DuPage Water Commission to borrow another $40 million

After accidentally spending $19 million and borrowing $30 million to help fix that mistake, the DuPage Water Commission began the process of borrowing another $40 million Thursday to pay off construction debt.

Commissioner Don Zeilenga, who has been the commission's point person during this financial crisis, said the $40 million loan solves a "near-term problem."

But Commissioner Jim Zay said that without a plan to repay the loans, the debt could turn into a long-term problem.

"A $70 million loan is not plugging a hole," he said. "The boat is sunk. We're just trying to raise it up to the top now."

The first $30 million loan is expected to be repaid in a year and cost the commission about $350,000 extra in interest. The $40 million loan could cost the commission an extra $800,000 over time because the interest rate on the loan is higher than the first one.

Zay suggested the commission wait on borrowing until the upcoming budget for the commission is approved. Commissioners poured over the budget proposal Thursday and suggested cutting 1 percent raises for employees and finding another 5 percent in the budget to cut to save more money.

The commission's financial saga began late last year when it was discovered that the commission's former financial administrator used reserve funds to pay for commission operations, leaving the commission unable to pay some of its $58 million in construction debt due before May 2010.

The commission hired a high-priced law firm to oversee a forensic audit to determine what went wrong. The report was submitted to the commission last week, but its contents were not discussed openly Thursday. It's unknown when and if the report will be available on the commission's Web site.

Meanwhile, legislation has been introduced in Springfield to roll operation of the commission into the county. The proposal has some supporters on the commission. Other commissioners have some other suggestions, including having the county auditor perform the commission's audit instead of paying an outside firm to do the work in the future.

Debra Fulks, a representative from the social advocacy group DuPage United, said the organization agrees with the proposal to move the water commission under the county's wing.

"It should have been done years ago and modeled after the county's stormwater management," she said.

Some commissioners worried about co-mingling of funds and the county using water reserves for its own purposes, but Zay said the county risks having its high bond rating lowered by taking over the financially mismanaged agency.

The commission is expected to meet again April 8 and pass a budget.

Borrow: Budget meeting coming April 8