By Bob Seidenberg

With needs far outpacing available funding, members of the city’s Finance & Budget Committee on Tuesday agreed it’s time to address how much debt is acceptable in addressing a growing list of capital projects.

Committee members didn’t vote at the end of their discussion, but there was consensus toward developing a policy on the issue at the upcoming Nov. 4 City Council meeting and the committee’s next meeting, scheduled for Nov. 12.

“I think what this committee has been great on is policies,” said Shari Reiches, the group’s chair, in summing up the discussion. “You know, we have a policy for the pension; we have a policy for exceeding the budget; and I do think we should work on a CIP [Capital Improvement Project] policy [related to projects]. I think there’s a lot of good work that’s gone in as far as deciding [which projects to fund] but … it’s almost like we come up with the projects and we fund the debt. We should come up with how much debt we’re going to have, and then fund the projects — almost the opposite.”

General Obligation (GO) long-term bonds are a common tool municipalities use to fund large projects. Evanston activists were critical of the city’s issuance of $40 million in bonds to fund construction of the Robert Crown Community Center, which, due to various add-ons, grew from a target budget of $30 million to $53.3 million in June of 2018.

In that case, annual debt service payments started at $1.3 million at the end of December 2019, and then quickly rose to close to $3 million annually, stretching into 2043.

“Typically a borrower will want to issue a bond and pay principal and interest over time to spread out the burden of paying for public infrastructure and assets over the expected useful life, as opposed to increasing taxes or impacting the budget over a shorter time,” according to an Illinois Municipal League article on the subject.

“Oftentimes,” the article continued, “capital projects are of long-term value to citizens [buildings, roads, land, development, parks, etc.] Hence, issuing bonds to fund a capital project allows current and future taxpayers within the community to pay related costs over the life of the project.”

The city typically uses a variety of sources to fund large capital projects. Most of them, such as outside grants and loans, though, have “significant limitations” on their use, Lara Biggs, the city engineer noted, in a memo and presentation at the meeting.

A full bag of capital ‘challenges’

“Of all the funding sources, issuing general obligation bonds is of particular concern,” she noted. “The City works to manage the volume of bonds issued, but it is the current choice when no other funding source is available.”

The city’s list of projects for its Capital Improvement Program in 2025 anticipates $11.82 million in GO bonds, she wrote. Ongoing projects begun prior to 2025, meanwhile, received approximately $7.1 million in GO support. Another roughly $4.8 million in “potential priority projects” would bring the total cost of the bond support to roughly $23.79 million.

The city’s outlay for new bonds generally runs along the lines of the debt retired from old projects every year, around $10 to $12 million.

Officials then will continue to look at how they can reduce the total figure (the $23.79 million), Biggs told committee members, “either by spreading the costs or just flat out delaying some projects. But that is where we are right now.”

New ‘challenges’ join old ones 

The city’s aging water-main system, lead pipe replacement, legacy parks and buildings (Civic Center, Police/Fire Headquarters and others) were marked as “challenges” on staff’s 2024 CIP list.

For 2025, officials have identified four more challenges:

• Those challenges include beginning to meet demands from residents wishing to participate in a 50-50 cost share for alley improvements. “Currently, there are 86 community members on the waitlist,” Biggs wrote. “The City releases five to 10 petitions [for alley improvements] annually. From this, the City receives two to three successful petitions, which are then turned into alley improvement projects for the next year. At the current level of funding to pay the City’s share, approximately $500,000 annually, this is all that can be funded for alleys requested through the special assessment process.”
• Sidewalk improvements in the downtown list have also been moved into a priority position as 2025 Challenge 2. “Decades ago, the business district sidewalk standard was changed to paver blocks,” Biggs wrote. “Over time, the pavers have shifted, increasing trip hazards. Over the last 15-20 years, the City has adopted a new standard that is more ADA-friendly and easier to maintain — concrete sidewalks with a paver block ribbon along the curb. Gradually, all of the paver block sidewalks are being converted too. Unfortunately, the downtown business district still has a significant number of paver-block sidewalks,” she pointed out, “and the City has been seeing increased litigation in recent years from plaintiffs who have tripped on the uneven surface. Therefore, staff recommends a concentrated effort to remove the remaining paver block sidewalks. The proposed 2025 budget includes $750,000 to begin this program. In 2025, staff will develop a plan to remove the remaining paver block sidewalks over a three- to five-year period.”
• Repairs to Fountain Square, downtown’s longtime gathering place and sprinkler system, is 2025 Challenge 3.
• Challenge number 4 is not a project but a call for council members to consider the impact of the extensive public engagement specific to Evanston that surrounds large projects. While valuable, the number of meetings “takes significant staff and consultant resources and dramatically limits the ability of staff to complete the needed annual workload. There’s always a push-pull tension where public engagement has a significant cost to our consulting teams, but is necessary in order to really make sure that the public is engaged in shaping the development of capital improvement in their individual areas,” Biggs said to committee members.

