DuPage water board accidentally spends $19 million

The DuPage Water Commission is looking to borrow $30 million after mistakenly depleting its reserve fund on operational costs over the past two years.

Commission officials estimate about $19 million was accidentally spent.

The commission has more than $50 million worth of construction bonds due between now and May 1, officials said at a special meeting Wednesday. To make those payments, meet payroll demands and maintain rates, the loan is necessary, staff told board members.

The commission's board voted to have staff negotiate the loan to have a deal in place by next week for approval. The loan would be paid off within a year and cost the commission an estimated $300,000 additionally in interest, officials said.

"It will give us time to catch up on fixing the holes in the ship," said board member Don Zeilenga, who has served as the board's point person.

The board approved a contract with an accounting firm last week to perform a forensic audit on the commission's finances after the depleted reserves were recently discovered, said interim finance administrator Rick Skiba. Skiba is the commission's former finance administrator and was brought back after Max Richter resigned from the post in October. Skiba said the commission's reserves should have held about $26 million, but discovered there was only $7 million there instead.

Skiba said the reserve spending on operational costs began in late 2007 and went undetected during a 2008 audit. The money should not have been spent on operational costs, he said.

Board member Liz Chaplin said she has been concerned about the commission's finances for years and wasn't surprised to learn of the financial plight since the district has been selling Lake Michigan water to municipalities for years at a rate lower than what it costs to buy it from Chicago. Currently, the commission buys water from Chicago at a rate of $1.82 per 1,000 gallons and sells it for $1.42 per 1,000 gallons.

"Some of us have asked questions for years, and no one has held staff accountable," Chaplin said. "My point is that when you buy water at a rate higher than what you're selling it for you can only sustain that for so long before you get into trouble."

About six years ago the commission held nearly $100 million in its reserves, but the county raided those reserves in a highly controversial move and took about $75 million. Still flush with cash years later, the commission acquiesced to demands from municipalities served by the commission to rebate almost $40 million.

In addition to voting on the short-term loan at the board's Dec. 10 meeting, the group is also expected to discuss creating a position for an ethics officer or commission, hiring a new finance administrator and meet in closed session to debate litigation and personnel matters. Board member Tom Bennington, who asked for the special closed session, would not elaborate on what litigation and personnel posts he wanted to discuss.