SAUK VILLAGE | The Village Board approved an ordinance Tuesday to allow the village to seek a line of credit up to $500,000.
The money would be used for payroll and possibly legal fees beginning in December, village Finance Director Mohan Rao said. The village hasn't yet reached an agreement with any bank. The ordinance requires the line of credit to have a fixed interest rate of 7 percent or lower and that it be repaid within 10 years.
"This allows the village to go after a line of credit and work with the banks," Village President David Hanks said. "They want to see an ordinance in place authorizing the village to move forward for a line of credit."
Hanks said the village could expect to pay off the line of credit with $2.4 million in tax money it expects to receive in March.
"We would hope that we wouldn't have to use the full $500,000, but it gives us a line of credit up to $500,000 until we start seeing our tax money coming in," Hanks said. "The goal is to pay the money back, once the tax revenue starts coming in, to the accounts that we borrowed from and to pay back this line of credit."
The village sought similar lines of credit in 2007 and in August 2008, each time with First Midwest Bank, according to its ordinance history available online. In 2009, Sauk Village took out a promissory note, Hanks said. Tuesday's ordinance was based on the ones passed in 2007 and 2008.
The village already has borrowed $400,000 from its water fund to make previous payroll disbursements this year.
"(Transferring money from the water fund) is not illegal. It's by state statute. Everything was done legally," Hanks said. ""We need to have money in our water fund to keep moving forward, and I'd rather not keep borrowing money from there."
Hanks said the village could continue borrowing money from the water fund if it needed to, but that money will be needed to make payments on a low-interest loan from the Illinois Environmental Protection Agency.
Under a consent order issued by the Illinois attorney general's office in Cook County Circuit Court in March, Sauk Village must maintain operation of equipment that reduces levels of vinyl chloride in its water supply. High levels of the chemical were detected in two of the town's wells in 2012 but tests have shown it to be well below acceptable levels since air strippers that remove it were installed with the help of the loan.
"We know that the IEPA is looking for money to be inside the water fund and we do not want to jeopardize our consent order," Hanks said.
Trustee Derrick Burgess peppered Rao with questions about the ordinance. Burgess was the only trustee to vote against the move.
"I'm glad that we didn't go and borrow money from the water fund (again)," Burgess said. "There are only two ways that you can balance a budget: 1. Raise taxes and 2. Cut personnel."
Trustee Rosie Williams said that if Sauk Village had raised taxes and fees when she first suggested it three years ago, many of its financial issues may have been resolved. She suggested a referendum request to raise taxes be put to residents during the March election.
"If anybody else out there can figure out a different way to do it besides the suggestion I have of raising taxes, feel free (to contact the board)," Williams said. "(Raising fees and taxes) is not something anybody wants to do. It's a necessary evil."