Larimer Park (currently under construction) required five meetings in total involving the public. A Dog Beach ADA Access ramp (currently in redesign) totaled 11 meetings involving the public, Biggs said.

In comparison, “Ridgeville Park District [located in Evanston and serving Evanston residents only] holds zero public engagement meetings when installing park improvements. Wilmette Park District typically holds zero to one public engagement per park improvements,” she noted.

Each public meeting adds approximately $10,000 to $20,000 to the cost of a consulting contract, she estimated.

Many items on the “potential priority list,” meanwhile, have received strong community demand of their own, the staff memo noted, such as a $650,000 plank for pickleball court improvements and a $300,000 dog park installation at Grey Park, 1051 Main St.

Drastic implications

According to a construction inflation index the city uses, $10 million in debt issued for projects 20 years ago would equal roughly $5.6 million in purchasing power on debt issued today.

“In particular, this would have drastic implications for the capital improvement of parks and facilities, which have very few alternate funding sources and have been chronically underfunded for the last 20 years,” Biggs wrote.

In discussion, committee member Leslie McMillan, with a background in finance, asked Biggs whether the return on investment is considered when staff “is prioritizing and looking at the intrinsic values in terms of what we’re getting from these projects. … And I think it might help us weed out things that maybe shouldn’t have bubbled to the top.”

She put the $650,000 for pickleball improvements as well as the $800,000 council members recently approved for a renovation of the Bent Park Field House at Central Street and Cowper Avenue in that category.

She was specifically concerned about funding requirements for the field house, she said, described as essentially a 600-square foot box with two bathrooms.

“And I’m currently financing a home renovation, Carmel-By-the Sea, where they’ve spared no expense on a kitchen, balcony, Jerusalem stone door, and other features, and it’s less than we’re [the city is] paying [per] square foot,” McMillan said.

“So if we were to do sort of a return on investment analysis, I don’t think anything like this would ever pass.”

Biggs cautioned that comparing construction costs for commercial or institutional uses with residential discounts such factors as prevailing wage laws, which can drive up costs.

Committee and Council Member Clare Kelly (1st Ward), spoke in support of McMillan’s concerns, adding the ADA access ramp originally proposed for the Clark Street Beach area to the list.

“We’ve seen that there was a construction journal, trade magazine that was advertising it to be an estimated cost of $700,000,” she said.

Livingston: ‘How much additional bonding is the council willing to live with?’

Committee member David Livingston, whose background also is in finance, noted that the city’s 2025 capital improvement budget should mirror the past debt the city retires every year, approximately $11 million.

“I think the council has to have an open discussion about what level of additional GO bonding we are willing to live with, and what the consequences of that is over multiple years.

“We are capital constrained,” he continued. “What is the pool of money that we have? Because you need that in a capital constrained environment to prioritize your projects and if there’s a desire to not have your taxes go up, then your budget is $11 million,” he said, referring to the figure officials have included in their budget covering the 2025 challenges. The figure is actually lower than that, when factoring in the true cost of the 20 years of debt the city is retiring.

“If the number is only $11 [million] that means Parks has maybe $3 [million] in funds to address that area’s many needs,” he said. “There are some big numbers floating around of what people need that clearly cannot be funded if our cap is $11 [million].”

Kelly said “it’s a debt increase that we are considering.”

She noted that for two years, new City Council members “had decreased it [debt] but then we blew it,” referring to council’s approval of $31.58 million in GO bonds earlier this year (to finance capital improvement projects from 2022 and 2023, when federal pandemic relief money was filling many of the gaps).

“So do we want to reduce our debt even if it’s incrementally small” she asked, framing the question, “or are we comfortable with increasing debt every year? I don’t think it has to be tied to taxes, but debt is expensive.”

Traveling down that road, “What work doesn’t get done?” asked Council Member Bobby Burns (5th Ward). “What park equipment gets snatched out and there’s no longer a park in these areas? Because that’s the reality.

“I think this is an important conversation,” he added. “But sometimes I think when we get on these bodies, we think of these things in the abstract. Even Bent Park — it’s like alright, let’s talk to all those programs [which make use of it] — the soccer leagues and all the leagues that rely to a certain extent on that field house — and make it seem like it’s not important.”