HomeMy WebLinkAboutTab 7: Other Significant Issues Impacting the VillageVillage of Mount Prospect
Mount Prospect, Illinois
INTEROFFICE MEMORANDUM
TO: MICHAEL E. JANONIS, VILLAGE MANAGER
FROM: FINANCE DIRECTOR
DATE: APRIL 19, 2012
SUBJECT: SIGNIFICANT ISSUES
Listed below are a number of items that are expected to have a significant impact on the overall financial
picture for the Village. While many of these items have their own dedicated revenue source, the revenue
is not sufficient to support the programs fully moving forward. Decisions on one particular item will have a
direct impact to how others can be addressed.
1) Street Resurfacing Program
To prevent streets from deteriorating to the point where a complete reconstruction is required, an
annual resurfacing program has been put in place. Resurfacing of village streets included in the
program is done according to a 20 -year life cycle. To meet this desired goal, 6.8 miles of streets
are to be resurfaced each year. Based on the 2012 cost of $100 per linear foot, the annual
funding requirement is $3.6 million. Due to shortfalls in the MFT and Street Construction Funds
the amount of streets resurfaced were reduced. In 2010 only 5.0 miles of streets were resurfaced
while in 2011 only 4.9 miles were resurfaced. For 2012 only 4.7 miles of streets will be
resurfaced.
There is currently a backlog of approximately one year's worth of resurfacing at an estimated cost
of $4.0 million. Shortfalls in the MFT and Street Funds continue with funding available to support
just two- thirds of what is required annually. Currently, funding for the street resurfacing program
is derived from the state and local motor fuel taxes and a one - quarter percent home rule sales
tax.
2) Flood Control Program
Similar to the street resurfacing program, the flood control program was put in place to deal with a
backlog of flood projects and to address flood control moving forward. Debt was issued in 1994,
1997 and 1999 to support the initial stages of the flood program. The debt is beginning to be paid
off making funds available to support ongoing flood projects. Funding comes from a one - quarter
percent home rule sales tax.
As a result of the extensive flooding that occurred in the village in July 2011, a comprehensive
stormwater study was conducted by Burns & McDonnell. The study presented a series of
recommendations to cost - effectively mitigate flooding problems. Recommendations made by
Burns & Mc Donnell are for projects outside of existing flood control efforts and includes a
strategy that involves both private and public sector improvements. Private sector projects
consist of the installation of overhead sewers estimated to cost $9.5 million. Public sector
improvements to the village -wide stormwater system are estimated to cost $14.4 million.
3) Emerald Ash Borer Infestation (EAB)
The Village began actively preparing for EAB in 2003. Various programs have been put in place
to proactively address the pending infestation. It is now apparent that further, more aggressive
steps are needed to address the expected loss of ash trees throughout the village. Costs
Significant Issues
April 19, 2012
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associated with the removal and replacement of the 4,400 ash trees is expected to cost between
$2 million and $3 million. This figure does not include the cost of providing insecticidal treatment
for healthy trees. A funding source for addressing EAB has not been identified.
4) Randhurst Redevelopment Agreement
In 2009, the Village entered into a redevelopment agreement (RDA) with the owners of Randhurst
Mall. The agreement requires the Village to contribute $25 million, in the form of an interest
bearing Note, to cover certain costs associated with the redevelopment. Support for the $25
million commitment is to come from various revenue sources generated on the redevelopment
site. These revenues include sales and amusement taxes, food & beverage taxes, a hotel /motel
tax and a business district tax. Semi - annual payments from these revenues are to begin upon
issuance of Certificate of Completion #2. When steady revenue streams have been established
the Village will be asked to retire the Note through the issuance of Business District Bonds and /or
Revenue Bonds.
5) Automatic Meter Reading System
An automatic meter reading system (AMR) is planned for both commercial and residential water
customers. An AMR system improves the efficiency of the water system by providing real time
reads and eliminates the need to visit the physical meter location for routine functions such as
final reads.
The Village is in the process of selecting a vendor for the installation of automatic meter reading
equipment on all commercial accounts. Approximately 1,200 meters will be receiving this new
equipment in this first phase at a cost of $565,000. Funds to pay for this first phase are included
in the 2012 Water Fund budget. The second phase of AMR involves approximately 12,000
residential customers. The AMR changeover is planned to occur over a four -year period
beginning in 2012. The 2012 Water Fund budget included $400,000 towards the initial stage of
the project. There is $1 million in each of the following 3 years to complete the residential AMR
project. Although the funding source is through the Water Fund, shortfalls in the budget may
necessitate this project being deferred.
The challenges presented in addressing these above listed items are in addition to those we continue to
experience in managing the day -to -day operations of the Village. There still exists in the General Fund a
structural imbalance in the growth of revenues versus expenditures and rate increases imposed by the
City of Chicago on the cost of water has reduced the amount of funds available for maintaining the
Village's water and sewer system. My presentation at the workshop will facilitate discussion on this item.
Let me know if you would like to discuss this further.
David O. Erb
Finance Director
H:\ACCT\BUDGET\Budget 2012 \Quarterly & Mid -Year Review \Significant Issues Memo.docx