OP trustees debate financing, deferring projects in capital plan

As major construction projects begin to stretch resources, Oak Park trustees are debating how to pay for their capital improvement plan and whether other projects may need to be delayed.

Trustees have been working to approve a five-year plan for fiscal years 2025 to 2029, a 240-page document available online .

The Oak Park Avenue Streetscape, remodeling Village Hall and building a new police station are some of the big-ticket items that are part of the package. But paying for them won't be cheap, and village staff said the numerous projects could spread employees too thin.

For funding 2025's projects, Oak Park has some options: spending down reserves or issuing bonds.

Oak Park has a significant unrestricted fund balance, sitting at about $45.8 million. It grows, Interim Chief Financial Officer Donna Gayden explained, when more revenue comes in than expected or expenses are lower than expected.

However, it's advised to keep the fund balance between 10% to 20% of the normal prior year expenditures from the general and enterprise funds. For Oak Park, that would be a minimum of about $11.2 million based on 2023 expenses, she said.

In 2025, village staff budget capital projects to cost $25 million. About $20 million of that is for the Oak Park Avenue Streetscape project. According to Village Engineer Bill McKenna, that includes the initial $14.5 million estimate as well as $5.5 million for water and sewer work.

"Customarily, you would likely be issuing debt on a project of this size," Village Manager Kevin Jackson said.

The board also set aside $3 million for the design phase of a new police station and remodeled Village Hall. Another $2 million is set aside for other projects, including street resurfacing and alley improvements.

The board could issue a $25 million bond to help pay for those projects.

Issuing a bond, Gayden explained, is similar to a resident issuing a mortgage. But the village doesn't have to put money down for a bond like an individual might for a mortgage. Interest rates, typically fluctuating between 4% to 5%, would vary depending on when the bond is taken out, she said. They are typically paid over 20 to 30 years.

Trustee Cory Wesley leaned in favor of this. He pointed out that however the board chooses to fund projects in 2025 will influence how they choose to fund other projects, like the new police station and Village Hall remodel. That expensive endeavor could cost $132 million to $138.3 million based on latest estimates.

"If we can bond all of it, then we should just bond all of it," Wesley said. "Capital improvements are long-term improvements. Typically, we want them to be paid for over the course of a lifetime because the people who will obtain value for them are people in the future, so the people of the future should be also paying for them."

Trustee Brian Straw also agreed it could make sense to issue bond debt for significant capital improvement projects like the Oak Park Avenue Streetscape.

But the trustees didn't all agree.

"It's large numbers and it's a consequential decision," Trustee Ravi Parakkat said, adding that his gut feeling is to not take on more debt.

It'd be most convenient to take from reserves to cover upcoming projects, Trustee Lucia Robinson said, but the village is also over budget on a couple projects, so they have to "see how it all shakes out." But she said she would prefer not to incur more debt.

Trustee Susan Buchanan said she'd like to spend the reserve funds over issuing debt, too.

"I can't think of a reason why we are letting it sit there," she said. "A lot of [this money] has to do with the levy and people are paying taxes. And to have it just sit there and not be used back for the residents feels irresponsible."

Village President Vicki Scaman also said she'd rather pay from reserves than issue debt that could outlive them.

Some trustees said they would be interested in a hybrid option of issuing some debt while also using some of their reserve funds.

Gayden said she would look into whether issuing two bonds at once – one for 2025 projects like the Streetscape and one for the Village Hall remodel and new police station – while maintaining a high fund balance would give the village better interest rates.

Jackson, however, pointed out it's best to issue debt as close to construction as possible, and the latter project is still in the design phase.

In a separate request, Gayden also asked the board to consider issuing a roughly $3.2 million bond for the water fund to bring it up to a reasonable balance for emergencies. McKenna said water and sewer improvements associated with the Oak Park Avenue Streetscape will almost deplete that fund.

Village staff also compiled a list of capital improvement projects that could be deferred or reduced without serious consequence.

It includes projects like street lighting replacement, the North Marion Street Streetscape project, fire and police vehicle replacements, new electric vehicle charging stations at Village Hall and some fire station renovations.

Wesley argued that he'd still like to prioritize the fire station renovation if it's a question of finances, not staffing. Straw and Scaman agreed.

"If we're going to be building new things, we should be taking care of the things that we have," Wesley said.

Another potentially delayed project would be traffic calming and signal retiming efforts intended to benefit pedestrians attempting to cross streets. Straw said he strongly opposed deferring this because of the long-overdue safety need. Wesley agreed.

But Robinson said trustees might be giving village staff mixed signals.

"We say we want to reduce spending, and then staff comes back with recommendations to reduce spending, and then we say 'No, we don't like the reductions in spending,'" she said.

Village staff also recommended completing the design for the Percy Julian Streetscape work in 2025, but deferring construction to 2026. McKenna said this was a more realistic timeline.

The village board will continue to review options in upcoming meetings, and is expected to adopt a final, five-year capital improvement plan Nov. 7. Trustees are also expected to adopt the fiscal year 2025 budget on Dec. 3.