Village of Hinckley Committee of the Whole met May 20.
Here is the minutes provided by the committee:
CALL THE MEETING TO ORDER: Meeting was called to order by President Nelson at 6:00 PM. Present: President Nelson, Trustees Mike Constant, Tim Sellers, Jeff Nier, Louis Manivong, and Trustee-elect Chuck Riforgiate. Quorum Established.
Also Present: Village Clerk Elizabeth Losiniecki, Treasurer Dave Maroo, Attorney Gibbons, Chris Ott and Pete Wallers (EEI), Kevin Hillen, Timothy Leahy, Walter Voegel from Illinois American Water (IAW), and Member of the Public.
The pledge to the flag was recited.
Village President Nancy Nelson stated that the Committee of the Whole meeting is being held to listen to Illinois American Water speak regarding their proposal for the potential purchase of the water/sewer utility for the Village of Hinckley. She also stated that there will not be any vote made tonight. This meeting is for discussion only. Ms. Nelson advised the public that they may not speak during the meeting, only during the public comment section. She advised those in the audience that if they wish to speak they must sign in at the podium and state their name and address for the record before speaking.
Trustee Constant reiterated that there would not be any vote this evening and that this meeting was for information gathering purposes, only. He stated that the Village of Hinckley was contacted by an interested party interested in purchasing the water utility. He stated that the Board of Trustees owed it to the community to do their due diligence and gather the information.
Treasurer Maroo had no comment.
Trustee Nier stated that the process started last August and that everything has been done in the open. He suggested that the social media comments were disruptive to the process and should be stopped. If the residents have questions they should contact any member of the board of trustees and or call the village hall.
President Nelson stated that she would hold comments to three minutes each in order to accommodate everyone in attendance. Comments will be allowed at the beginning of the meeting or at the end of the meeting. The audience agreed to be heard at the end of the meeting. During this time attempts were made to find adequate seating for those in the audience who were standing in the lobby and entry way.
Items for Discussion
°Discussion of Possible Action with regard to the Sale of the Water and Sewer System of the Village of Hinckley, Illinois
Tim Leahy, Director of Business Development for Illinois American Water
Mr. Leahy thanked the audience for the opportunity to present. He stated that his company has been in operation for over 140 years and is regulated by the Illinois Commerce Commission (ICC).
Any rate increases have to be reviewed and approved by the ICC, which usually takes about 12 months.
Kevin Hillen, Senior Operations Manager for Illinois American Water
Mr. Hillen stated that his company had presented a proposal that included three options for purchase. Two options are guaranteed and one option is not. Trustee Nier asked Mr. Hillen to explain how IAW arrived at the offer figures. Mr. Hillen stated that the offers were based on expenses vs. customer base, projected growth, and book value based on financial records provided by the Village. Mr. Hillen reviewed the bullet points in the proposal including the following:
-painting of the elevated water storage tank
-asset purchase agreement
-full description of the water/wastewater being conveyed
-conditional offer for 2 contract employees pending background check -offer expiration 08/13/19
-$7.5M (guaranteed) no rate increase
-$9.8M (guaranteed) $10/mo rate increase
-$10.5M (not guaranteed) $20/mo rate increase
Trustee Nier provided a brief background on the wells and radon issues and the IEPA requiring the Village to revamp the wastewater treatment plant. He stated that this is when the debt service fee started. Water rates should have also increased at this time but were only sporadically increased, instead of cyclically as required by the loan schedule. He stated that IAW had included $2.8M investment as part of the proposal because there is a lot of infrastructure repair/upgrade/maintenance that is needed in the Village. The water/sewer department only receives money from utility bills and utility bills are the only source of payment for the IEPA loans. Many residents do not pay their utility bills or only make partial payments. Mr. Nier also stated that due to these financial constraints, the Village is often only able to make repairs (as opposed to replacing equipment). Sump pumps connected to the sewer line is ILLEGAL. Trees planted over sewer and water lines cause root damage to the pipes and are costly to repair. A resin replacement at the water treatment facility will be needed in approximately eight years. This is a costly expense.
President Nelson stated that the Village only received one bid in response to the request for proposals.
