Riverside voters next fall will be asked to support re-issuing roughly $2 million in bonds to fund as-yet-unnamed capital improvements within the village.
At their meeting on Feb. 6, village trustees appeared to agree that issuing the bonds would provide a source of much-needed revenue for large capital projects while having almost no additional impact on homeowners’ tax bills.
“I feel like we have an obligation to ask our residents this question,” said Trustee Doug Pollock. “We’d be remiss not to ask. If they say no, they say no.”
Trustees could begin exploring which capital projects they’d like to fund with the bonds as early as their next meeting on Feb. 20. In order to lay the groundwork for a referendum question on Nov. 4, the village board needs to have a plan in place by the beginning of June, so that its bond counsel can prepare a ballot question by mid-August.
Village President Ben Sells has directed Village Manager Peter Scalera to prepare alternatives for the board to consider at its next meeting.
Riverside is in a position to issue the new bonds, because a $2 million bond issue, approved by voters in 2004, expires at the end of 2014. A decade ago, voters overwhelmingly supported issuing $2.06 million in bonds to fund street improvements. More than 80 percent of voters cast ballots in support of that issuance.
While the village could simply let the bonds expire, officials see a new issuance as a way to keep funding critical infrastructure projects without actually raising the village’s share of the burden on tax bills.
“What’s attractive is it’s neutral in terms of taxation,” said Jessica Frances, the village’s finance director.
If the village simply let the bonds expire, she said, homeowners with average tax bills of $10,000 would see an annual savings of about $76.
In a memo to the village board, Frances and Scalera laid out different scenarios for issuing bonds, based on how long it would take to pay them off. In order to keep tax bills cost-neutral to residents, the village could issue $2.275 million in bonds if they were to pay them off in 10 years. With interest, the total cost of such an issue would come to about $2.5 million.
The critical question is, what infrastructure projects will the board identify as worthy of being funded by a new bond issue. Any referendum question would need to specifically state what the money is being used for.
The staff memo to the board also included a list of more than a dozen potential uses for the bond funding, from large-scale improvements to buildings to the purchase of fire trucks to infrastructure projects, including streets, sidewalks, Harlem Avenue streetscaping and tree removal/reforestation.
While the village could choose to put more than one question to voters — for example, one for streets and one for fire truck purchases — doing so could confuse voters and risk failure of one or both.
“If we’re going to do this, it’d have to be for capital expenditures,” said Sells.
Pollock wondered whether it might not be most cost-effective in the long run to simply ask voters for a permanent tax increase to fund capital improvements instead of re-issuing bonds every 10 years and paying roughly $250,000 in interest over the life of the bonds.
“Shouldn’t we just ask residents if they want their tax bills to be $76 more, period?” Pollock said.
But Sells cautioned that such an approach might simply invite failure because a general tax increase question would be couched in very complicated language on the ballot, which would not specify an exact use for the additional tax levy.
“A general tax increase question is almost impenetrable in its language,” said Sells. “From a logistical standpoint, it makes it much more difficult to pass.”
In addition, future village boards would be under no obligation to use that additional tax levy for capital improvements. Since the increase would simply increase taxes generally, the money could be used for any purpose.
“Passing a bond referendum and a tax increase are two different things,” said Trustee Ellen Hamilton.
