Salem Lakes trustees signal consensus to pursue $2 million capital borrowing for roads and equipment

Salem Lakes — Trustees signaled a board-level consensus to direct staff to develop a $2,000,000 capital financing plan to fund road work and other items in the village capital plan, Treasurer’s office staff and a financial advisor told the board at its meeting.

The board’s direction came after a presentation that outlined several funding scenarios — $2 million, $4 million and $6 million — and explained tax and levy consequences. A consultant from Ehlers described the options and the timing constraints tied to the levy-setting process and debt market schedules.

A staff member from the treasurer’s office said the village maintains about 86 miles of roads and that best practice would be to invest roughly 4 miles of roadway per year; the village currently funds roughly 1.5 miles per year. The treasurer’s office and Ehlers described the trade-offs between borrowing amounts and the immediate tax impact: a one‑year general obligation note of $2,000,000 was presented in the packet as increasing taxes on an example $450,000 house by roughly $514 (staff used $450,000 as the example valuation in their illustrations).

Trustees discussed alternatives including a multiyear payoff schedule to smooth levy impacts, phasing incremental borrowings over several years rather than issuing a single large bond, and the possibility of deferring parts of the capital plan. Several trustees said they preferred starting with $2,000,000 and presenting a financing plan the board could consider in October; others called for continued budget work to identify potential cuts before borrowing.

No final binding vote to issue debt was taken at the meeting; instead the board voted to direct staff to prepare the financing plan and return with a resolution and more detailed plan-of-finance. Staff and the Ehlers consultant warned that timing matters: if debt is issued early in the calendar year, the village may need to capitalize the first interest payment into the issue or otherwise account for the partial-year payment in the current levy.

Trustees and staff emphasized that borrowing converts the cost of capital improvements into an exemption from the state levy limit (debt service is outside the levy limit once issued), while noting the village’s limited ongoing levy capacity. Staff said the village’s general fund reserve was roughly $2.3 million and that auditors had recommended a higher target reserve (presented as a range the auditors discussed). Ehlers recommended keeping incremental and stable levy impacts when possible to avoid a “roller‑coaster” tax effect.

The board asked staff to return with the $2,000,000 financing option for consideration, with documentation of timing, projected levy impacts, and a recommended repayment schedule and to include how carrying or capitalizing initial interest payments would be handled.

Trustees who spoke in favor of directing staff included those who expressed concern about accelerating road deterioration and the rising cost of deferral; others who urged more caution asked for firm budget cuts and clearer local tax‑capacity numbers before committing to larger issues.

The next step is for staff and the village’s financial advisor to prepare a detailed plan-of-finance and a resolution for the board to consider at a future meeting so the levy impact can be incorporated into the 2026 budget process.

Ending: The board’s direction instructs staff to return with a formal financing plan and a recommended schedule; a subsequent board action will be required to authorize sale of debt or final terms.