Libertyville Sports Complex key to village deficit

With an estimated 1.2 million visitors a year, it's not as if the Libertyville Sports Complex has been a ghost town. Some 1,000 athletes and their families are at the indoor sports complex this weekend for an international basketball tournament.

But the 168,000-square-foot building is only part of the complex at Peterson Road and Route 45. Since it opened in 2002, the traffic hasn't translated to enough money for the center to cover its debt.

Though not the only factor, the heavy shortfall is one key reason the Libertyville village board is in the last resort position of having to raise taxes.

"This perfect storm is now upon us and we have to act accordingly," Trustee Richard Moras, head of the board's finance committee said recently.

Ordinances to be considered by the board at 8 p.m. Tuesday, Sept. 8, during its regular meeting, would authorize what amounts to about a 5 percent tax on gas and electric bills. The telecommunications tax also would increase from 3.5 percent to 6 percent.

In the village's big picture, sales tax revenues have been falling for years and are well below even conservative expectations. Required pension payments will increase. And despite continuing budget cuts, there isn't enough money coming in to cover all the expenses, village staff say.

One of the biggest has been the annual $2.4 million payment for the bonds used to build the Sports Complex, which is comprised of: a large indoor facility with nine full-sized basketball/volleyball courts, two full-sized soccer fields and other amenities; a driving range with heated tees; and a now-closed 27-hole mini-golf course and batting cages.

The village issued $4.5 million in bonds to buy the land and $20 million to build the facilities in response to a citizen survey saying more recreational opportunities were needed.

Overall, it has never met sales projections, however.

"They misforecast the market. That is where the problem lies," said James Zych, parks and recreation director. The indoor portion has been holding its own and serves the community and neighboring areas well, according to Zych. But the other pieces have fallen short.

"It's a unique situation. The forecast estimates for the other parts of the property are not coming true," he said.

What's left after salaries and other expenses has fallen far short of the amount of the debt, and the village has been transferring rainy day funds - about $7 million so far - to cover the bills.

"When you have to pay your mortgage, that's where it gets complicated," Zych said.

Once at nearly $10 million, those "unreserved funds" may be gone by early next year, prompting the village board to look for new revenues.

Realizing it was a losing proposition, the village in 2005 put the mini-golf portion of the Sports Complex up for sale. The golf learning center was put on the market in 2007.

There was interest and a few offers for the land at the busy intersection but no sales. Then, the real estate market tanked. Offers are still being accepted, but the village has authorized another strategy.

The property is being made available as a whole or in parts in what is known as a sealed bid auction. The village is not obligated to accept any offers it may get by the Nov. 3 deadline.

The goal is to sell the land and pay down the bond debt. But the village likely will have to settle for much less than the $11 million to $18 million range it originally anticipated.

"We know that in this market, if people were going to make an offer at the original price, they would have made it already," said Dick Kehoe, who is handling the sale for Inland Real Estate Sales Inc. "They're all aware of what the market is today and that there is no foreseeable change in it for a minimum of a year and maybe more."

Even if a buyer was found tomorrow, however, the village would still need a new source of revenue because bond companies require cushion beyond the bond payment, according to Pat Wesolowski, the village's finance director.

"We have to show we have that much revenue plus an additional 25 percent coverage factor," she said.