Mr. Leahy stated that if an agreement was reached, the Village would realize immediate debt relief and would have a new revenue stream from the property tax payments on the WTP & WWTP. IAW profits are regulated by the ICC.
There was a discussion regarding the water tower and the repairs needed. Mr. Constant stated that all three proposal options include the water tower repair work. He said that the 1% sales tax increase was passed to fund the water tower repair and that the money is being accumulated in a separate account. Currently, there is not enough in the account to fund the necessary repairs and another loan would need to be taken out to cover the costs.
Trustee Manivong stated that the Village currently provides clean, safe water to residents and asked IAW what they would do differently. Mr. Voegel stated that everything would be done in-house and that there would be annual inspections of fire hydrants and valves. They would flush and clean all mains on a four year rotation and utilize their TV/camera truck to televise and clean lines.
Mr. Leahy stated that there is a pool of over 350,000 IAW customers and the cost of dramatic failures can be more easily absorbed when spread out across a larger user base. There was additional discussion regarding main breaks/repairs, GIS meters and customer service. Additional questions were posed regarding pooling together with other smaller communities, shipping “Hinckley water” to other areas i.e. “Chicago water”, option to revoke/rescind the award decision, debt pay-off amount, sludge storage building, purchase price vs. net proceeds, rate comparisons, “cash unlocked”, relocation of public works facility, and impact on Royal Estates development. Mr. Hillen stated that he cannot comment on the majority of the questions asked but that their proposal was based on the information provided by the Village.
Disgruntled audience members standing in the back of the room and in the lobby repeated their complaints that they couldn’t hear. Village President (again) invited guests to come into the room and stand along the walls or find a seat on the floor. There was a resident that pointed out that the room occupancy had been exceeded.
Riforgiate pointed out the aging infrastructure that has been neglected for decades and Mr. Hillen stated that the entire system would be inspected and repairs and replacements would be done as necessary. Mr. Thillen stated that capital investments are spread across the IAW customer base and not just applied to the Hinckley customer base. Riforgiate requested a cost comparison projection reflecting Village of Hinckley future rates/investments vs. IAM future rates/investments. Mr. Leahy stated that IAM is “not allowed to kick the can down the road.” That IAM adheres to the “regulated model” and the Village of Hinckley follows the “municipal model” as it relates to repairs and replacements. Discussion followed regarding water vs. sewer cost structure, recovery of capital investment, volume balancing count (wet vs. dry years), taxes required by the state, and lake water rates vs. non-lake water rates.
President Nelson asked if the Trustees or representatives from EEI had any further questions. There were none.
At this time President Nelson opened the meeting for questions from the public. The following residents came to the podium:
1. Resident Debbie Asbell stated that she would like an explanation of the $5.6M debt take-over. Trustee Nier explained that a portion of the lump sum payment for the sale/purchase of the water utility would be used to pay off the outstanding debt for the IEPA loans. Trustee Constant clarified that the total outstanding debt is $5.9M, not $5.6M.
2. Resident Dale Clark stated that a buy back clause exists in most original agreements. This provides an opportunity to review and assess the value of the agreement. He asked that any agreement entered into have a buy back option. He went on to state that everyone (including municipalities) is regulated and IAW follows a profit model (not a regulated model, as stated) and that all option presented will result in a rate increase for residents. He stated that the Board of Trustees can be changed more easily than the ICC. He suggested that the Village simply explain to the residents why the rates have to be increased and that the Village needs to maintain control of the water source. He mentioned the 1% sales tax referendum that recently passed and stated that he doesn’t want to pay more for less.
3. Resident John McFarland stated that he has done considerable research on water privatization and that other communities that have done this have rate hikes as high as 40%. These rate hikes were approved by the ICC. He mentioned the Northwest Planning Alliance and suggested that the Trustees look into joining the organization to help guide this decision.
4. Resident Ken Rohr asked how much the current utility bill needs to go up in order for the Village to be able to manage the current debt. Trustee Constant stated that the current water/sewer debt is $5.94M and that the Village is short $160K every year. Mr. Rohr asked how much the water rates have to go up in order to keep from privatizing. Mr. Constant stated that the recent rate increases are to cover operations, maintenance, etc. and that he is hopeful that the rate structure in the new ordinance will be enough. Trustee Nier stated that one IEPA loan is paid off in 2030 and the other will be paid off in 2035. The Village will need to incur more debt before the existing debt is paid off. Trustee Manivong stated that $3M is needed for all repairs and upgrades to the water/sewer infrastructure. Trustee Nier stated that we need to do a water study to review all components and create a timeline for replacement priority and associated cost.
