Lake Zurich will restructure bond debt to cover $650,000 TIF deficit

Lake Zurich village officials said they hope to plug a $650,000 shortfall in revenue from a special taxing district by restructuring the village's nearly $30 million debt.

The tax increment financing district, established for the redevelopment of the downtown area, isn't generating as much revenue as consultants initially projected. That's partly because of the stall of two downtown redevelopment projects attributed to a national slump in the housing market.

The district, established in 2002, captures taxes from increased property values. The money is used for redevelopment purposes.

The roughly $1.4 million in anticipated tax district revenue for the next fiscal year won't cover principal and interest payments on two $10 million bonds issued for redevelopment. The amount is also insufficient for the village to pay the library district and Lake Zurich Unit District 95 for new residents coming from redeveloped areas.

Consultants told village officials this week restructuring the debt at a time when interest rates are low is the best option to stave off the deficit.

"The restructuring and refunding of that TIF debt essentially defers the cost burden from today to a better time when we actually have the resources to pay," Lake Zurich Village Administrator Bob Vitas said. "It gives us the breathing room that we need in order to be able to move forward with new development downtown."

The village is paying 7 percent on a separate $10 million line of credit from Cambridge Bank, which also will likely be refinanced.

"Right now, with the market being where it is, we're very confident that we're going to see some good rates," Vitas said.

The plan also buys the village time to figure out what to do with the halted downtown redevelopment.

"We are talking to multiple developers about three different sites in downtown right now," Vitas said.

In December, the village publicly severed ties with its master developer, McCaffery Interests, and is considering possible legal action against the Chicago developer.