund is completely improper.

Last year when the same Freeport City Council voted to drastically increase this fee on residents' and businesses' water bills, users of the public utility were told the huge increases were necessary to upgrade the city's treatment facilities and improve aging "water and sewer" infrastructure

Apparently the Freeport City Council has used home rule to create their own piggy bank to dig into for whatever project they need the money for.  Let's also keep in mind this fee is placed on water bills that everyone, including the city's poorest, need for sustenance.

If you take a look at the City's Codified Ordinances the City Council created this large and very unpopular tax without putting any restrictions upon the use of the proceeds.  If you look at Chapter 1052 it states the fee was created for the "purpose of funding capital projects relating to the City's water system and sewer system, specifically, but not limited to rehabilitation, repair, replacement, renovation and creation of facilities."  Pictured below is the ordinance:

Don't you just love the "specifically, but not limited to" language?  These words essentially make any restrictive use of the funds legally unenforceable.

A new Demeter bridge would benefit but a handful of Freeport residents, furthermore there is virtually no chance of increased economic development on the Krape Park side of the projected structure.  The vast majority of Freeport residents (all of which pay the capital improvement fee) could not care less if there is a bridge over Yellow Creek at this location.

What will this bridge actually do for residents of Cherokee Hills or the Third Ward?  How will it benefit any Freeport business or employer?  The only benefit listed on the flyer provided to the Freeport City Council is, "New Bridge Design will allow emergency vehicles to pass."  But think about it, would an ambulance and firetruck coming from the Park Boulevard fire station really find it any quicker to to get to Gladewood Drive via a new bridge?  Tutty would like to see the time studies.

Tutty considers it a blatant misuse of the water and sewer capital improvement fund to finance any part this proposed new bridge.  And while the use of motor fuel taxes is obviously a better source of funding for this project, those funds are also limited and Freeport streets are in terrible shape...whether this bridge should be a priority at this point in time is an issue worth an in depth public discussion.

Of course who are we to tell the Freeport City Council how to use their home rule piggy bank.

As always,  yours in honesty, Tutty Baker, tutty.baker@gmail.com

More Freeport City Council Scrutiny is Desperately Needed

Freeport's almost daily newspaper's lead story this past Wednesday was in regard to the Freeport City Council "considering" a $1.1 million bond for "downtown development".  In last Sunday's  Journal-Standard, City Manager Lowell Crow wrote,  "Monday night, the City Council will approve the sale of this bond to begin that process". 

People that follow Tutty through this blog, tuttystown.blogspot.com, know that Manager Crow's statement of certainty caused Tutty some consternation. When the agenda for the meeting was nowhere to be found, the City Council meeting had to be backed up until Tuesday to avoid the mayor, council members, city clerk and city manager from committing a class C misdemeanor by violating the Illinois Open Meetings Act.

The Journal-Standard story never mentioned why the meeting was moved to Wednesday. But readers of the Tutty's Town blog know why.

What the newspaper's story did do was completely take the word of Manager Crow as fact even though ordinance authorizing the bond does not guarantee or legally enforce what Manager Crow has publicly represented.  Please see Tutty's  previous post for a link to the ordinance, Ordinance 2018-25, and see for yourself.

The Journal-Standard article, as Manager Crow does, claims the 15-year bond will be retired through TIF money, even though there is not 15-years left in the life of the downtown tax increment financing district.  This general obligation bond will be backed by the "full faith and credit" of the City of Freeport and will require an additional property tax levy, and while that levy may be abated, this city council cannot guarantee the actions of future city councils.  The current city council or city manager have not said how this tax will be abated after the TIF district expires.

What's more, if these bonds were going to paid off with a single source, they would be issued as "non-recourse" bonds, meaning that if the designated source of revenue dries up, the bond holders would not be paid.  In this case the City would issue "revenue bonds" rather than the "general obligation bonds" currently before the Freeport City Council.

Tutty is also bothered by the fact that the Journal-Standard article, as well as a memo to the Freeport City Council from City Manager Crow both make mention of the "Northern Illinois Community Development 'Council'".  This is not the official name of the group.  The group's official name is the "Northern Illinois Community Development Corporation" and is a for-profit organization.  According to both the newspaper and the city manager, this group will be working with the recently formed NewCo  to administer the disbursement of  bond proceeds.  How many members of NewCo are also members of the for-profit corporation?  How proper is it to hand public money over to a for-profit corporation while all the contracts will be hidden from City Council (therefore public) view through the NewCo organization?  Why does it appear that NewCo does not have to comply with Illinois' open meeting laws when they are relying upon so much public money to operate?

Here is the city manager's memo to the Freeport City Council.

What the Freeport City Council and the public at large should realize is that newspaper articles and memos from the city manager are nothing more than hearsay.  The only legally enforceable document is Ordinance 2018-25 that they are being asked to pass.  From Tutty's point of view, it does not appear that members of the Freeport City Council have bothered to critically read the actual ordinance.

Let's look at the last paragraph of Section 9 of the ordinance in question.  In this paragraph the term "Official Statement" appears no less than six times.  An "Official Statement" is basically a prospectus on the issuer of municipal debt and is required by Securities and Exchange Commission rules on all municipal debt issuances of greater than one million dollars.  Tutty wonders if any Freeport City Council members, or the mayor herself, know what an "Official Statement" is or have seen the "Official Statement" regarding this bond issue--even though Section 9 of the ordinance states that this lengthy document "is hereby ratified, approved and authorized".  Is City Manager Crow asking the Freeport City Council to approve, ratify and authorize a document they have not seen?  Following is the paragraph of Ordinance 2018-25 in question.

