You'll decide if Wauconda will take a loan

Wauconda will ask voters in November to approve the village borrowing $7 million over 15 years to fund roughly 8 miles of road improvements.

The village board Tuesday night approved placing the tax increase request on the Nov. 4 ballot.

The village needs taxpayer approval through a referendum to issue general obligation bonds for the $7 million. If approved, the estimated cost to the owner of a $260,000 home would be roughly $99 in additional taxes annually.

Village officials were initially considering borrowing $5.5 million to complete 5.6 miles of road upgrades, which would include drainage and driveway improvements.

But officials decided Tuesday to extend the project area because maintaining older roads would only get costlier over time and because of the current bond market interest rate of roughly 4.25 percent.

"It's just a matter of taking advantage of the low interest rates now and doing more of the roadwork earlier than later," said Bob Devery, village engineer. "The goal would be to make sure all our streets are maintained on a more regular basis."

Since interest rates could increase by the time voters approve a tax hike and bonds are issued, the village board set a cap on borrowing only if interest rates stayed below 9 percent.

"We've got five years from the time the referendum is approved to issue all of the bonds," said Rudolph Magna, village attorney. "You can piecemeal it based on prudent fiscal planning so you don't have to borrow all of it."

Village Trustee Patrick Murphy asked why the village shouldn't borrow all $7 million at once.

"If you borrow it later, you risk the interest rate escalating," he said.

Magna cautioned the village board against borrowing the entire $7 million at once because the village would have to pay interest on the money.

If the borrowed money is not fully spent within a three-year arbitrage period, the village could face penalties and the money could become fully taxable, he said.

Wauconda was hit hard by the housing market slump, forcing the village to slash expenses and lay off eight employees to ward off a projected $958,000 deficit at the end of the 2010 fiscal year.

Officials said a referendum is the only option to get the roads repairs done because the village has no additional revenue available.

"A lot of times people say that they don't have a voice in their government," Wauconda Mayor Sal Saccomanno said. "This is a time when they get to choose how the village moves forward."

Village board members said voters should be assured the money would only be used for streets and storm sewer improvements, and any related expenses.

"What we're trying to do here is fix things that have never been fixed," Murphy said.