Salem Lakes board approves resolution to pursue $2 million short-term promissory note

The Village of Salem Lakes authorized staff to pursue the sale of approximately $2,000,000 in general obligation promissory notes to fund planned street projects and allow the amount to be exempted from the village's levy limit. The board approved the procedural resolution on a 6-1 roll call vote, directing staff and the village's financial advisor to solicit competitive proposals and return to the board for award. Todd, a municipal finance advisor from Ehlers, told trustees the plan is to solicit bids from commercial banks, with proposals due by Oct. 1 and a recommendation to the board at its Oct. 7 meeting. The draft term sheet calls for a short maturity ' a one-year promissory note due Nov. 1, 2026 ' so the village can minimize interest costs and, if cash flow allows, prepay as early as March 1 to reduce interest expense. The board's discussion emphasized timing and budget implications. Trustees were told that debt service on the note is exempt from the statutory levy limit if the note is issued and reflected in the levy process; the village must therefore have a note in place before setting its levy to use that exemption. Ehlers estimated the additional tax impact in 2026 at about $84 per $100,000 of assessed value for a one-year repayment of the entire $2,000,000 note. Board members asked staff to factor the note into the remaining budget workshops and to consider reducing the borrowing amount if needed after further budget work. The board vote to authorize the sale resolution was recorded as: Trustee Verhaite: yes; Trustee Brooks: yes; Trustee Foley: no; Trustee Favor: yes; Trustee Hopkins: yes; Trustee Gant: yes; President Buecher: yes. The motion carried, 6-1. That authorization does not obligate the village to accept any particular bid; the board will award the note after receiving competitive proposals. Trustees and staff also discussed alternatives and the village's longer-term finances. Staff noted the village receives a relatively small share of a typical property tax bill (about 18 percent in the numbers discussed by staff) and that the village's ability to raise its operating levy is tightly constrained by state law, which ties most levy growth to net new construction. Several trustees and members of the public framed the borrowing decision in that context, saying the village must balance near-term infrastructure needs against the ongoing goal of growing its taxable base. Next steps: staff and Ehlers will finalize the term sheet, solicit competitive proposals, and return to the board on Oct. 7 with bids and a recommendation for award. If the board later chooses a smaller loan amount, Ehlers said that change can be reflected in the term sheet before bids are solicited.