City Manager Crow and personnel in the finance department have had to have been working on the "Official Statement" for weeks if not longer.  An "Official Statement" from a City of Freeport bond issue in 2015 is a total of 207-pages and contains a plethora of financial and budgetary facts regarding Freeport, Illinois.  Here is one of the pages of this document and has to do with the total long term debt attributable to the City of Freeport and her taxpayers.

Another concern of Tutty's regarding the above pictured document is the percentage of  direct bonded debt in relation to Freeport's equalized assessed value (EAV).  According to the 2015 Official Statement the ratio was 10.66%.   Because Freeport is home rule there is no statutory debt limit as the Freeport City Council can raise taxes at any time to cover any debt incurred.   However, if the City of Freeport would ever cease to be a home rule the statutory debt limit would be 8.625% of the EAV, continuing to add to Freeport's debt burden could cripple future Freeport City Councils.

Tutty's next posting will focus on home rule and the City's use of the same.  Have City leaders been prudent with the use of home rule, or have they abused this vast power to the detriment of Freeport's future?

You can follow Tutty by sending a friend request on Facebook, or by following Tutty on Twitter @tuttybaker.

As always, yours in honesty.  Tutty Baker  tutty.baker@gmail.com

The Freeport City Council...Professionalism...or Lack Thereof?

Today's column by Freeport City Manager Lowell Crow piqued Tutty's interest.  Manager Crow wrote that, "The City is leveraging the downtown TIF money to be able to sell a government bond value of $1 million.  This bond is backed and secured by tax increment financing revenues to secure and guarantee the government bond."  According to Manager Crow's column the money generated would be used, "to develop a revolving loan fund for economic growth downtown."

Tutty believes the public has a pertinent interest when the Freeport City Council is discussing taking on additional debt. While Manager Crow stated that this bond will be backed by TIF funds, in most cases bonds such as this are referred to as "double-barreled" bonds, meaning they are backed by general taxes as well as other specific sources in order to secure a more favorable interest rate.

As a result, Tutty began seeking more information.  Tutty sought out the agenda on the City of Freeport's website, to no avail.  For whatever reason the agenda was not posted on the website, which is a problem.  The Illinois Open Meetings Act requires an agenda to be continuously available for public perusal a full 48-hours prior to the noticed meeting.  Because the City does not post their agenda where the public can see it for the required amount of time, such as on the front door of where the meeting will be held, as the Freeport Park District or Stephenson County Board does, the City can comply with the 48-hour requirement by posting the agenda on the City's website and having it available for the full 48-hour time frame.  However there was not a link to the agenda.

 

 

 

 

 

 

Manager Crow stated in his column that, "Monday night, the City Council will approve the sale of this bond to begin that process."  This statement bothered Tutty as how does he know the City Council will approve this bond?

Tutty made a few calls and, amazingly, the agenda showed up on the City's website shortly after noon on Sunday, April 15, 2018 with the meeting being pushed back by a day, until Tuesday, April 17th in an obvious effort to comply with the Illinois Open Meetings Act.  However, all the agenda has done is raise more questions.

Here is a link to this ordinance, Ordinance 2018-25, for those that want to read it for themselves. http://www.cityoffreeport.org/2018%20Agenda%20Hyperlinks/2018-25%20Draft%20Bond%20Ordinance%20-%20Downtown%20TIF.pdf

The ordinance is clear that the Freeport City Council is using home rule powers to borrow this money without published notice.  Second, the ordinance contains no mention of the amount of money being borrowed, interest rate or specific re-payment terms.  Third, there is not one single mention of TIF or tax increment financing in the ordinance supplied with the agenda.  Fourth, the ordinance is clear that the Freeport City council is going waive their own rules and pass this ordinance on a single reading with very limited public notice.

 

 

 

So why is it so important for the City Council to pass this bond ordinance immediately?  Is there a bona fide emergency the public should know about?

 

And while the City Manager's column claimed that this borrowed money will be used for "economic growth downtown" however, the language of the ordinance paints a different picture.  The ordinance states this:

"This Bond is one of a series of bonds (the “Bonds”) issued by the City for the

 

purpose of financing capital municipal improvements in the City including, but not limited to,

financing the City’s downtown development, and paying expenses incidental thereto, all as

described and defined in the ordinance of the City, adopted by the City Council of the City on

the 16th day of April, 2018..."



 

Another problem rests with the city clerk as this ordinance, Ordinance 2018-25, requires the city clerk to "certify" that this ordinance was "continuously available for public review during the entire 72-hour period preceding said meeting."  Here is the exact language the city clerk will be asked to certify if the ordinance is passed on Tuesday night, with less than 72-hours of being available for the public to peruse.

 

So will the city clerk certify with her signature that this ordinance has been available to the public for the full 72-hour time period, possibly committing fraud?

While the public has been promised more "professionalism" from Freeport City Hall, that sure seems to be a long way from fact in Freeport, Illinois.  Either way, Freeport City Council members should have some very pointed questions for the Mayor, Freeport City Manager and Freeport City Clerk, unless they really are asleep at the wheel.

As always, yours in honesty, Tutty Baker,  tutty.baker@gmail.com