Why Kane County wants to get into the loan business

Move over, banks - Kane County wants to be the go-to source for local taxing bodies seeking short-term loans.

County officials gave preliminary approval for a $400,000 loan to St. Charles Township Wednesday. The county would collect the loan repayment directly from the township's property tax installments in June and September, along with 1.5 percent interest. Because the county takes out the property tax proceeds before the township even gets its share, there is no risk involved with the loan not being repaid, officials said.

Kane County Treasurer David Rickert explained how the county would make more money and the township would save more money in the deal: The 1.5 percent interest is about twice the amount of return the county would earn with that $400,000 just sitting in a local bank. And the township probably would have paid 3.5 percent to 5 percent interest on the loan if it used a local bank. That's a scenario Rickert pitched to every local taxing body, from school districts and municipalities to libraries and townships, in a recent letter.

"We want to make sure our local taxing districts don't have to go out and get tax anticipation loans from a financial institution," Rickert said. "We're not really doing it for our own monetary purposes. The interest we charge really just covers our costs."

Asked whether he thought the banking industry would frown upon the county's solicitation, Rickert said it's not a factor.

"I don't work for Wall Street," he said.

St. Charles Township Supervisor John Arthur Anderson said the township depleted all its reserves when it built a $950,000 structure designed to house cremains in the Union Cemetery.

"This loan just tides us over in case we need the money," Anderson said. "If we get a big snowstorm again, we might need it."

Anderson said the cremains facility will pay for itself over time as the niches for ashes are sold. The township has sold 10 of the 312 niches it must sell to pay off the project. Once that happens, it will add more niches to create a revenue source to fund maintenance of the cemetery. The addition of gardens, wooden benches and polished granite blocks at the cemetery will also reduce the need and costs to mow the property, Anderson said.

The full county board must still vote on the loan before the transaction is finalized.