Lake Zurich puts Band-Aid on shortfall

The Lake Zurich village board Monday night voted to make up for a roughly $750,000 shortfall in anticipated revenue from the village's special tax increment financing district in fall 2008 by borrowing internally from the village's water and sewer fund.

Officials say a lackluster housing market that has indefinitely stalled one of two major downtown redevelopment projects is to blame for the shortfall. The village also hasn't fully realized the increase in property values from a townhouse project that is only half complete.

The village board discussed several options to make up the deficit, including the possibility of raising taxes, establishing a new utility tax and cutting expenditures by 5 percent across all village departments, before coming to that decision.

"I'd hate to see us really get backed into a corner right now because we have lots of options," Mayor John Tolomei said. "We aren't in dire straits by any means but I'd hate to see us get to that point."

Several board members did not favor raising taxes or cutting the village budget without a proper review of the impact on services.

The village is anticipating a one-time increase of roughly $2 million in revenue in the water and sewer fund next year, generated from selling additional sewer capacity to Lake County and Wynstone subdivision in North Barrington. The deal would also generate additional revenue from usage.

That money would essentially be used to plug the hole in the TIF fund so that the village can fulfill its obligation to Lake Zurich Unit District 95, which amounts to roughly $455,000 in tuition for new students coming from the TIF district, and pay interest on a $6 million bank loan.

It's a temporary Band-Aid on what could be a continuing problem that needs a long-term solution, village officials admitted.

"I think we have to look at as many ways as we can to conserve funds," village Trustee Jim Johnson said. "Maybe we could look at how to streamline, how to better utilize personnel, look at some services that don't have to be done in the village, look at how we can gather some fees."

The village also will be looking into refinancing two $10 million bond issues for downtown redevelopment in an attempt to save roughly $383,000, which would have contributed to the deficit.