5. Resident Becky Bernhardy stated that she does not want to privatize the water utility and questioned why the bid wasn’t made available to the public. She stated that the residents have a say in this decision.
6. Property owner Victor Viland stated that IAW had received over $400K in political donations and that the ICC rarely turns down rate increase requests. He stated that the residents need to thank the Board of Trustees because it is not an easy or fun job. He also stated that the Mayor of Bolingbrook has many serious regrets after privatizing the water utility.
7. Resident Sarah Quirk thanked the Board of Trustees for their stewardship now and in the future. She stated that there is a bill pending in the Illinois House that would require a referendum for this type of decision. She is opposed to privatizing the water utility.
8. Resident Larry Menz thanked everyone for coming to this meeting and asked that they consider coming to future meetings. He stated that this meeting is in violation of the Open Meetings Act because proper accommodations had not been made to provide for the number of people in attendance. He stated that people in the audience could not hear the proceedings. President Nelson stated that the Village does not have a sound system and Mr. Menz stated that the Village is obligated to allow people in the audience to hear the proceedings. Ms. Nelson asked Mr. Menz if he’d like to pay for an audio system. Mr. Menz also stated that the posted occupancy for the room had been exceeded, which is in violation of fire code.
9. Resident Donna Kimpan asked if the property (real estate) was included in the purchase and President Nelson stated that it is included. Trustee Nier stated that that is where the property tax increase would come from (that was mentioned previously).
10. Resident Stan Morris stated that a rate increase is going to happen either way and that he’d rather pay his money to the Village than IAW.
11. Resident Nate Lemaster stated that he moved here from Bolingbrook and that his monthly water bill was $160.00. His quarterly bill in Hinckley is $230.00. He is opposed to the Village selling to IAW. He suggested that the Village be transparent with the residents.
12. Resident Julie Morsch stated that we have a problem and we need to fix it. She stated that most residents have been here a long time and are invested in the community and that, “we need to fix this ourselves because we’re the ones that broke it.”
13. Resident Jeannie Richmond stated that she has lived here for twenty years and that she’d rather pay her money to the Village than IAW. She asked that the proposal be put on the website so that residents could have the opportunity to see the same document that the Trustees were referencing during the meeting. President Nelson stated that, according to the attorneys, the document cannot be released. She also stated that the next meeting would be held at a larger venue.
14. Resident Pam Mackey stated that everyone needs to talk and come together on this issue and she thanked everyone for coming.
15. Resident Rob Zimmerman thanked the Board of Trustees for entering into this tough decision. He stated that there are lots of private companies (for profit) serving the Village (EEI, attorneys, TEST) and that rate hikes will happen either way. He thanked Trustee Nier for all of the work he put into this process.
Trustee Nier stated that there are infrastructure repairs that need to be done in excess of $600K, which includes the water tower, Sycamore Street main replacement and evaluation of the sewer system.
Attorney Gibbons stated that it was good to have this meeting and that the Village should have more. She suggested having the utility privatization attorney (Mr. Schrempf) attend and having IAW come back with answers to the questions posed. She stated that the Board of Trustees needs to do their due diligence and that they need to compile a repair list for all of the infrastructure, not just the water/sewer system. This will help all residents understand the BIG picture.
President Nelson thanked all residents who came to the meeting and reminded residents that there are several ways to contact the Board of Trustees. She apologized for the lack of chairs and microphones and stated that the high turnout was unexpected. She stated that this is not a done deal and that there will be more meetings to come. She also reminded the audience that there is a Village Trustee position open.
Trustee Constant reminded the audience that the Regular Board Meetings are held on the second and fourth Monday of each month and that the agendas are posted on the website and outside the Village Hall. The next meeting is May 28, 2019 at 7:00pm at the Village Hall.
Motion: Trustee Constant moved to adjourn the meeting at 8:15 PM. Trustee Manivong seconded the motion. Voice Vote: All members voted yes. Motion carried.