Lake County municipal officials turn to lenders for urban amenities

2013-04-27T20:20:00Z 2013-04-28T21:35:06Z Lake County municipal officials turn to lenders for urban amenitiesBill Dolan bill.dolan@nwi.com, (219) 662-5328 nwitimes.com
April 27, 2013 8:20 pm  • 

Lake County's streets are paved with loans.

Borrowed money courses beneath the pavement. All the residents enjoying the benefits of urban living, from community bike trails to indoor plumbing are in the debt of municipal debt.

The county's 19 cities and towns and their attendant special taxing districts approach $900 million in obligations, according to the Gateway database provided by the Indiana State Board of Accounts and Indiana Department of Local Government Finance.

Hammond leads the city and town debt list, with more than $167.7 million in bonds drawn to be repaid by property taxes, casino fees and other revenues.

Stan Dostatni, Hammond Sanitary District president, said a large portion of the borrowing is driven by a $40.3 million project to stop sewage overflows into the Grand Calumet River. A large pond near the city's Columbia Avenue treatment plant is being excavated to receive the overflows through new sewage mains.

On top of that borrowing, add tens of millions more for roads, sewers and other infrastructure work to bring in the Potash Corp.'s new rail transfer facility, Cabela's and the Home Depot on 165th Street; to raze and prepare the old River Park site for new corporate tenants; to resurface major streets; and even to pay off a couple of lawsuits the city lost, Hammond City Controller Bobby Lendi said.

Munster has used a portion of its $72.7 million in credit to create Centennial Park; revitalize the Lake Business Center industrial park; and turn vacant buildings and a landfill quarry along Calumet Avenue into the thriving collection of restaurants and retail businesses that make up the Munster Shops.

Munster Town Manager Tom DeGiulio said, "If you don't use debt, how are you going to finance capital improvements like these? How are you going to keep moving forward?"

 

'You have to spend money'

Municipal officials said new curbs, street paving, major flood control structures, even firetrucks, would be beyond the means of many cities and towns without the magic of lending.

Crown Point Clerk-Treasurer Patti Olsen said loans made possible the city's new North Street Sportsplex, the stormwater structures mandated by state environmental authorities, and sewage improvements to facilitate commercial development along its Broadway/Interstate 65 corridor.

Olson said Crown Point's debt amounts to less than $23 million. She disputes the $31.4 million figured used in Gateway, saying some of that debt may have the city government's name on it, but in reality it is associated with the city's hospital and isn't a burden on city taxpayers.

That would put Crown Point's per capita debt below $850.

Gateway indicates the accumulated municipal obligations amount to $1,983 for each one of the county's 452,000 residents.

It is highest in Whiting, at $8,217 per capita.

Much of that is repaid with property taxes, sewer and water fees. Gary, East Chicago and Hammond are fortunate enough to draw on casino revenues.

"That kind of debt doesn't show up on anybody's tax bill," Hammond's Lendi said.

Lake County officials have depended on it so heavily, the circuit-breaker law state legislators passed with such fanfare five years ago to tame property taxes still permits Lake County local government to collect a significant amount of taxes over those caps to service its old debt. That exemption will be lifted in seven years.

Lake Station Mayor Keith Soderquist said a significant portion of his city's taxes must service its $34.2 million debt, money now unavailable to support its daily operations.

"The pinch is there. We have to come up with that within the money and still stay under the maxed-out caps," Soderquist said. "But you don't want to stop moving forward."

Lake Station's latest debt represents new municipal offices, a new water source and filtration plant for added fire protection, and eight new playgrounds to make the city more attractive, not only to current residents but to boost economic development.

Munster's DeGiulio said his town borrows $1 million annually to keep streets paved.

"You have to spend money on them," DeGiulio said. "They only last so long. If you don't, your maintenance costs go through the roof."

 

Other initiatives also used

Griffith Town Councilman Rick Ryfa said his community is pursuing another approach, setting aside a portion of the annual tax draw to spend on future capital improvement projects.

"It would take an effort to try to save up for it with five or 10 years of planning, but that doesn't happen a lot with municipal government," Ryfa said.

He hopes Griffith will reap a windfall of new revenue if it can disengage its property taxes from funding the social services of the Calumet Township trustee's poor relief system.

"If we get out from under Calumet Township, it will have a positive influence on our bottom line. I've seen Legislative Service estimates that town government might receive anywhere from $350,000 up to $700,000," he said, referring to the state's nonpartisan Legislative Services Agency.

Griffith's $17.6 million in obligations results in one of the lowest per-capita rates in the county.

"We haven't taken on a lot of debt in the last five years. The bad news is, the pre-2007 debt affects our tax bills," Ryfa said. "It's all above the 1 percent everybody must pay. But we will have big chunks of debt paid off before 2019 when everything hits the fan, and we will be looking real good."

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