Yorkville looks for way to pay sewer bonds

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Updated: August 4, 2011 4:20PM

YORKVILLE — Aldermen here have a date with the Yorkville Bristol Sanitary District, and they will wait until after that to decide if they will abate property tax payments on upcoming sewer bonds.

The City Council will meet at 6 p.m. Jan. 11 — right before its regular meeting — with Sanitary District board members to discuss the possibility of the district taking over, or helping with, bond payments the city is obligated to make in 2011.

The city owes the money on five different bonds which were passed several years ago to pay for the Rob Roy interceptor project, the sewer that served Kendall Marketplace. City officials at the time set it up so tap-on fees to the new system would pay the bond interest payments. But with the dearth of new development lately, those tap-ons have not materialized, and the city has to find a way to make the bond payments.

City officials are hoping the Sanitary District can help. The district eventually will take over the Rob Roy interceptor when it is paid for, but board members have said the district is not likely to have the money to make the payments, either.

The money was raised with general obligation bonds, which means if there is no other way to make the payments, the city must use tax money to do it. The city has special tax levies for the bonds each year.

Usually, the council abates those taxes as a matter of routine. But this year the council could decline to abate those taxes, and the money would be collected as property taxes to make the bond payments. Aldermen have delayed voting on the abatements several times — the most recent time last week — to see if they can raise money any other way.

After meeting with the Sanitary District board, the council will again vote on the abatements. If the council abates those levies, and does not find another way to make the bond payments, the bond holders likely will sue the city for default, and a court likely would force the city to pay the bond holders out of tax dollars anyway.

Also at the Jan. 11 meeting, the council will discuss the possibility of putting a referendum on the April 5 ballot asking residents to increase Yorkville’s sales tax by 1 percent. That would bring the total sales tax in the city to 8.25 percent, 2 percent of which would go to the city.

Mayor Valerie Burd has said the additional 1 percent could be pledged to the sewer bonds.