Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
2009 BUDGET
2009 CAPITAL IMPROVEMENTS PROGRAM (continued)
PROGRAM FUNDING
Sources of funding for the Capital Improvements Program consist of the sale of Capital Improvement Bonds, general property
tax revenues, State Revolving Fund loans, and federal and state grants.
Construction Fund
Section 9.6(a) of “An ACT to create sanitary districts and to remove obstructions in the Des Plaines and Illinois Rivers,”
approved May 29, 1889, as amended, provides that the Board of Commissioners of the District can levy and collect taxes for
construction purposes (which means the replacement, remodeling, completion, alteration, construction, and enlargement, which
will add appreciably to the value, utility, or useful life of sewage treatment works or flood control facilities, and additions
thereto, pumping stations, tunnels, conduits and intercepting sewer connecting therewith, and outlet sewers together with the
equipment and appurtenance necessary thereto, and for the acquisition of the sites and rights of way necessary thereto, and for
engineering expenses for designing and supervising construction of the work above described) for the year 1985 and each year
thereafter which shall be at a rate not to exceed .10 percent of the assessed valuations of all taxable property within the sanitary
district as equalized and determined for state and local taxes.
Capital Improvements Bond Fund
Section 9.6(a) of “An ACT to create sanitary districts and to remove obstructions in the Des Plaines and Illinois Rivers,”
approved May 29, 1889, as amended, provides that the Board of Commissioners of the District is authorized to issue bonds for
District purposes. The District issues bonds to provide funds to replace, remodel, complete, alter, construct, and enlarge sewage
treatment or flood control facilities, to acquire air pollution control equipment, and to build or acquire sewers. The total
allowable Bond debt at any given time can not exceed 3.35 percent of the last known equalized assessed valuation of taxable
property within the District. The ordinance authorizing the issuance of the bonds provides for the levy of a tax on all taxable
property within the District adequate to pay principal and interest on the Bonds when due, including a provision for loss in the
collection of taxes.
Tax Cap laws enacted in Illinois have significant impacts on the funding of the District’s capital program through bond sales.
Under Public Act 89-1, the District’s non-referendum bond authority is restricted to fund only projects initiated prior to
October 1, 1991, which generally covers only TARP projects. However, Public Act 89-385 provided additional nonreferendum
authority to the District by authorizing the issuance of “limited bonds.” These “limited bonds” allow the District to
issue non-referendum debt for projects initiated after October 1, 1991. Limited bonds can be issued up to the debt service
extension base established by the Act. This “limited bond” authority was expanded for the District by passage of Public Act
90-485 in the 1997 legislative session. This act excludes debt associated with the TARP program from the “limited bond”
limitation. Limited tax bonds were issued in 2001, 2002 and 2006. These bonds were well received by the market and future
limited tax bond sales are projected. The use of limited tax bonds in conjunction with the unlimited bonds authorized for TARP
related projects positions the District’s capital funding on firm footing.
State Revolving Loan Fund (SRF)
The purpose of the SRF is to ensure that each state’s program is designed and operated to continue to provide capital funding
assistance for water pollution control activities into perpetuity. The USEPA implemented the SRF program in a manner that
preserves for the states a high degree of flexibility for operating their revolving funds in accordance with each state’s unique
needs and circumstances.
Funds in the SRF shall not be used to provide grants. SRF balances must be available in perpetuity and must be used solely to
provide loans and other authorized forms of financial assistance:
a. To municipalities, inter-municipal, interstate or state agencies for the construction of publicly owned wastewater
treatment works; and
b. For implementation of a new point source pollution control management program; and
c. For development and implementation of a conservation and management plan.
For many years the major sources of funding for District projects were Federal Grants and the Build Illinois Compliance
Grants, both of which were discontinued. Under the grant program, the District received approximately $1.9 billion between
1973 and 1993 leaving 25 percent of the cost to be borne by the District. The District continues to aggressively pursue federal
and state funding to minimize the impact on its constituency. The SRF is an integral part of the District’s capital improvements
financing. SRF revenues are based on the award and construction schedule of specific projects. The annual amount of revenue
received from SRF loans has averaged $30 million.
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