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?

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