Overextended in Hampshire Via SSA

[Update 9/3: SSA bond owners have agreed to the buy-back plan.]

Courier News item, my emphasis:

HAMPSHIRE — Whether Crown Community Development will continue with plans to build 2,833 homes in three Hampshire developments, potentially tripling the village’s population, may depend on what six Wall Street firms decide between now and 5 p.m. Wednesday.

That’s the new deadline set for a bond sale that would reduce Crown’s yearly financing costs by millions of dollars per year, but would leave the bond holders with only about a third as much money as the face value of their bonds. The $75 million worth of bonds were sold in 2007 to raise money to build roads, expand wastewater and water treatment plants, and other infrastructure improvements to serve the planned Prairie Ridge, Oakstead and Tamms Farm subdivisions.

The bonds are being paid off over 30 to 40 years with money collected by a Special Service Area tax against each piece of land in the subdivisions. But so far, Crown has sold only 46 lots, and only three of those have had houses built on them. So Crown itself, rather than homeowners, has been paying the yearly SSA taxes.

Here we have, imo, yet another example of a financing mechanism that started out as a good idea but got warped by Illinois’ penchant for “work-arounds.” The “special” in “special service area” refers to the service, not to the area. SSAs are supposed to be about a commercial or residential neighborhood paying for improvements or services provided by government that go beyond what that government provides for everyone else. While debt may be created to pay for certain improvements, my reading of the Special Services Tax Law leaves me shocked to find out that this type of taxing district has been used to finance the basic infrastructure for new development.

In DeKalb, SSAs ensure upkeep of retention/detention and other commercial and residential common areas, and for extra lighting along Greek Row. I’ve no gripe with current usage, but have long mulled downtown properties being put into an SSA for some snow removal activities because the city removes snow from their sidewalks and not ours.

[H/T B.P.@Boone County Watchdog]